All Forum Posts by: Ross Markey

Hey Matt, thank you for the thoughtful response! Indeed, the devil is in the details. Sadly, we did have to pass on that particular property. Was rare to find a multiunit in that neighborhood, but it is what it is! We're back to making offers on SFR for my next house hack.

Thanks again! :) 

I'm in the market for my next house-hack. I found a great triplex that is within my budget, but every lender I've talked to says they won't do a 3-5% down owner-occupied loan on a 3-unit property. My intention was to use a 5% down conventional owner-occupied loan, which apparently doesn't work for anything other than single-family. Then I was considering FHA with 3.5% down, where they indicated they would lend on the small multifamily, however because I'm applying for the mortgage together with my business partner (who will not occupy the property) I've now been told that FHA is also not an option.

Does anyone have any advice on this? I always heard on the podcast and read in the books that you could use these low downpayment loan products for owner-occupied house-hacks on small multifamily with up to four units. But now it seems like it won't work. Is this a new change with Fannie/Freddie, is it just not possible when applying with a non-owner-occupant, or is there something else I'm missing? 

Any help or advice would be greatly appreciated! 

Thanks for the tip!! 

Thanks Joe & Frank. We ended up negotiating a seller finance deal with a 10% down payment. Appraisal is taking place this week. Thanks for following-up! 

Thanks for your help everyone! It's much appreciated. Fingers crossed for a high appraisal. 

Thanks @Joseph Coleman...

4 bed 2 bath lakefront property in the Finger Lakes region of New York (upstate New York). We have it under contract for $695k, and comps in the area range between $630k-$780k. The current purchase price puts us right around the average for these comps. So there's a chance for instant equity if it appraises for higher, but of course that is not guaranteed until we actually move forward. With the investor who dropped out, we're now down roughly $40,000. 

Investment strategy: short-term rental on Airbnb and VRBO. Data from Airdna.co estimates that similar properties in the area rent for an ADR of $581, with occupancy at 58% and 70% for the 50th and 75th percentile, respectively. Our local agent and STR management company have validated this data.

So my current situation is trying to bridge the gap that the investor drop-out caused so we are still able to close the deal. I am hesitant to use a hard money lender for such a situation, because it is too short-sighted and we are looking at a minimum 3-5 year hold period. Thus, short of finding another partner to join our deal within the next few days (not going to happen), I see my remaining options being: 1) find a 15% down loan product, 2) take out a personal investment loan to make up the difference, 3) move forward and hope that the house appraises for higher and that our LTC works out to be 85%. 

Option 3, to me, is wishful thinking and not a solid investment strategy. Option 2 adds potentially too much risk, and also offsets our credit scores and DTIs to levels we do not want. Thus, Option 1 seems to be the way to go (if at all possible). 

Any other advice or suggestions? Very much appreciate your help and guidance!

Thanks, 

Ross

Hey BP Community! 

Does anyone know of any lenders that will do a commercial loan to a LLC for only 15% down? We had 20% all lined up, but one of our partners dropped out. Thus, we're looking for a way to make up that difference. Any advice or suggestions would be most helpful. Thanks!

Already got my ticket!! 👏🎉

Hi @Jason Forman, 

Congrats on getting the duplex under contract! In today's market, that is already a win. Fully agreed with @Tim Johnson's response above. 

Keep in mind these "rules" like the 1% rule aren't actually rules. They are general guidelines for quickly analyzing a property's potential. Ideally, you wouldn't even make an offer and get a property under contract solely based on the 1% rule performance. Use the 1% rule as a guide when filtering through properties. If you find a property that meets the 1% rule, then you can continue with a full analysis like Tim explained. In other words, the 1% rule is nothing more than a quick and dirty method to see if a property is worth further analysis and investigation. I would never buy a property solely based on the 1% rule, because many properties that meet the 1% may be terrible investments, and vice versa. 

For example, in my market, within certain zip codes every property meets the 1% rule on the surface. Only after we dig deeper do we realize that the local tax rate is triple the neighboring areas, and thus that destroys all cash flow and quickly turns into a bad deal. So use the 1% rule as no more than a guide, and always do a full analysis to make sure a property is a good investment. 

Good luck! 

@Jeremy Huson you can check out David Green's brokerage, "The One Brokerage". They offer a wide variety of DSCR loans and are very responsive. Good luck!

https://www.the1brokerage.com/