All Forum Posts by: Ryan Muska

Is the property a mobile home?

Why are you paying 4.4% in points? That seems quite excessive for a loan of that size. 

I have heard good things from the banks that you have mentioned, but it looks like you are limiting yourself by only having those few options. 

I'd suggest looking for an expierienced mortgage brokerage to work with. They typically have access to hundreds of companies' rates and loan programs and can provide some programs you may have never even knew existed.

I'd love to connect and talk sometime!

Proud of you to be looking into your future like this! As mentioned by Daniel and Jaron in the other comments, there is a plus to both options. Either way, definitely purchase something. Now is always the best time to buy.

In terms of House-hacking or BRRRRing, here's my thoughts:

- BRRRR does not need to be paid in full cash upfront, you can still successfully BRRRR a property with a loan. However, it is harder and requires a much higher ARV or buying the property at a larger discount.

- House hacking is super easy to do and is way easier than you think. Depending on where you live, that 60k salary can be enough to get you in your first house, then your next one in a year, and the next one in 2 yrs. At that point (after you have much experience taking care of your own property) you will be more accustom to what a property needs/doesn't need allowing you to have a much more seamless transition into BRRRR.

If I had to choose, I would choose the house hacking. Much less risk, and you get to learn a ton. Feel free to contact me and I can go over all the options you may have for house hacking or any purchase!

Quote from @Greg Hagenbuch:

Hey, thanks for the responses! Yes, besides the potential for cashflow (or near net 0 if my numbers were not conservative enough) while paying down the mortgage, I think Manayunk has really great appreciation potential. All speculation, but it's hard for me to see it not appreciate at least 5% average per year.

I have not reached out to property managers yet - but yes I'd definitely do so in my next step. The rental estimate from dealcheck does align well with what I notice comperable properties going for in my neighborhood -- but yes, I'd definitely need to confirm.

Here's a breakdown of the estimates for operating expenses:

Property Taxes:$ 205

Insurance:$ 90

Property Management:$ 158 (looks like they estimate about 9% of rent - is that about right in Philadelphia)?

Maintenance:$ 176

Capital Expenditures:$ 88

The only thing that seems low is the insurance -- that is nearly half the cost of my insurance covering me while I reside here - though I do have comprehensive insurance. I am not sure if dealcheck takes into account rental insurance costs based upon specs/location. I'd have to look into that more (how?).

In regards to the upgrades I'd need to put in, yes, I think about $35K, and I am thinking (hoping) that is a high/conservative number, especially since the bathroom and kitchen renovation will be pretty basic and renter-friendly. But investing this money to make my house renter-ready is one of my bigger concerns. It is kinda scary to think I could put in this money and have a terrible tenant shred up new appliances, etc.  But I can afford this out-of-pocket and I'd still have a decent rainy day fund left. Would property managers be willing to look through my property and help me come up with a checklist of things that need to be updated before it rents out?

And lastly, no I won't need $ for a down payment, trip, etc. anytime soon. I am almost certainly moving in with family within these next couple of years, and will just pay a low rent price to them. This is another factor which makes this set up appealing.

Insurance is hard to discern whether or not it is accurate because we don't have the value of the property (F/e: insurance on a $100k property is going to be less on a $500k property) nor do we have the necessary condition of the property. 
A personal rule of thumb for landlord insurance (this is not a rule I've heard of, it's just one that I made up on my own due to my own experiences) is that for ever $1k the property is worth, you can expect to pay around $1/month on insurance. This may vary depending on the area you are in and the amount of coverage. You can obviously pay less and get less coverage, but I like to get fully covered with decent deductibles so I pay more for insurance. 
Also, for the capital expenditures, you put aside 5% of the rent. This is good and all, but I definitely like to be more cautious and put aside 20%. Again, I'm a more cautious investor, so that could still work for you. 

 For having a Property Manager come to give you ideas on how to make the property move in ready, I'd just give a tip and make sure you commit to a property manager. Shop around for one that fits your criteria and what you are trying to do by calling them. Then invite them to the property and have them give you ideas on what you may need to do, if you need to do anything in the first place. With rentals, don't do too much. Like you said, if you get a bad tenant in there, you could end up having to redo whatever it is you do, so don't do too much if you can afford it. That being said, if you have a good Property Manager, they may have a sound system for verifying the quality of tenants and may be able to secure you a solid tenant so you don't have to worry about that. 

Hi Greg!

First off, congratulations to you for owning a home and trying to turn it into a cash cow. 

I was looking at the numbers you used for your expenses and was curious exactly where they came from? When I run numbers I want to be as accurate as possible. That being said, instead of using solely what the Internet says something should rent for, have you reached out to property managers in the area to see what they may be able to rent it out for? On top of that, what percentage are you estimating the property manager will charge you? Typically a property manager will charge you between 8-10% of the months rent. Further, are you accommodating for the potential repairs/replacements that you will need to make to the property? I like to take 20% of my monthly rent and put that aside for vacancies, roof, boiler, toilet, anything that can go wrong. There are other things that I would account for when determined the estimated return I'll receive. 

That being said, judging from everything you said, I would definitely use this property as a long term rental (LTR) if you can financially afford it. 

by holding the property, the tenants will pay off your mortgage, you may get cash flow, the property will appreciate it value, tax benefits, and many more possible positives.

If you ever want to speak to someone about investing and a possible strategy for keeping this property and then buying a new one, I'd love to connect!

Hey Tim! 

Ex-touring musician?!? A little celebrity, huh. 

If you are ever interested in finding out how to finance these purchases and the various investor programs out there, I'd love to discuss how I may be able to assist you. Feel free to contact me whenever and we can set up a time to call and discuss what type of financial goals you may have. 

It may not be as advantageous to pay off the loan as you think. I'm a mortgage professional who looks at peoples debt and helps them plan for future purchase all the time. Let's talk and we can determine what the best course of action is together. 

Definitely hop in! 

Analysis paralysis is an all too real dampener on people's success. I am an advocate for hands-on learning. You may lose money initially, but it's in exchange for priceless knowledge. I am a mortgage professional who is licensed in Florida and I'd love to hop on a call sometime to discuss what your thinking about as well as bouncing some ideas off of how you may be able to finance your strategic purchases. I've sent a connection your way.

Hi Katherine, 

Welcome to this awesome industry! It's always important to have a good team around. I'd love to talk business sometime and see how a mortgage professional who also owns their own investment portfolio, could provide assistance to you and your partner!