All Forum Posts by: Sean Hudgins

CONGRATS on the deal. 

Im not in MN so I can't speak to specifics but I do think it would be wise of you to approach this with caution. If this was my deal I would try and speak with the tenant and find out what's going on. However I would also let them know that they signed a lease agreement... hopefully with the old owner and if not talk to an attorney asap as that could really cause issues depending on your sates tenant laws. 

I would let them know that you plan to honor that lease as long as they do the same, and if they are unable to pay I would make if very clear that I would be moving forward with eviction in accordance with the lease.

There is a way to be a good human and help tenants out when they are in need but it's a fine line to walk as there are many that will absolutely take advantage of that charitable nature. 

I find it best to stick to the black and white and communicate intent early so that no one can claim to be caught off guard. also documenting everything including those communications is important to ensure you are in the strongest position if a tenant tries to take advantage of you.

Your agent should be guiding you through this process. I do this all the time and I have sellers that need extra time in order to get funds and pay for their new home. However depending on how far out you are from closing at this point I would see why the 3 days are so important to them. 

If you are getting close to closing and they are asking for an extension because they didn't get their ducks in a row prior to closing and now they need more time I would absolutely do what others have said and make sure there is a large monetary incentive for them to leave as quickly as possible... once a procrastinator always one...

If its something along the lines of needing the funds for their next purchase I would make those accommodations best that you could. My sellers are currently getting 10 days $0 rent BUT after the 10 days the rent goes to about 2x the market rent for that type of property. 

The posts above are all good info but I think if you want to get more in the weeds maybe give us more specifics on the deal and where you are at in the timeline.

best of luck!

 @Devin Voelker Congrats on getting ahead of the game. I totally agree with Ryan here talk to your land lord, some are nicer than others when it comes to early termination. If there is a management company involved they may have a Real Estate agent that works with them and you may be able to work out a deal that if you use their agent they might let you out of your lease for no cost... If the agent is no good then forget this, that early termination fee is not worth a bad investment because of bad advice.

Bottom line I wish I had known more when I got started and used my VA loan to get into the multi family space earlier. Build your team and be ready to act when that right property comes up!

Best of Luck.

Absolutely, I honestly want to find someone who has pulled it off just to get some of the nerdy details of how they did it. I have been pondering how to do it myself just to be able to pass the knowledge on to others. I would have to do quite a bit of restructuring of my current VA Loans as well as my Wife's but we both have the entitlement so maybe we could be the ones to pull it off.

I agree new construction is likely the smartest choice here. I have been looking around my area and finding land zoned for mixed use like that is proving slightly challenging lol. This is definitely something I will be keeping my eye on and maybe an opportunity will present itself.

Thanks!

 Congrats on your position. I believe it is a position that many people would love to be in. 

I tend to agree with the general principles that @Greg Scott put out there. that being said I would change one main thing. I would not mortgage the primary residence unless you had a good use for that money ie. purchase more rentals, or some other investment that can get you a return to justify the interest rate. 

I would absolutely mortgage the rentals to pay of the LAL because your rents should be covering those mortgage payments and then some. 

now as far as leveraging the rentals as already said that is really going to be up to your position in life and your risk tolerance. If you have discovered that you enjoy being a landlord and want to grow then I would suggest that you are in a great position to leverage yourself highly and acquire a number of doors in the near future. personally I would always ask myself when getting a loan on any of the properties... what asset is paying this debt and if at any point you have to say my W-2 or personal funds then I would seriously think twice about that leverage.

If you're close to retirement or already in retirement then maybe its time to keep the cash in the properties and reduce leverage. or maybe consider your cash position and look for a younger investor that needs that cash and partner up as their private lender, a great way to get a return without all that work that goes into land lording and house flipping. but thats a totally different discussion I think.

Are you looking to house hack or just want a rental property? 

McLean is pretty close to DC so I'm thinking you may need to venture away from that area to get a better cash flowing property.

Garret,

My wife and I have always wanted to get into that business it seems like a good time and potentially a great cash flowing business. I see you have a lot of people in the family that can help run the day to day and really increase the value to your family which is great. 

I think I would personally try and reach out to other operators that could be partners and possibly help you secure the financing. I would probably not look in the immediate area as you will be their competition. You might also be able to find an operator that has recently sold their business or retired that may be willing to consult with you for a couple of years. They can bring the business knowledge that would mitigate a lot of the risk that a lender may see in a new operator. 

As already stated having an equity partner can really cost more in the long run but if you plan for your exit (or the partners exit) when you buy you can make sure you are in control and don't have regrets later down the line. 

Hi,

Im an agent in Virginia Beach and a Navy veteran. I have been curious about this method for a long time and have only seen it in theory and would love to hear from someone who has actually done it. 

The Theory is this:

(Quoted from VA.org: Those who apply for a VA mortgage with another veteran (a VA “joint loan”) may be permitted extra units for business purposes, which means your multi-unit property could have more than four units. Chapter Seven of the VA Lender’s Handbook clearly states:

“If a property is to be owned by two or more eligible Veterans, it may consist of four family units and one business unit, plus one additional unit for each Veteran participating in the ownership”.

That means if you and another veteran apply for a VA mortgage together you can build or buy a property with as many as “six family units (the basic four units plus one unit for each of the two Veterans), and one business unit.”)

My Take:

I interpret this as possibly a mixed use building with 6 residential units and one business unit like a restaurant or coffee shop down stairs. I do wonder if this could be accomplished with a 7 residential unit and using one unit as a short term rental though. 

Has anyone actually pulled this type of VA funding off? If you have please fill us all in I think this could be a huge opportunity for a lot of VA buyers that are looking to think outside the box.

Mike,

I think all your options are good. My question would be what is your goals from the investment? You are currently living for free which is huge. I would try to hold onto that if at all possible unless you could use your equity to buy a new house hack that also covered living expense. I like the idea of the detached unit personally because you essentially create your own multi family property... however depending on which city you're in that may not be an option. For example Chesapeake does not allow ADUs with kitchens and specifically states it cannot be rented (not the exact wording). 

I also have one of those under 3% mortgages and I personally would not want to lose that if possible, but it sounds like with a HELOC for the addition you would cashflow the HELOC so seems like a good deal to me.

Hey I’m an agent and investor in Virginia Beach, Chesapeake, and Norfolk. I love the area for investing. I would love to connect and will send you a PM. What kind of properties are you looking for?