All Forum Posts by: Shawn Bhatti

Hi there Pearl. My situation is actually very similar to yours. I used my VA loan to purchase a new build (single-family home) for about 355k with 0% down and roughly $7000 in closing costs. My girlfriend and I live in the master suite and rent out two other rooms for $1800 a month total.

I would say if you are certain about not being able to hire contractors to conduct a rehab, then this would be a good option for you! Don't worry so much about the first two years when looking for whether it is a good deal or not. Also, you can refinance out of this into a conventional loan after several years when you have some equity via market appreciation and principle paydown. Based on the equity alone, you could be near 20-25% down potentially on a new conventional loan in a few years, which could allow you to refinance and have stronger cashflow with no PMI and be able to recoup your VA loan to house-hack again.

In summary I'd say this sounds like a good option, I would just make sure you feel confident both about the type of tenant you would attract and the market rental demands. I like to use Zillow rental estimator, rentometer, and BP insights to gauge the likely monthly rent. Best of luck!

I experienced the same problem where I posted one of my rental properties on FB marketplace and very few people were willing to fill out the questionnaire. I feel that you did a great job advertising this property as far as the wording and pictures go, but I would omit this statement:

"Applicants must receive positive references from all previous landlords for the previous 5 years."

This may deter some applicants, as this is not a quantifiable metric. Furthermore some people may not have references past 2 years. Does this make them a bad tenant? Not necessarily in my opinion. Instead, I would have them include their prior landlord(s) contact information and if everything else aligns, you can call their landlord(s) and see if they were reasonable a reasonable tenant. I did choose a tenant for one of my properties based on what his prior landlords told me, but I did not include this as a rigid requirement.

I also agree with other suggestions that you could lower the rent if the rental comps justify it. Best of luck! 

Not an engineer here, but have a BS in meteorology (which unbeknownst to many is very math/physics heavy) and have a minor in mathematics. Definitely helps when analyzing deals!

Thanks for the feedback @Joseph Firmin. By high-end I don't necessarily mean over-the-top eccentric, but rather just going for something that is the highest quality and durability. I feel it really comes down to knowing the market.

Hey fellow BP members,

I've seen a lot of posts from buy-and-hold investors who talk about not doing high end finishes on a rental property. Though I am newer, this strategy is flawed in my eyes for several reasons:

-If you are hiring out contractors to do the work (which is generally the case), the cost is no greater when installing an expensive granite countertop versus a cheaper marble material

-The appraised ARV will be lower with lower-end finishes

-Your time return on investment is lower, because you still have the same scope of work (generally) for a lower profit

-Your exit strategy will be more difficult on lower-end finishes if you ever choose to sell in the future

These are probably obvious to anyone who argues not to go with high end finishes on rentals, so I really don't see the counterargument. My argument is that if you can do higher end finishes on a rental, why not? Not only will it commandeer a higher rent, but also rent quicker, which is an important and often overlooked metric. Maybe you can leave smaller details out, but planning a higher end rehab seems to be much more sensible in many cases. Obviously you need to be weary of the top-end rent that you could receive on a property in a particular market, but in most cities I feel that it is worth spending more on higher end finishes to really aim for that top-end ARV. Would like to hear other investors input on this topic.

I'd say go for it. I am investing near my hometown of Lancaster, PA and the numbers make a ton of sense there. Eventually I may plan to scale up into bigger cities, but I am satisfied with starting in a smaller city. Sometimes less competition is good, especially when starting out.

I'd say it is a good deal if you rent out the 2/1 and find a compatible roommate to share the 2/1 that you will occupy. This will really offset your costs and maximize your wealth. You could also search for a MFR that has a studio detached from a separate dwelling, allowing you to live by yourself and maximize offsetting the expenses by renting out the bigger units.

Bump

I would say no. I have learned quite a bit just from browsing content on this website. If anything, consider a paid membership to have access to greater perks. Most people who charge insane charges do not have your best interest in mind.

Thanks for the input @Alex Uman! Nice to see another southeastern PA investor on here.