All Forum Posts by: Steve K.

@Tiffany Miller , Congrats; that's amazing for your first deal. Happy to hear my modest post helped convince you to look further into it.

So....does it cashflow nicely as a rental? Looks like it truly was a BRRRR ,and you have none of your original money in it?

@Mindy Jensen , if you're watching, I nominate Tiffany for the new investor deal of the year! or the BP Hall of Fame!

That's a stellar deal, @Andrew Michaud.

It starts out looking good, because $3950/mo rent on a $145k property is 2.72% of purchase in monthly rent!

Even if I burden with 10% management, your $23,390 NOI per year is a 16% cap rate (assuming no financing), and then w/ your financing, you're net cash flow of $1047/mo ($174 per door) is a 40% cash on cash on your $29k down payment and closing costs of $2500.

Great find.....if you're comfortable with the repair/vacancy assumptions and risk/reward of this property appreciating or holding flat, or depreciating.

Good luck

@Billie Miller , didn't I read somewhere on BP that you're investing in CO and Midwest?

So, @Nicole Heasley Beitenman , are you sure this is a "good investment"? You say your dad bought it to fix/flip, but hasn't been able to sell it, and now the profit margin is zero or possibly a loss. Have you calculated how well it will rent? And is it positive cash flow above and beyond all your expenses? What's the benefit of selling to the first tenant? Is it "appreciating" in the first year, such that it becomes profitable upon that sale? Or are you merely timing your local seasonality; avoiding selling in winter?

@Mike Bereck , begin talking to lender(s).

A typical mortgage company can offer a variety of mortgages. Depending on your property and your income/credit worthiness together, you can find:

a) FHA loan (a conforming loan that is insured by the federal government; this insurance protects the lender in case you default.) Because of the federal guarantee, lenders allow lower down payments (as low as 3.5% down.) Monthly mortgage payment will increase because you have to pay for this "insurance" (like PMI).

b) Veterans can qualify for a VA loan w/ zero down payment and excellent terms; again guaranteed by the federal government (VA department).

c) conventional conforming loan (not insured by FHA). Good terms because your mortgage company can "sell" your loan on the secondary market (Fannie Mae and Freddie Mac). Requires more down payment than FHA. Might have PMI added to payments if less than 20% down payment.

d) portfolio loan. Less favorable terms, since this "non conforming" loan won't meet Fannie/Freddie standards, and your lender or credit union will keep it in their local "portfolio" for the duration of the loan. Likeley will be an adjustable rate mortgage (ARM)

e) if you don't qualify for any of these, you look to hard money lenders or private lenders; terms will be less favorable, but the lender may be more flexible.

Beginning a loan application with  a lender(s) will allow your loan officer to try and fit the best program for you. Do some comparison shopping; not all terms are the same from different sources.

@Mike Bereck , keep reading the forums and listening to the podcasts. You might be a great candidate for "house hacking" and making it your first investment property. (your posts reveal that you have no knowledge of applying for or getting approved for a mortgage. Go ahead and start a pre-approval process with a lender(s); see what's possible with your income).

In house hacking, you'll read that the cheapest mortgages are the "owner occupied" with as little as 3.5% down payment. By agreeing to live in it for a year, you don't need 20% to 25% down payment, as you do on a "non-owner-occupied" rental. Research what a duplex/tri/quad would cost, what it would rent for. Can you qualify for such a purchase, and will the other 1, 2 or 3 tenants bring in enough rent to make it a good investment. (The point is to begin making passive income; but a lot of emphases is on "living for free" in your unit, while the other tenants pay all costs). After a year, you could buy another hack property  and rent all units in your first. Then you're a landlord with two investment properties.

Read also here about BRRRR fix/hold strategy....it's a fast way to grow wealth, if you're up to rehabbing properties (either yourself, or overseeing contractors doing the work).

@Nicole Heasley Beitenman , ....I think you need to rethink/research the capital gains issue.

If you live in the house 2 years as your primary residence, the capital gain is tax free ($250k per person, $500k for a couple). If it's a rental, the 2 years doesn't apply on investment property.

If you sell in less than 1 year, the gain is taxed at ordinary income rates. If you held it for a year or more, it's long-term capital gains.

You say "hold this house for a long-term rental" and then you say "rent to own in 2 years" for your newly found tenant????). Since there is no tax 'trigger' at 2 years, why 2 years? Maybe sell after 1 year?

Why not keep a good rental for 30 years??? You might have a BRRRR rental on your hands.

@Jacob R. and @Anthony Dooley , I confess, my opinions are biased by my own experience in Denver; I don't pretend to be an expert at markets elsewhere in Dallas or Georgia.

Nationwide, you can read a lot of experts opining on "rent vs own" your own residence. Anthony is correct that if you expect no appreciation, fear depreciation, and might want to move in short time....that favors the "rent" (and buy/sell transaction costs can really persuade you this way.) If you're just "consuming" this $/month part of your budget, by all means, minimize it and save all you can.

However, I'm a landlord in Denver precisely because the opposite is happening here. If you rented for the last 8 years, you missed 10% appreciation per year.....and you're not growing wealth the way you could have. Although I'm not getting 2% or even 1% of purchase price in monthly rent, rent is still higher than cost of ownership (here) and favors the landlord.

And, duplexes are appreciating here in Denver (again, I can't say that it's universal nationwide). I got beat out on 2 recent purchase ideas off MLS wherein ~30 cash bidders put in offers on rental duplexes/quads in the first 36 hours. Many of the duplex/quads on the market, I can see the past sales on a handful of them, where the seller paid about 30-40% less, just 2 years ago...and not due to remodel in the interim.

Granted, there are more buyers for a $300,000 single family home, than there are for a $450,000 duplex....but investors, and/or house-hackers are bidding up the duplexes too. To say that "duplexes don't appreciate" or "if they do it's small", may be true of Georgia....but I'm not seeing it that way in Denver currently.

And, given that a house-hack MFH can cashflow, and appreciates, and comes with 3.5% down payment, and the goal isn't to sell it in 12 months (suffering transaction costs), but to Fix/hold for long term rental....it could work. (Further confession: I've never house hacked personally. I don't live in any of my rentals. But I should have, if I'd have learned to be a REI 35 years ago when I was single.

Good Luck.

@Jacob R. 

Although the goal of a lot of house hacking is to live "free", I personally don't believe that distinction is that important. My first BRRRR is a quad in Denver. I don't live there.....I have tenants in all 4 units.

The rent from 2.4 units pays the mortgage on the quad. So....if I lived there, I could say I live "free", or I could even say "I'm being paid to live there (collecting 3 rents, when 2.4 pays the mortgage).

So, what if the quad were a duplex, and all else is in proportion? The rent from 1.2 units is required to pay the mortgage on 2 units. Now, I'd say I rent one, and I have 80% of my own "rent" covered. I"m almost fully subsidized....but not a 100% hack.

I'd argue that when you move out and start renting (after the 1 yr minimum requirement on your VA or FHA loan) both of the above rentals are identical, in terms of rent/purchase price or cap rate or cash on cash or other metric.

So....it's easier to house hack a quad than a duplex.

@Holly Scott , 

True, when an agent sets up an "email alert" for you, the software usually blocks the selling agent info, and substitutes/emphasizes the "sender" of the email alert.

If you've ended the "buyers' agent" relationship, you might just set up your own email alerts via Redfin.com 

You can there see the Seller's agent within the ad, likely google them and find a phone #.

If you're going to be big time REI, consider getting your own license someday and be your own realtor?