All Forum Posts by: Stephen Beaudoin

Just an update...

The house is ours. No longer a failed flip. 

We're dealing with a tenant, hopefully going to go smoothly, he seems agreeable and then onto our minor refresh/update (not a real renovation, just some updating) and we should be good to flip it early October.

Once everything is done I'll keep you posted on the actual numbers of the deal, or message me.

Hey, I started out with a 203K loan on a two-family home so I only needed 3.5% down. I've put some sweat equity in that and am taking some cash out now to fund a flip with a partner. 

Certainly nothing that would help me quit my job, but it's a start.

Good luck!

Congrats, sounds like you got a great deal! I lived in that type of construction growing up and started out that way personally and while it takes it's toll, it is definitely worth it.

It's a term I first heard here, but essentially what I did. 

It's just buying a house that you are going to live in and fix up and build equity in. You get a lot of benefits out of that. There are tax right offs, you don't need to put as much down, if you live in it for (I believe) 2 out of the last 5 years and sell it then you don't need to pay capital gains taxes, plus your mortgage is supplemented or even paid for by the rent coming in from the other units. 

Even if you don't get a duplex, having a single family with a few extra rooms and renting them out to your friends is a great way to get started.

Welcome and good luck. A little advise speaking from experience, if you're waiting for the moment to be right, you'll never find the moment.

Stay interested and always be looking. House hacking is a great way to start for a young guy and you could always get an FHA loan for 3.5% down on a 2-family if you're willing to live in half.

Thanks everyone, we actually got the contract signed today and are figuring out how much we actually need to do. It really only needs a refresh to be listed so could be minimal.

My wife and I did the same thing and I think it's a great strategy. We got more house because our mortgage payment is essentially subsidized by the rent. 

One tip, know that it's a long term investment house and treat it as such. You will want to put in certain upgrades or updates because you are living there, but they can be costly to fix/replace and won't add anything to the rental income when you move out.

I hadn't really thought of that @Danny Hutchinson

Would it work better in the situation of a buy and hold, rental property? Since we are flipping, I am thinking that may leave one of us to pay all of the Capital Gains.

I'm working on a deal that is a cash buy where I'm working with a partner. He happens to be my brother, but it isn't really too relevant to the story. 

I'm just curious how everyone structures their partnerships and what the thoughts are on my current arrangement.

Neither of us had 100% of the cash to do this deal, however he is bringing more to the table. After a brief discussion, I had thought that it's beneficial to at least pay a return on the money dished out first before splitting the profit, just as as we would have done if financed. 

Our agreement is a quick 5% paid on the cash put into the deal. Then we will split the remaining profit 50/50. We factored this into the structure of our deal.

The idea is that no one gets bitter that they have bigger risks, because the rewards are weighted. Plus we both get to benefit from a deal we couldn't have pulled off on our own.

The approach seems to be working for us, but what are your thoughts?

I know there are a lot of experts here with great advice, all I can tell you is my story.

I started out by getting into a 2-unit house and living in one side. I guess BP calls that house hacking.

By doing this I was able to afford more house with less money down.

As a live-in owner, you'll get to claim 70% or so of the potential rental of the other unit as your income which means you can afford more house. And for a traditional loan, you may be able to get away with 3-3.5% down.

It's worth looking into. We bought right and were able to get some instant equity. 

Seeing as I still don't have enough cash for deals on my own, I've looked into wholesaling but I have a partner who can fill in the rest of the cash and it turned out to be a quick flip.

Either way, if you can find a way to ease into it it's a good start, good luck!