All Forum Posts by: William Sing

Hey Kenny, 

I would have a lender double-check this, but with FHA loans you only need to live in them for a year. I'd check with other lenders in the area that work with investors specifically. I have never heard of a "second owner-occupied duplex". It might be something that has to do with your DTI ratio since it takes 2 years for the rental income to count as "income" from the bank's perspective. 

Check with Julee Felsman - She is a wonderful investor/lender https://www.biggerpockets.com/...

Hey David! 

Congrats on looking to learn! I'd recommend you look into the local REIA in the area. That would be a good place to start learning more. Not sure exactly what you are looking to learn but would recommend starting there. 

I would talk to your bank before making the switch. Sometimes when you switch it to the LLC they may not do the refinance. Usually it is better to make the move to the LLC after the refinancing. Just make sure the Due on Sale clause isn't triggered when you do make that move!

Hey Andrew!

Depending on how much money you have, you could provide a larger downpayment with a balloon option later down the line. You could also shorten the loan length as well to increase the monthly payments to make it work. This would probably kill your cash flow though. 

This isn't a "creative way" but using a normal loan might also be an option. I'd be looking more at what the numbers make sense with what your goals are for the STR. Then finding the price that makes sense for that. In my experience seller financing is relatively close in terms of interest rates.

Hope this helps!

Hey Mike,

Congrats on deciding on making the next steps in Real Estate!

I'm not around that area but thought these tips might be helpful. 
1) When searching for properties, you can look for on-market or off-market deals. I'd suggest finding a real estate agent who is well versed in investments if you go on-market. In my eyes, this gives you a lot more of an understanding of the process without as much liability for your first property. If you need someone to recommend let me know! If you are going for off-market deals, I'd look into driving for dollars or doing some mail campaign. When you look for off-market deals there is a lot more time involved. 
2) Using Redfin, make a broad search of multifamily properties that have sold in the past year or so. Multifamily homes sometimes are built in clusters. I had a builder in my area that sells of 1-2 multifamily units every year from their portfolio so it might be away. 
3) You can buy 3-4 units with FHA, but they have a 75% sustainability rule to be aware of (duplexes don't have this). The total rent needs to cover 75% of the PITI. This can sometimes limit your use of this loan if the values are appreciating quickly. 

When searching for a lender, make sure they understand investments. Here are some questions I would use when interviewing them. 

What does your team look like?
What systems do you have in place?
What are your expectations of a client?
How long is the seasoning period before you can borrow money against the property?
Tell me about your experience with investing?
How many deals have you done?
What are deals you have learned from?
Where would/do you invest in this market? Why?
How do you like to communicate? Frequency?

Hey Jordan, 

Using the 70% rule is a decent rule of thumb to start with if you are flipping. During the inspection period when you do your due diligence you can have an inspector come in along with any other contractors to get a better understanding of the costs. From there you can negotiate as needed!

The 70% Rule - Aim to pay no more than 70% of the properties ARV. If the ARV is $200k then you'd want to get it under contract for 140k (200 x 0.7). 

If you are looking at making this a rental or buy & hold you'd want to look at what it would rent for. If you are using the BRRRR method, it is critical to make understand what the bank's LTV (loan to values) is for the refinance part. This will help you buy the next property. 

Hey Neil, 

This was the slew of questions I asked Property Managers. Make sure to review their contracts and see what fees they have. I'm more of a fan of having a higher rental % with less fees. It helps things stay a bit more consistent. Hope this helps!

What is your experience with Property Management?

What areas of town are you familiar with and manage?

Have you dealt with evictions before? If so, how did they go?

How many properties do you manage? What is your goal?

How will you scale?

What are the property fees? (8-12% for SFH, 4-8% for multi unit)

How long has the company been in business? At least 3 years required.

What is the accounting software and capabilities? Understand what the accounting reports look like and how many people they use (preferably more than 1)

What are your banking references? Check these references.

Can I get a list of properties you have worked with? Contact them all or a large sample so they don’t cherry-pick only good references.

Can I get a list of policies and procedures? Want to vet all policies and procedures.

What professional affiliations and associations are they a part of? Should have AMO, CPM, and local Renters Association

How do you help train employees?

Do you or anyone in your organization have any real estate licenses?

Do you have any vendor negotiations.

How is your business structured?

Redfin actually has some great sold data if you are looking for comps. You can use their sold filter and use the draw feature to hone in on specific neighborhoods!

Hi Dolina! 

Congrats on getting this under contract! First off, I'm not sure what your goals are but make sure you set those before deciding if this is a good deal for you. 

If you are looking to optimize cash flow, I'd think that even though the recently redone was done poorly will still rent for more. I'd probably work on the unit that needs the most work since it would need a lot more work and would provide the most benefit to you in the long term. 

Not sure if you are working with a realtor, but they should let you know more about what a big deal is. In the Pacific NW, mold is an incredibly common problem. The water heaters are something you will want to deal with immediately but in my area usually costs $1200 a pop at most. The roof is a problem, but it isn't a problem right now which will give you 5 years to redo it. 

With your first investments, you usually aren't going to be getting the best deal but you are just trying to get in the game to a certain degree. 

Hope this helps!

Hey Crystal!

It depends on what you are trying to do. Here are some factors to consider:

1) How much $$ do you have?

2) Do you plan on living in the place (i.e., house hacking)?

3) Do you want to do a lot of renovations?

If you don't have a lot of money, then you can use private money (think of this as a personal loan from someone). The other option is to use a traditional bank as you mentioned. If you are going to owner-occupy usually you can do less down. You can use the 203k loan that would allow you to do renovations using this. I'd talk to a lender who is experienced with these "renovation loans". They can get pretty complex and do have more upfront fees but are great at financing your renovation costs. I'd make sure to interview markets. In more of a sellers market, this is still hard to get under contract as a heads up. 

I'd recommend building relationships with great lenders/agents in that area for your first deal. DM me if you want me to recommend anyone!