All Forum Posts by: Tom Wagner

Welcome Irving! I think you'll find most folks on here very approachable and willing to help however they can. Best of luck in your investing journey.

Hi Katrina, +1 to everything Jon said! One thing to keep in mind with qualification as well is that on 2-4 unit properties you can use estimated (or actual/in-place) rental income to qualify for your mortgage. Using this strategy I was able to qualify for a $1.44mm mortgage on my house hack when I would've only qualified for about $800k without the rental income.

The specifics of this will vary from property to property but as you are looking your lender should be able to write updated pre-approvals on a house-by-house basis. Happy to chat further on this if you are (or anyone else is) interested!

Edit: Accidental post.

So the benefit here is that you "only" have to get $800k from a private note instead of $1.3mm? I'm guessing the terms on a private note for $800k + the terms on the $500k in seller financing will kill your deal. At 6% interest (best case scenario, likely much higher) your monthly debt service will be incredibly high, likely leaving you with negative cash flow.

Creative financing can definitely make tricky deals work, but more often than not the increased borrowing costs kill all cash flow (and thus kill the "deal").

Good question Chris. I think for a light rehab the money is all made on the buy, though it is affected by whatever direction the winds of the market take you during your rehab period.

Ex: If you buy a $1mm triplex with 75% down and do a $100k rehab, but only create $50k in equity (making it worth $1.15mm) you'll be able to pull out 1.15mm x 75% = $862,500. Which would leave you with over $200k in the property with the math as follows:

$862,500 - $750,000 original loan = $112,500

$350,000 initial investment - $112,500 (from above) = $240k still in the property

However, if you are able to lock down a great deal off-market / distressed and buy the property for $900k the numbers get much better.

And to wrap up, this entire process will take 3-9 months. If the current ARV is $1.2mm and the market moves up 5%, your new ARV will be $1.26mm but if it pulls back 5% your ARV will be $1.14mm. So as you can see you are also at the mercy of the market!

Happy to chat further or take a look at any specific properties you have in mind!

Such a shame that some agents are out here spewing non-sense such as "you should finance this with hard money instead of an FHA loan". Really awful advice that may result in you being able to close on the property (hint: what they want) more easily but comes with a huge cost post-closing (massive interest payments/fees/risk).

Hi Mohammad, I definitely think you are thinking about it the right way and have a good plan. Some thoughts:

- Why limit yourself to 2 bedrooms per unit? And why limit your search to duplexes? While the self-sufficiency test gets tougher to pass every day rates creep closer to 5%, a 3- or 4-unit property could also be a great option.

- Do you need to have a place by 9/1? If not then giving yourself 4-6 months for your search instead of 3-4 months increases the likelihood that you'll find a 95th-percentile+ deal.

And the next thing I would start thinking about is where you fall on the spectrum of investing for cash flow vs investing for appreciation, as this will be one of the many factors that inform what neighborhoods / cities to concentrate on for your search.

Hi Liam, tricky situation and I don't envy you! Are you co-borrowers on the mortgage? And who is the "owner" of the house, or do you each have 50/50 legal ownership?

My mind moves immediately towards terminating the partnership, but that may be tricky based on the current interest rate situation. You could also consider selling instead (or after two years of owner occupancy to avoid capital gains) and roll your equity into a solely-owned property, though this is also complicated by current interest rates.

In summary, you're in a tough spot and current interest rates being so high is very annoying.

Monthly meetup to discuss house hacking and real estate investing in the Greater Boston metro area!

All topics welcome for open discussion -- bring your questions / ideas / strategies!

Zoom link: https://us06web.zoom.us/j/8561...

Monthly meetup to discuss house hacking and real estate investing in the Greater Boston metro area!

All topics welcome for open discussion -- bring your questions / ideas / strategies!