All Forum Posts by: Clarence Johnson

@David Gwilt do you mind sharing the lender contacts, all the 3-5% programs I was aware of now have income limits that conflict with the income needed to qualify in our mkt.

Thanks

@Nabil Suleiman spot on sir!

I would explore using your cash reserves to put 3.5% down on a multi, or 5% down on a SFR with ADU. It may be difficult to find something reasonable in the $500K price point, so I'm hoping lower down payment can increase your buying power. MI does weigh heavy on FHA deals, however with 5% conventional for SFR with ADU the MI is FICO based and with a good FICO its several hundred less than FHA MI. I purchased a $650K SFR recently with the 5% down conventional and my MI is below $150, this would be over $400 for a FHA loan with the same value. Hoping this helps open your options, but if you do insist on putting the 20% down you can go get a HELOC to access some of the tied up cash. I just moved from my duplex house hack after 10 years, I was able to pick up two 2 other properties in that time, and access enough equity to build an ADU at the duplex and at the most recent SFR acquisition for my family househack.

@Anthony Holloway your lender will use avg mkt rent to increase you approval, however the approval will vary based on actual rents (if the 2nd unit is occupied) or on mkt rents (if the 2nd unit is vacant). SFR's with a garage for an ADU is a good idea, I just picked one up with the same intention. I would not suggest trying to buy in a new community and adding an ADU, you will likely get pushback from the HOA even though I believe the new ADU laws allow you to do so. Also, you would be paying a premium for new construction. When I picked up my SFR I was looking for homes with a 2 car garage in the rear. After some searching and consideration I opted for a SFR with a front facing garage so our backyard space can remain private. Your on the right track with the ADU add on! The duplex will be the best foundation to get you to the SFR where you can build another ADU, I will be starting my second ADU as soon as we finish the SFR rehab.

@Jon Schwartz amazing analysis sir!

House hack a multi, the lower price points are safer than the higher price points and have higher rental demand.  I would not stress, worry or suggest selling even if prices do dip as your rent will stay the same.  You can spend less than $50k doing a house hack and purchase again in 12 months, wait and watch the mkt, or look into other mkts.  Don't buy high to protect yourself, just buy right and make sure your monthly mtg contribution is at or below mkt rent so you will cashflow when you rent it and move.

@Ismael Martinez buy a house hack multifamily, if it makes sense today it will make sense tomorrow. Whenever values decrease, our rents will not (LA rule). I have purchased a few properties, most recently my first SFR, and I had to look at it as a SFR with ADU and possible JADU to feel better about it. Buying a nice home with picket fence that may be worth considerably less tomorrow can be a little scary even when your an agent/investor. Buying a multifamily (or SFR with ADU) in a high demand rental area with near 0 vacancy where rents have almost doubled each decade since I have been paying attention (only the the last 2 lol) helps me sleep at night.