All Forum Posts by: Tyler Hodgson

I have a STR in Destin, FL. Not quite Gulf Shores, but not too far away. I think that entire strip of beach from Gulf Shores to Panama City Beach is a gold mine of some of the best beaches and vacation destination. I don't think you can go wrong with getting a property in that area, if the numbers are good of course!

It's been an awesome journey, so far, my friend! Looking forward to seeing your continued success, and of course always competing against you! 

Alex, @Kenneth McKeown has some rentals along that corridor and is a real estate agent who works a lot in Collin and Denton county. He's active here on BP, so if you search some of his posts I'm sure you'll find some helpful insights. And of course you can reach out to him directly with a message. 

Personally, I think there is still room for growth in the areas you mentioned. I believe that COVID migration has just begun (micro and macro migration) 

@Timmy Paul - welcome to BP! Like many others it seems Rich Dad Poor Dad spurred your interest in Real Estate Investing. Good think you stumbled across BiggerPockets too. The community, forums, podcasts, resources are invaluable! 

As @Kenneth McKeown mentioned, I’m a CPA as well, and no I’m full time in real estate investing and mortgage brokerage. Took the leap, and never looked back! I grew up in DFW and have lived here most of my life. 

 Ken,

I’d highly recommend @Kenneth McKeown who is an agent in DFW, fellow investor, and very active here on BP. I’m sure you two can connect and chat more about what you’re looking for and how he can help. 

 Marland, at 3.5% down on anFHA loan the property obviously won't be a strong rental at this time, house hacks in our market are never going to strongly cash flow (especially in a B+ neighborhood) if you only put 3.5% down. No duplexes in our market make the 1% rule, especially in a B class neighborhood.

Originally posted by @Aaron Montague:

@Tyler Hodgson - I would vote "strong pass" on this for your friend.

Short version - His monthly contribution is going to go up beyond his current rent.

Long version - This is a lousy rental unless you foresee large increases to the rent rolls in the near term.  The place doesn't break even until both sides are paying $2000/month in rent.  It won't clear $300/month in cash flow until rents hit $2175/side. We can quibble about the numbers a bit though the point of house hacking in my mind is to either:

1. Drive the owner's housing costs down significantly

2. Present as a rental worth buying, even if it will be a little while until it is worth it

Ideally it is both. This one is neither from what I see. Here are my monthly numbers, they are close, but not exactly what you posted. The monthly mortgage line includes principle, interest and PMI. It is the reason the rate is higher than he is actually paying. The $2600 from unit 2 is what your friend will be paying to break even. Which is $800 more than he is paying now.

The obvious line to question here is the management fee line.  I also recommend to new investors that they take this into account from day one, even if they intend to manage themselves.  Get your accounting used to paying out that 10% as a management fee so you don't think it will be there forever. If you friend wants this as a rental later in life, it is going to cost him ~10% of the monthly rents.

 Aaron, thanks for the feedback. His monthly contribution is actually going to go way down compared to his current rent ($1,800). He will pull in at least $1,400 on the other side, plus roommates on his side. His personal housing expense would drop to $400-500. 

At 3.5% down on an FHA loan the property obviously won't be a strong rental at this time, house hacks in our market are never going to strongly cash flow (especially in a B+ neighborhood) if you only put 3.5% down. No duplexes in our market make the 1% rule, especially in a B class neighborhood.

 Yes, $405k sales price, and $20k in concessions. Talked them down from $425k list and got the concessions!

Hello BPers. I have a friend who is under contract to purchase his first duplex as a house hack. He came to me with some concerns about the state of the market right now, and thoughts that maybe he should just wait another year to purchase. I took a look at his current deal under contract, and I think he's in a pretty strong position to move forward with this house hack. I know there is a lot of fear and uncertainty out there right now, especially purchasing your first duplex, so maybe some of you can give you thoughts and advice?

Here are some quick facts and details:

• Duplex in Farmers Branch (just north of Dallas), Texas
• Each unit is 3 bed / 2 bath / 1648 SF, and cosmetically pretty upgraded 
• Purchase price: $405,000 
• Seller Concessions: $10k towards closing costs and $10k towards foundation repair
• Here is the listing: https://www.zillow.com/homedetails/2822-Golfing-Green-Dr-Farmers-Branch-TX-75234/26998169_zpid/
  
  FHA Loan: total cash to close less than $8k
• • 1st Mortgage (P&I)     $1,758
    
  • Property Taxes             $658
  • Property Insurance       $230 
  • Mortgage Insurance      $274
    
• Total PITI                      $2,920

• One unit is vacant and the other side is rented out for $1,400 with a long-term tenant, that is now on a month-to-month lease. Market rents are now closer to $1,700 per side. 
• He has already paid for inspection, option fee, and earnest money. Which would all be lost if he backed out - approx. $5k
• Currently paying $1,800/month in rent, so if he doesn't purchase this duplex would continue to rent for $1,800/month.
  Strong enough income to be able to make the entire $2,920 PITI payment plus other expenses/bills without problem.

Some of my friend's concerns are the other tenant not paying rent and not being able to evict right now because of COVID protections, and/or it being hard to get a new tenant right now. He has uncertainty with the markets, jobs, housing values, etc. and thinks it may be less risky and smarter to wait a year. What are your thoughts on this deal? And what are your suggestions to someone who is purchasing a house hack duplex right now? 

Thank you for your help!

Thanks for the mention Megan!