All Forum Posts by: Wendy S.

@Bill Brandt. Thanks Bill. I lived in it. Remodeled 2018 and house hacked until Dec 2021. Moved out 2022 but I decided to sell. It's fine, I will be ok either way.

Good Day, hopefully I have posted in the correct forum as I really need some help with my dilemma.

I co-own 2 properties with a family member who no longer wishes to own RE or have any loans.

Loan 1 worth @minimum $270K

Balance $143,000

Interest rate 3.625% conventional Investment property

Purchased Feb 2021

Both of us on title and mortgage

Mortgage paid directly from my account since inception of the loan.

Loan 2 worth at minimum $650K

Balance $533K

Interest rate 3.125% conventional

Owner occupied

Purchased Dec 2021 both of us on title but I am not on mortgage.

Mortgage paid from Family member account but I transfer this payment from rental income I collect. Rental fully convers the mortgage payment while we also occupy the house.

My thoughts

Pay off Loan 1

Remove Family member from title

Get a first line 75% HELOC on investment property. $202K

Payout Family member $50K

(270K*90%-143K)÷2=$50K

Market value less selling fees less Loan

I am aware that I would be losing the interest deduction yearly but at least I would have full ownership control plus a HELOC $152K which I can deploy if an opportunity presents itself with interest due on only $50,000 used up. This would also mean replacing my monthly PI of over $660 with this new Heloc payment.

I don't quite know how to figure out Loan 2 without refinancing. I can pay out the Family member plus maybe another $10,000 for helping to acquire the property. Have them do a quit claim deed, I provide documentation that I am now responsible for paying the mortgage seeing that I am on title but not mortgage. Would this be considered favorable with a Lender or would it trigger the Due on Sale clause? Would this free up the Family member's DTI as I can provide proof of paying out and that I am now responsible for paying the loan. Since inception, Family member has been paying the Loan but with full rental income generated from the property.

Any insights would be greatly appreciated.

P.S. No W2 for me since Jan 22, only rental income.

@Shannon Smith

When you say you can put 10% down, have you already confirmed this with a Lender based on your credit, asset,etc?

You said $5,000 taxes do you mean PITI?

if it's PITI, how long will it take you to have the place fully ready? Can you afford the carrying costs in the meantime? How long could you carry your monthly obligations plus that for this house, worst case scenario?

You said you could live off your checking account for a year? Did you mean credit cards as your checking account technically is savings or did you mean your monthly checking accounts from your jobs?

Do you have other sources of income other than a W2?

We bought a house Dec 21 in the higher $500's and remodeled the basement. Had carrying costs for almost $4,000 monthly while work that should have been completed in 6 weeks took over 3 1/2 months. We lived in the property so collectively we shared the bills and it was OK.

Enjoyed another month and half by ourselves then rented it out. Option 1 was $225/ night STR, which is very conservative for our area. Option 2 continue what we know and rent per room with one room given as a bonus for everyone so 3 persons for the place. Option 3 rent a family for $3,000 monthly.

We chose to stick to what we know and rent 3 individuals min 3 months so technically $90 nightly. Then we rented another from the main house albeit on another level of the house. So we cover $3,675 and get to live in a beautiful house occupying 3/3 baths with a spare for guests. So house-hacking at minimal costs.

Can we move, rent out the main, loft and basement separately on the low end of almost $7,000 monthly or on the high end of over $11,000 calculated at $550 for 20 days to 2 separate parties? Yes these are quite doable.

Yes this is a Primary comparison which means we had lower entry costs with higher mortgage when purchased. You would have higher entry costs with approximate PITI based on increased interest rates.

If we simply lived in the property without hacking, yes we could carry the costs. We could also put expenses on a 0% credit card if we needed to.

I've shared all the above with you, so you can look at your deal from many angles and also look at other exit strategies if the market changes to see if it's viable.

Finally, you would be carrying the utilities, ask the present owner for a year's utilities to fully understand your costs per season.

Like others have said, you've not provided sufficient context regarding your experience so I've provided a real life example to help you make a decision.

All the best to you. Happy investing and learning.

@Nathan G. Thank you.

My lifestyle is conducive to house hacking, but preferably a basement unit while I rent the main house at this point.

Former residence can be rented and still cash flow even after a HELOC. I guess I'm emotionally attached especially seeing that I'll have to get new tenants. My former ones had 0 issues and left house in immaculate condition.

Guess I'll try to find 2 newer builds that can cash flow and have greater appreciation play and have some cash left over.

Not sure if I posted in the right area.

So basically instead of seeing if I could qualify for a Heloc with no income except documented rental income over 2 years I decided to sell primary residence bought in 2017.Current interest rate is 2.625%.

Shortly after I listed, I realized I misunderstood the 2 of the last 5 years selling rule to avoid Capital gains and that I actually have another 2 years.

Cash flow after all expenses plus $542 monthly for Capex/Repairs/vacancy is almost $700. Rent by room model. Started as a house hacker.

Sale will realize in excess of $120K net. .

I remodeled it so things are in good shape, new HVAC etc. Already emptied house of awesome tenants.

I am keeping 2 other rental properties that cash flow over $3,000 combined which I use as job income replacement.

Now I'm not sure what I'll do with the proceeds from the sale as interest rate is crazy and I'm wanting to move away from current model to investing bigger and better with better returns. (I had no money left in the house as I had previously cash out refinanced all of it)

Am I overthinking? Should I try Figure for a Heloc and keep property?

How do you move away from the house-hacking mindset when you no longer need to do it but do not wish to buy a house to live in and pay to live in it. I'm currently hacking another place that costs me around $100 or less monthly but looking at purchasing something else in the coming months. We do use 3 beds/ 3 1/2 baths now which could all be rented if we bought another place.

Finally, I'm thinking, factoring cash flow, depreciation, mortgage paydown, offsetting taxes plus speculative appreciation: I would need to be getting at least a 20% cash on cash on my $120K to make it comparative to what I already have.

Side note

Investment properties have at least $200K equity with a 80% ltv. Should I sell the primary and try to pull funds here to deploy later?

@Caroline Gerardo

Thank you for your reply.

Seller had been paying taxes, had a job until a month ago when car failed. Was approved for the HELOC hence the appraisal but that fell through with job loss. Been at job for last 5 years.

Buyer defaulted on closing date. I don't see any documentation as to why, which would still be irrelevant. Signer signed another agreement to close later, with a $5,000 advance which somehow reduced the sales price by $16,500 with the advance to be recovered at close.

I tried to say the new agreement was invalid or at best voidable. They can sue for specific performance but Seller could argue duress with the failing of the closing and signed this new agreement. Seller just needs to return the advance at a later date, and not sell the house. Credit a car if possible and buy time to figure things out.

He is frantic, doesn't want to mess up his credit and feel he is in a desperate situation. I truly fear if I can't help him find a solution by Tuesday he will go through with them.

I even told him I'm not willing to rent to him, because he's not a renter and would be more willing to help save his house. He bought the house cash at the beginning of the year, to have peace of mind having moved out of his family home after 25 years.

He has taken in a roommate but have gave notice because of the pending sale.

Solutions? Suggestions??

@Chris Seveney

If he was getting a fair deal from them, I would be ok with him selling and I would rent to him but they first told him he would be allowed to stay. Then they changed and also didn't close on the agreed date. They moved the closing, loaned him a paltry $5,000 and lowered their original $91,000 to $75,000. So he now has $70,000 left before commissions, and sellers costs.

@Chris Seveney

Anything is possible before closing. Agent is onboard as well.

Good day BP family.

Background:-

1.Seller has committed to sell house to company for $70,000.

2.House appraised for $135,000

3. Seller failed to get a mortgage, no income. Delivery driver income loss because of car failure.

4. Seller asked for $20,000 upfront to buy used car for work, pay bills (all of which are presently current) and have some money left over.

5. Seller would love to remain in the home.

Options we are discussing.

1. I purchase the house outright for about $103,000 cash. This price was suggested by me as fair price, seeing that I would be reselling in short order. So enough to cover selling costs with about $11,000 profit with sale.

2. Lend Seller money and put lien against title and seller repays at agreed rate.

Here is what I am thinking:-

1. Purchase with seller financing with $20,000 paid upfront amortized over 30 years.

2. Seller rents property for about $1,100-$1,200 monthly.

3. Seller buys back the home within 6 months for slightly under market value with a traditional mortgage.

Am I thinking along the right lines?

Overthinking it?

Or should I simply let seller proceed with pending sale for $70,000?

I only met seller recently when approached to rent 1/2 rooms from me by Oct 1. My model is per room rental.

Initially I offered to rent 2 rooms, store additional furniture for $1,400 with all utilities/internet paid. However, we got to talking and I began to look at how to help seller remain in home.

While I have never done seller financing before , I would hire an attorney to get the paperwork done and keep seller's agent in the loop. So all is transparent, commission still paid etc.

Any ideas/suggestions would be greatly appreciated. Have to decide by Tuesday Sept 27.

Aye, I understand.