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All Forum Posts by: Will Morrison

Will Morrison has started 6 posts and replied 9 times.

Post: Bank accounts for investment properties

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

As an agent here in Western North Carolina I have been posed the question by a client whether or not it is better to have a separate bank account per investment property or to have all the income flow into one account. 

With my own properties I have created separate bank accounts as I understand it makes for cleaner taxes. The recognizable downside is that this is not convenient having to keep up with multiple banks/cards/accounts. In my scenario I have only one LLC that my (two) investment properties fall then I have a house hack in my name.

I am open to feedback as to how I should be organized as well as whether or not its recommended to have different bank account per property.

Thanks in advance!

Post: House Hacking Weaverville, NC

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

@Ryan Thomson I would say it depends on the client. I am happy to help run numbers if that is helpful to the client. Most of the time it seems people have a goal and numbers already in mind that they are wanting to achieve. Depending on their experience they run the numbers and have me check their work!

What about you?

Post: House Hacking Weaverville, NC

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $406,800
Cash invested: $44,296

My wife and I recently closed on a property in Weaverville NC that will serve as our next house hack (HH)! If you don’t know, House Hacking was originally coined by Brandon Turner of Bigger Pockets. It is essentially sharing a property with tenants whether that is a room, basement, adu, etc in which their rent supplements the mortgage. Other benefits might include tax write offs, increasing your debt to income ratio, and being able to buy investment properties for as little as 3.5% down.

What made you interested in investing in this type of deal?

For this one, our strategy was to find a property that had two separate spaces and was located in an area that we could see ourselves living in. The property that we ended up purchasing has a basement separated from the upper level by a staircase. For us, separate spaces are key to a sustainable HH. I'm all about the HH where I see the tenants outside on walks rather than in the kitchen.. The tough part its to find a HH where you want to live. This area has a small downtown 10 m from Asheville.

How did you find this deal and how did you negotiate it?

We found this deal on the MLS. Offered above asking to lock in the property and negotiated it to below asking upon the due diligence request.

How did you finance this deal?

When I run numbers on HHs I like to look at a couple different scenarios. For this specific property, it can be a STR, MTR, LTR, or HH. When running the numbers, I choose to create a spreadsheet for each rental scenario so that I can understand my property's potential while I'm living there and after I move out. In my opinion, STR income is typically the most risky, however it offers the most income potential. LTR is typically the most conservative and more of a guarantee of monthly income.

How did you add value to the deal?

Since this property has stairs leading to the basement, our plan is to remove them and add a bathroom upstairs in the space. Although this is an irreversible move and might change the resale in the future, I believe that it will only have a positive effect. Adding a bathroom upstairs will increase the functionality of the space and add value. In my opinion, as property values continue to rise, house hacking will become a more normal and desirable home trait

What was the outcome?

We are financing this through private financing, and are planning to put a sum towards downstairs improvements to increase rent potential. The great thing about house hacking is that it can be achieved through a variety of loans. FHA is one of the most tempting options as it is a primary residence loan in which you can put as little as 3.5% down. There is a catch though: the potential for permanent PMI payments. For that reason, I see clients opt for conventional loans.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Closing Thoughts
We are fortunate to piece a deal together with so much potential in an area we like! If you are planning to purchase a home as an investor, consider house hacking as it can lower one of your biggest monthly expenses. As an agent I’m happy to share my resources or help talk through deals for anyone interested in investing.

Post: House Hacking Weaverville, NC

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $406,800
Cash invested: $44,296

My wife and I recently closed on a property in Weaverville NC that will serve as our next house hack (HH)! If you don’t know, House Hacking was originally coined by Brandon Turner of Bigger Pockets. It is essentially sharing a property with tenants whether that is a room, basement, adu, etc in which their rent supplements the mortgage. Other benefits might include tax write offs, increasing your debt to income ratio, and being able to buy investment properties for as little as 3.5% down.

What made you interested in investing in this type of deal?

For this one, our strategy was to find a property that had two separate spaces and was located in an area that we could see ourselves living in. The property that we ended up purchasing has a basement separated from the upper level by a staircase. For us, separate spaces are key to a sustainable HH. I'm all about the HH where I see the tenants outside on walks rather than in the kitchen..

Depending on where you live, it can be fairly simple to find a property that fits the spacing requirement.

How did you find this deal and how did you negotiate it?

We found this deal on the MLS. Offered above asking to lock in the property and negotiated it to below asking upon the due diligence request.

How did you finance this deal?

When I run numbers on HHs I like to look at a couple different scenarios. For this specific property, it can be a STR, MTR, LTR, or HH. When running the numbers, I choose to create a spreadsheet for each rental scenario so that I can understand my property's potential while I'm living there and after I move out. In my opinion, STR income is typically the most risky, however it offers the most income potential. LTR is typically the most conservative and more of a guarantee of monthly income.

How did you add value to the deal?

Since this property has stairs leading to the basement, our plan is to remove them and add a bathroom upstairs in the space. Although this is an irreversible move and might change the resale in the future, I believe that it will only have a positive effect. Adding a bathroom upstairs will increase the functionality of the space and add value. In my opinion, as property values continue to rise, house hacking will become a more normal and desirable home trait

What was the outcome?

We are financing this through private financing, and are planning to put a sum towards downstairs improvements to increase rent potential. The great thing about house hacking is that it can be achieved through a variety of loans. FHA is one of the most tempting options as it is a primary residence loan in which you can put as little as 3.5% down. There is a catch though: the potential for permanent PMI payments. For that reason, I see clients opt for conventional loans.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Closing Thoughts
We are fortunate to piece a deal together with so much potential in an area we like! If you are planning to purchase a home as an investor, consider house hacking as it can lower one of your biggest monthly expenses. As an agent I’m happy to share my resources or help talk through deals for anyone interested in investing.

Post: House Hacking Weaverville, NC

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $406,800
Cash invested: $44,296

The Deal
My wife and I recently closed on a property in Weaverville NC that will serve as our next house hack (HH)! If you don’t know, House Hacking was originally coined by Brandon Turner of Bigger Pockets. It is essentially sharing a property with tenants whether that is a room, basement, adu, etc in which their rent supplements the mortgage. Other benefits might include tax write offs, increasing your debt to income ratio, and being able to buy investment properties for as little as 3.5% down.

Strategy
For this one, our strategy was to find a property that had two separate spaces and was located in an area that we could see ourselves living in. The property that we ended up purchasing has a basement separated from the upper level by a staircase. For us, separate spaces are key to a sustainable HH. I'm all about the HH where I see the tenants outside on walks rather than in the kitchen..

Depending on where you live, it can be fairly simple to find a property that fits the spacing requirements, however since the property will also be the owners primary residence, the location is often important. This property is located in Weaverville, which is desirable in the sense that rent demand is high for both STR and LTR. The area also has parks, food and a small downtown.

Since this property has stairs leading to the basement, our plan is to remove them and add a bathroom upstairs in the space. Although this is an irreversible move and might change the resale in the future, I believe that it will only have a positive effect. Adding a bathroom upstairs will increase the functionality of the space and add value. In my opinion, as property values continue to rise, house hacking will become a more normal and desirable home trait, especially when the leading home buyers are younger Millennials and Gen Z who have likely seen strategies such as these on the interent. We have to get creative to afford what we want. Besides, HH are not just homes, they are money making machines. This is a tempting sales pitch to the right buyer.

Financing
We are financing this through private financing, and are planning to put a sum towards downstairs improvements to increase rent potential. The great thing about house hacking is that it can be achieved through a variety of loans. FHA is one of the most tempting options as it is a primary residence loan in which you can put as little as 3.5% down. There is a catch though: the potential for permanent PMI payments. For that reason, I see clients opt for conventional loans in which you can put as little as 5% down. This is what we did for our first house hack. It's whatever works best for you with your current financial situation. Once you purchase your first property, many investors choose to take out a Home Equity Line of Credit (HELOC) to help with the next down payment. There are so many creative ways to finance a deal!

Numbers
When I run numbers on HHs I like to look at a couple different scenarios. For this specific property, it can be a STR, MTR, LTR, or HH. When running the numbers, I choose to create a spreadsheet for each rental scenario so that I can understand my property's potential while I'm living there and after I move out. In my opinion, STR income is typically the most risky, however it offers the most income potential. LTR is typically the most conservative and more of a guarantee of monthly income. As a HH, I hope to use whatever income the property produces to cut into the expenses as much as possible. As far as I am concerned, while I live there any income I get to go against home expenses is a win.

Closing Thoughts
We are fortunate to piece a deal together with so much potential in an area we like! If you are planning to purchase a home as an investor, consider househacking as it can lower one of your biggest monthly expenses. As an agent I’m happy to share my resources or help talk through deals for anyone interested in investing.

Post: Tenant in studio basment apartment wants to add boyfriend

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Thanks all for the suggestions. I've decided to vet him with the same Zillow application (to make sure he is safe to live with) and add an addendum to the lease allowing him to stay there as a tenant fully responsible for the lease, having the same responsibilities as our primary tenant. It actually is kind of a good thing because it gives us a reason to make rent more competitive due to added wear and tear and higher utility costs. 

Post: Tenant in studio basment apartment wants to add boyfriend

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Hi, 

House hacker here. I've got a tenant who wants to add her boyfriend to basement studio apt. It is currently only her on the lease. I am not opposed to allowing him to move in down there, however want to protect myself as the land lord. My question is, what is the best way to go about adding a tenant to an already established lease? My first thought is to have him fill out a Zillow application (to better understand him as a tenant) then make an addendum to the lease that maintains the primary tenants responsibility however allows the boyfriend to stay there. Ideally, making her responsible for him. What are the thoughts?

Post: House hacking in Asheville

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $325,000
Cash invested: $20,000

My wife and I bought a single family and turned it into a house hack. We rent out the downstairs and live in the upstairs. This house has two separate entrances, kitchens and living spaces. The rent covers 90% of our mortgage!

What made you interested in investing in this type of deal?

This was our first investment property! My wife and I wanted to decrease the cost of living in Asheville while providing housing for people in Asheville. Thus we needed a house hack.

How did you find this deal and how did you negotiate it?

Found on the MLS, drove to the property and met the owner. I then put an offer in referencing our conversation.

How did you finance this deal?

Traditional financing. Only one of us took out the mortgage so we would be more lendable in the future.

How did you add value to the deal?

As we are living in this one we are slowing renovating and adding value to each unit. Eventually we will move and rent out both the upstairs and downstairs.

Post: HOW TO CHECK OUT RENTS IN MARKET

Will MorrisonPosted
  • Real Estate Agent
  • Asheville
  • Posts 9
  • Votes 7

You can also check zillow for comparable properties. Use properties that are similar in value, size and area to your specific property. With 2-3 comps you can find a general price range.