All Forum Posts by: Will Walker

@Ryan Thomson Yes, it sounds too optimistic on the surface. But Denver just initiated a new section-8 program which provides $1000/mo rent for individual room rentals. A 2500sq' house at ~$500,000 (7% interest rate, insurance and taxes would be around $5200/mo) with 7-8 bedrooms would produce ~$7000-$8000 total rent minus $5200 expenses = $1800-$2800 cashflow. The average individual room rental is between $700-900 so even without section-8, the cashflow would be $1200 at $800x8bedrooms. 

I'm seeing houses on the market in Aurora, CO at $450,000 with 6 bedrooms plus additional convertible space which would cashflow even more with lower expenses.

@Andrew Postell Hey, my apologies! I am bringing my own cash for the down-payment, I am not borrowing any money for the down-payment or closing costs. The credit partner would co-sign on the loan and receive a percentage of the deal without having to put any of their own money into the deal. I just need a partner with good income and credit. 

Hey Allan, thank you for the response! I realize my post is a little lengthy, but I did mention that I am not asking for money in the partnership. I would be offering a percentage of my deal to someone willing to so-sign on my loan. I am bringing my own down-payment.

I'm self employed with over $200,000 equity across three rental properties, two of which were previous house-hacks. I quit my job to start flipping couches while my wife and I travel in search of our next house-hack. In the past I've used non-QM loans like bank statement loans with near 10% interest rates for example, and still found ways to cashflow using section-8 and rent-by-room strategy. I am selling two properties to free up ~$100,000 to put down on a house-hack in the Denver area. After speaking with many lenders it looks like I should be looking for either seller financing utilizing 40-50-10 lending, an owner occupied DSCR loan(which I thought didn't exist until speaking with a lender who has done them), or bringing in a co-signer. I could see offering a percentage of the profits(cashflow/equity) to a partner willing to help me qualify for a conventional loan ($400k-$600k purchase price) while I take most of the risk bringing my own down payment.

Has anyone else done this? 

How would I go about finding a credit partner? 

How can I best offer downside protection for my credit partner?

Example deal (based off of an actual house currently on the market)

Property: 5bd 3ba, 2300sq' (with additional convertible square footage)

Purchase Price: $480,000

Funding: 5% down plus 5% closing costs ($47,000) conventional loan, keeping 6mo of liquid reserves.

Room by room rental income per room: $800/mo or $1000/mo (section-8) = $5k-$6k/mo

Cashflow after expenses: ~$2000 conservatively

A credit partner could receive $1000/mo in passive income and/or some % of equity in the deal for a certain period of time (maybe as long as their name is on the loan) or until a certain amount of $. In the unlikely event of a default, the property would be sold and I would lose some or all of my equity and the partner would still be covered from any risk. What am I missing?

Thanks in advance!

I'm curious what kinds of limitations I might come across building storage units behind my house hack. I see all kinds of spaces being rented out on Neighbor.com for example, why couldn't you build a few out-buildings/storage units out back? Is it as simple as contacting my municipality and getting the proper permitting. "I want to build a 3 car garage behind my house" kind of deal shouldn't be too complicated, but what else am I missing? This seems like low hanging fruit. Is anyone else doing this?

Thanks in advance!

Being self-employed, I used a 10% down bank statement loan to buy into a nice area a few months ago at an interest rate of 9% ($1600 total monthly expenses). I added a couple bathrooms and converted the living room into a large bedroom for my wife and I to live in and began renting the three other individual bedrooms. This allowed me to go from the estimated rent of ~$1000 to $1800 which will increase to $2400 after we move out assuming I continue renting by the room. In other words, I'm cash-flowing $200-$800 instead of -$600. There are obvious downsides such as additional management effort, needing additional parking, potential regulatory restrictions, etc. But just thought I'd share what's working for me!

@Linden Hausmann

Have you considered rent-by-room strategy? I have three single family homes I've been able to consistently 2x market rent. STR numbers with much less vacancy risk and strong recessionary performance. Feel free to reach out with questions.

With the bulk of the buyer pool being pushed out of the marketplace by interest rate hikes, is now a particularly difficult time to get started as an agent?

1. Quit and put 40h/wk into wholesaling = uncapped potential/risky/unlendable

or

2. Grind out the W2 with security and lendability = drains my soul

SKIP THE FIRST PARAGRAPH IF YOU'RE ON A TIME CRUNCH.

3 SFRs, self managing rent-by-room strategy, tutoring in the evenings, side hustle on weekends, on top of full-time W2 and managing house hack renovations (working ~70+ hours weekly). I recently came from a decade of self-employment making average income and recently took this remote project coordinator role within the Pharma industry for reasons of financial security and improved lendability. I've already been promoted and have received a 20% raise within the first 6 months and have been assigned (consulting) to their largest client based on my performance. 

I feel incredibly fortunate to be where I'm at but I feel trapped.

I'm realizing the "floor" the W2 provides is cursed with a inherent "ceiling" my entrepreneurial temperament is repulsed by. My wife and I will achieve FI in 3-5 years with plenty of passive income to quit our jobs and go full-time into real estate which is my dream. However, I can't sustain this pace caged within the security of my W2. I love the idea of wholesaling and got a our primary residence at 60% of ARV even as the novice I am, but I have absolutely no time to drive for dollars or cold call but would love to start. My wife and I could still coast our way along living on her W2 and rental income but I feel obligated to provide more and build us a better life, I feel like I'd be risking that by going all in on wholesaling.

Advice? Am I being selfish or naive? What am I not considering? Has anyone been here?