Fellow Real Estate Investors-
I really need help at the best use of my money, equity, and future real estate investing goals. I have a full-time job and financing shouldn’t be an issue. I also have a great to excellent credit score.
Here's the scenario and my goals:
This year I listed a rental property (previous primary residence) house for sale in Galveston, Texas 77551 and it didn't sell, Property 1 below. I've decided to keep it and rent it. My tenant will be renting this house in January of 2020 for a one year lease of $1,700/month. I am currently living in this property until I find the next house-hacking opportunity this fall. I can always go back to my duplex that’s a vacation rental in the off-season if necessary. I am looking for good deals on Galveston Island this fall and winter.
My initial goals were the following:
Property 1 (LTR). To refinance into a 30 year note for a small amount of cash flow. This property has 3 policies: homeowners, windstorm, and flood. It's in an AE zone on the new FEMA maps.
I also wanted to refinance solely to remove escrow. It's had 20% equity for a while now, but the servicing company has been a huge pain to deal with and now that I kicked a couple of payments down the road when I asked for the 3 months due to Hurricane Harvey, they have stated I MUST escrow for the life of the loan.
The mortgage is roughly $140K and it's appraised on the county tax rolls for around $215K, which is what I believe it would also appraise for with appreciation and some minor updates that I've done over the years, perhaps a bit more, $225k.
Property #2 (now a STR – 2 units). Galveston, 77550 (I obtained this property as a primary residence under an FHA in late 2017): I tried to find options for a refinance on this duplex that is under an FHA loan. I've converted both units into short term vacation rental units. It's been rehabilitated a lot and more improvements to it. With what I've put into it in the last two years it should have no problem being evaluated at 20% now of equity. I roughly think it would be worth around the $330 to $340 k range, possibly valuated at $350k. I have an Airbnb income statement that I can provide. This STR is new and is self-supporting. The upstairs unit is 1 year old and the downstairs unit was available in August this year.
Now that I've done some research, there appears to be a lot of money involved in the refinances and I don't have enough equity to make it worthwhile. My intentions were to reutilize the FHA loan at 3.5%. Now, I'm thinking of taking a LOC on the first property or borrowing from my 401k for a 20% down payment. I need a place to live this year and it needs to be a 2 bedroom. I have a roommate that pays me rent that will be coming with me. He's my partner and working for me on this house-hacking hop. Any advice would be appreciated.
@Christina Johnson my house is farther away from the Seawall and doesn’t make sense as a vacation rental. I’m getting someone who loves the space and wants to rent. I know it’s going to be taken care of and meets her needs as an artist.
I did find a mortgage company and they are wonderful! They’re looking into my duplex for refinance. I’m leaving the other one alone and borrowing from the equity if needed.
I’m self managing my vacation rentals for the time being. Which company do you work for?
I’d love to connect and chat with you sometime.
I’m having my mentor look for the next property.
It’s looking better now! Thanks for your input.