Cleveland House Hack

[Eddie Davalos]

Hello BP!

After reading the House Hacking Strategy, I’m looking to make the plunge into my first house hack.

I’ve been searching Lakewood, Ohio City, Shaker, and Cleveland Heights since March 2022 and have come up short on a couple offers.

I'm likely in the FHA loan boat and willing to do informational only inspections (not entirely waive them).

Any tips / advise for putting forth compelling offers in this low inventory environment?

All advise welcome 🤗.

Thanks,

Eddie

[Nicholas Misch]

Are your offers on market of off? If on you need an agent who has the right strategies and ability to negotiate. FHA is an awesome loan product but is very difficult to get accepted without the right strategy. Off market obviously is different but still requires a special strategy.

[Ashley Cross]

I agree with @Nicholas Misch FHA loans needs a bit extra umpf (however you spell it) to get the offer accepted. Even without the inspection, which most people waive nowadays so its sort of a standard and not a bonus, you still need to get a good appraisal report. There could be deferred maintenance on the property that wouldn't be an issue with conventional financing but the FHA appraiser would want it fixed. I've financed a lot of deals in Cleveland and it seems like that would be the biggest issue. With all that being said, it can be done with the right strategy and team willing to do what it takes to get the deal to the finish line.

[Shane Kelly]

As someone who will be searching for a house hack myself in Cleveland in the near future, I feel it. I've been watching Old Brooklyn's duplex market since 2020 and I've seen it go from light rehab duplexes sitting at 60k-80k to you can't find one that needs anything less than a gut-job still selling for 120k+. Let me know how your FHA journey goes as I will use you path as a guide!

[Joshua Janus]

Quote from @Eddie Davalos:

Hello BP!

After reading the House Hacking Strategy, I’m looking to make the plunge into my first house hack.

I’ve been searching Lakewood, Ohio City, Shaker, and Cleveland Heights since March 2022 and have come up short on a couple offers.

I'm likely in the FHA loan boat and willing to do informational only inspections (not entirely waive them).

Any tips / advise for putting forth compelling offers in this low inventory environment?

All advise welcome 🤗.

Thanks,

Eddie

Study the requirements for an FHA loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. These are some barriers I had to make sure to be able to climb over. Let me know what questions you have.

*This isn't legal or lending advice, and you should seek professional assistance.

[Nicholas Salman]

Hey, Eddie! I’ve known a hand written letter to have been previously helpful. Everything is really about building rapport. Hope it helps! Would love to connect

[Rick Albert]

I just helped a client using an FHA 203(k) in a multiple offer situation. It's doable.

A couple of things to consider:

-Look at properties that have been sitting on the market. Anything over 2 weeks can be considered a long time.

-Have your agent be on the details and have great, upbeat conversations with the listing agent. I can't tell you how many times that has worked for me when representing clients.

-Think outside the box for properties. Are there properties with weird floorplans but could make a great house hack? Is it on a busy street but you could hedge it for privacy?

-Why are you going FHA? If you have good credit, show that to the listing agent? Many listing agents suck and think FHA=unqualified. Show that you are qualified.

-Have your lender call the listing agent directly to explain how well qualified you are and to address any concerns the listing agent may have.

It's doable, just requires a little more effort (which others have stated on this thread).

[James Wise]

Quote from @Eddie Davalos:

Hello BP!

After reading the House Hacking Strategy, I’m looking to make the plunge into my first house hack.

I’ve been searching Lakewood, Ohio City, Shaker, and Cleveland Heights since March 2022 and have come up short on a couple offers.

I'm likely in the FHA loan boat and willing to do informational only inspections (not entirely waive them).

Any tips / advise for putting forth compelling offers in this low inventory environment?

All advise welcome 🤗.

Thanks,

Eddie

 Cut out the information only inspection. Your offer is either contingent on an inspection or it's not. Saying to the seller, "it's not contingent on an inspection but I want one anyway" translates to "my word means nothing. I will back out of this offer despite what the contract says."

[Kaiden Swainamer]

@Eddie Davalos

Hi Eddie, 

Congratulations on getting started in your search! I just recently closed on a house hack in southern mass. with an FHA loan. I lost out on a couple deals because I had FHA financing and the sellers went with lower cash offers. The deal I ended up closing on was listed on the MLS for $399k (Below market for this area), the cash flow numbers on it worked all the way up to 470k for what I was looking for. When I made my offer, one of the contingencies was that the seller will sell at the appraised value or the offer price of 470k which ever is lower. The seller accepted this offer and contingency and when it came time for the appraisal, the appraisal came back lower than expected at 435k. He tried to back out because he claimed he had cash offers for more however at this point we were under contract. I believe he chose the offer because of the total offer being very strong but luckily the appraisal brought that number down.

I definitely had some luck on my side on this one... But depending on what your state laws are, a contingency like this can ensure you come in with a strong offer and get your offer chosen with FHA. I would only suggest this if you have a pretty good understanding of your local market though. My numbers showed the market value was about 440k but the rents being collected justified up to 470k, I was comfortable closing all the way up to 470k if the appraisal came in that high. Definitely some risk involved, but it worked for me in my market to get my FHA offer selected and the contingency helped me close below my offer price!

[Kaiden Swainamer]

Quote from @Nicholas Salman:

Hey, Eddie! I’ve known a hand written letter to have been previously helpful. Everything is really about building rapport. Hope it helps! Would love to connect

 I wrote a hand written letter and had a picture of me and my girlfriend as well! The seller never said if that swayed him one way or the other but the offer did get accepted!

[Eddie Davalos]

Quote from @James Wise:

Quote from @Eddie Davalos:

Hello BP!

After reading the House Hacking Strategy, I’m looking to make the plunge into my first house hack.

I’ve been searching Lakewood, Ohio City, Shaker, and Cleveland Heights since March 2022 and have come up short on a couple offers.

I'm likely in the FHA loan boat and willing to do informational only inspections (not entirely waive them).

Any tips / advise for putting forth compelling offers in this low inventory environment?

All advise welcome 🤗.

Thanks,

Eddie

 Cut out the information only inspection. Your offer is either contingent on an inspection or it's not. Saying to the seller, "it's not contingent on an inspection but I want one anyway" translates to "my word means nothing. I will back out of this offer despite what the contract says."

 Thanks James! Great perspective, I have been thinking about this from my shoes but when the roles are reversed, I understand how the "information only" part can lose its value. Thank you for the feedback!

[Eddie Davalos]

Quote from :

I agree with FHA loans needs a bit extra umpf (however you spell it) to get the offer accepted. Even without the inspection, which most people waive nowadays so its sort of a standard and not a bonus, you still need to get a good appraisal report. There could be deferred maintenance on the property that wouldn't be an issue with conventional financing but the FHA appraiser would want it fixed. I've financed a lot of deals in Cleveland and it seems like that would be the biggest issue. With all that being said, it can be done with the right strategy and team willing to do what it takes to get the deal to the finish line.

@Ashley Cross @Nicholas Misch Thank you for the feedback! The FHA appraisal/inspection continues to be a deterrent, however I am confident the right property/seller is out there.

[Eddie Davalos]

Quote from @Rick Albert:

I just helped a client using an FHA 203(k) in a multiple offer situation. It's doable.

A couple of things to consider:

-Look at properties that have been sitting on the market. Anything over 2 weeks can be considered a long time.

-Have your agent be on the details and have great, upbeat conversations with the listing agent. I can't tell you how many times that has worked for me when representing clients.

-Think outside the box for properties. Are there properties with weird floorplans but could make a great house hack? Is it on a busy street but you could hedge it for privacy?

-Why are you going FHA? If you have good credit, show that to the listing agent? Many listing agents suck and think FHA=unqualified. Show that you are qualified.

-Have your lender call the listing agent directly to explain how well qualified you are and to address any concerns the listing agent may have.

It's doable, just requires a little more effort (which others have stated on this thread).

 @Rick Albert Thank you for the advice. In our most recent offer (today actually) we used a couple of your suggestions! We shared my credit score with the seller and had our lender call the listing agent directly. Fingers crossed. 

[Eddie Davalos]

Update - We had an offer accept on Sunday! :) 

We made sure our communication with the listing agent was clear. In addition, we did do the extra effort by having our lender contact the listing agent, providing credit scores, and liquid cash amounts ready for the deal. We were able to include an inspection, which for this market is tough! 

Thank you everyone who responded here and helped guide our journey!
 

[Ashley Cross]

Congrats! 

[Muhammad Amawi]

I know a big thing is always making sure you have your pre-approval done before hand. I know @Sabrina Quinones is a realtor that would be able to help offer more advise on putting together compelling offers.

[Eddie Davalos]

@Muhammad Amawi Yes completely agree! Having pre-approval plus if the lender offers a fast-track approval is best!

[Michael Azzam]

Quote from @Eddie Davalos:

Update - We had an offer accept on Sunday! :) 

We made sure our communication with the listing agent was clear. In addition, we did do the extra effort by having our lender contact the listing agent, providing credit scores, and liquid cash amounts ready for the deal. We were able to include an inspection, which for this market is tough! 

Thank you everyone who responded here and helped guide our journey!
 

 Congrats!