All Forum Posts by: Anthony Vicino

This is a pretty common issue, actually. Early in my investing career, a broker recommended if I planned to FHA-hop from property to property, that I should start by buying something like a quad and then downsizing to a duplex, the rationale being, of course if given the choice you'd want to move into a duplex over a quad, so it would make sense from a lender perspective.

At the end of the day, though, @Chris Mason is spot on when he says (though he didn't necessarily say it in these terms) it's all about the story you're able to tell for why you want to move to the new property. Just make sure that story is true. You don't want to be on the wrong side of mortgage fraud.

Honestly, if you're just looking to house hack your first property, this resource might be a bit too high level, but it's a free course on Udemy with tons of valuable insights ranging from how to find a neighborhoods median income, crime levels, job growth, etc. This is highly valuable stuff if you scale into larger multifamily properties, but can also be a great way to gain a deeper understanding of a city as you try to narrow down prospective neighborhoods for a house hack. 
https://www.udemy.com/course/realfocus/learn/lecture/12998740?start=15#overview

Here's a link to a resource I personally use that I've found valuable as it compares census data across narrowly defined tracts. It can be a little weird to navigate at first, so let me know if it would be helpful to hop on a screen share and I can walk you through the basics. 
https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx

These are all pretty sophisticated tools, but in the end, if you have boots on the ground in the city you're looking at, you'll be well served just driving the neighborhoods at different times of the day. Check the police department's crime stats for neighborhoods you're interested in, and take a gander at the quality of nearby elementary, middle, and highschools.

Two great meetups for those niches would be:

Millennial Investors Focus Group:  https://www.meetup.com/Millennial-Investors-Focus-Group/ (These guys also have a thriving Facebook group I would recommend checking out).

Future Millionaire Real Estate Investor Club (Fulton Realty) - https://www.meetup.com/Future-Millionaire-Real-Estate-Investor-Club/(These guys provide free snacks and drinks. Hard to beat that!)

@Katie Greenman NOI - Net Operating Income (ie: Total Revenue - Total Expenses (not including Debt Service) = NOI). If you're looking at multifamily properties over 4 units, this is going to be a critical number to know as the banks derive the valuation of a property in part from the NOI (NOI/Cap Rate).

The Cap Rate is going to be dictated by your local market for that particular asset class, so there's nothing you can do to control that, but you can control the NOI by increasing revenue (raise rent and additional income sources (parking, laundry, pet fees) and by decreasing operational expenses (spend less to actually operate the property).

One of the biggest expenses you'll have on a property are the utilites. A lot of buildings these days will have split electricity that the tenants pay themselves, but it's not all that common to have split water. In many cases, the landlord just ends up paying this themselves, but that can add up to be a massive bill.

That's where RUBS comes in. RUBS is Ratio Utility Billing Services and really all it's doing is charging the tenants a ratio of the water consumption bill. This can be calculated in a bunch of ways (also there are some companies that will just handle this entirely for you), but it's important to know you absolutely cannot make a profit by charging more than the cost you incurred (as now you would be selling a utility, which is strictly regulated). Generally speaking, landlords will charge up to 80% of the total water bill to the tenants so that they always stay well clear of that regulation.

All this really means is that to increase the value of the building you need to increase the Net Operating Income. The renovations you implement should all have an eye-towards that goal.

Ask yourself: Can I charge more rent if I implement this renovation?

If the answer is yes, then give that strong consideration. If the answer is no, then you need to ask yourself: 

Will this renovation lead to decreased expenses? If the answer is yes, well, again, give it strong consideration based on what the numbers say. If the answer is no, well, then the final question is:

Do I have to do this renovation? For instance, is there a safety concern or some long term problem that will be caused by not making the fix?

Very last thing: If the building you're looking at is 4 units or smaller than you can pretty much disregard all of the above because these properties are going to be valued based on comparables, which is a whole other topic of discussion.

Hit the things that lead to the highest increase in rent. That's going to differ area-by-area, but I've found paint and flooring are the two biggest hitters that almost always make an immediate impact. From there, fresh paint on cabinets and new appliances go a long ways. Then, bathroom touch-ups.

The new roof isn't going to increase value. It's like a shower, you don't get bonus points for having done it, but you do get dinged if you don't.

Heat and AC are things that you can conceivably raise the rent for (unless it's market standard that these are already included). Otherwise, implementing RUBS (if it flies in your area) can be an effective way to pump up that NOI.

You're going to get some mixed opinions on this, but I think the first step is learning enough about what particular niche of investing you're interested in pursuing.

With that in mind, focus first on education. Learn the ins-and-outs of the different types of real estate. Once you understand them, you can better formulate an effective strategy.

In some investments, being a broker might be an advantage. In others, it's worth nothing, In others still, its actively detrimental.

Grab some books, attend some webinars, attend some local meetups, and talk to other investors. Figure out what you're psyched to pursue, then worry about whether or not the broker's license is useful.

Though, I'll jump straight to the punchline and say, in the vast majority of instances, I don't think the license will actually be all the helpful, but that's just my $0.02.

Yeah, what @Russell Brazil said.

"Cashflow makes you free. Appreciation makes you wealthy."

As others have already pointed out, the answer is "it depends". Primarily it depends on your long-term/short-term goals.

Here at BP you'll notice there's a lot of talk about cashflow, which I agree is absolutely important, but not always for the reasons people think.

There's a guy around these parts, (cannot think of his name for the life of me: LLewelyn, perhaps?) who I think does a great job breaking the difference down and often chimes in on subjects of this type. Any old-timers know who I'm talking about?

It certainly can be. I know myself, Todd, and Tim all own apartment buildings. Then again, I believe all three of us also own some single family and small multifamily, so really there is no right answer.

It all comes down to your personal goals. Shoot me a DM telling me a bit more about your desired endstate and I'll see what I can do to help!

The conv-95 sounds like a potentially great option. Just to clarify, the PMI on an FHA disappears if you refinance into a different product, but it won't naturally fall off upon hitting 80% LTV which is how it used to operate. Since the change, the PMI sticks with the FHA for the life of the loan, until you refinance out. On the conv-95 you mentioned, chances are good that MIP falls off at 75-80%LTV without the need to refi, but you'd want to double check that with the lender.