All Forum Posts by: Andrew Terrell

Good afternoon, I am in search of a referral for a Real Estate Attorney in the San Diego area. I have a friend who is currently renting in San Diego near Crown Point, and he is wanting to make an owner-finance offer to his current landlord. He has already reached out to the owner, and the owner does own this unit free and clear, and is open to an owner-finance offer. 

After some googling it seems like the State of California uses Title companies to process RE transactions. Is this fact? My friend is not working with a local Real Estate Agent, and I advised him that he should contact a RE Attorney directly to assist in drafting up the offer, as well as the needed paperwork if the offer is accepted. My rationale in avoiding using an agent is that he would then have to pay that agent, or increase his purchase price to the seller to cover the cost of the Agent. I do not know that an Agent brings him much value in this scenario. I could be wrong, and am open to constructive criticism on that stance, though. 

Do I have any BP contacts who have a local San Diego Attorney that they could refer my friend to, to assist in this scenario??
 

@Preston Donovan

I am not an insurance agent. So, you should call some insurance agents, or insurance brokers to make sure what I say isn't wrong. If you are house-hacking a SFH, then you should only need a normal owner-occupied homeowners policy. You should require that anyone you rent a room to, gets a renters insurance policy, and names you as an additional insured individual on their specific policy.

@Tyler Holzer,

I have been house-hacking a duplex in the Oklahoma City metro area for a few years. Insurance for housing like this should be pretty straightforward. You may have to shop around through a few providers, but I would just recommend trying to find an insurance broker. They should have access to multiple product types, as well as multiple providers. 

I have a home-owners policy on the side of the duplex I reside in. It is a similar policy to what someone would get on a single family home. It is a Replacement cost policy, with wind, hail, fire etc. as well as liability coverage (your insurance agent should be able to help guide you on what makes sense for your needs, and the area of the country you live in) with coverage of my personal belongings too.

Then I have a separate landlord policy on the side that I lease out to a tenant. Again, this is just a standard landlord policy with Replacement Cost coverage, rather than Actual Cash Value coverage. I still have liability coverage on this policy too. I also carry an Umbrella Liability insurance policy ($1,000,000 in coverage, for about $150 a year). The umbrella policy is not tied to my duplex, but I carry that since I bought the duplex in my name rather than in an LLC, or some other legal business entity.

When I find another property to live in, I will only carry one landlord policy, that will give insurance coverage for both units, but just on one policy. That will be a landlord policy, and I will carry replacement cost coverage. This will lower my total insurance bill for this property, since there will be one vs. two policies like I currently need. I have heard of some people who house-hack that only carry one policy, even when they live there. This was not the path I chose. Maybe some people who are smarter on the insurance side of the aisle can weigh-in on the pros/cons of carrying one, or two policies while you're there, and for after you move out.

My leases states that I am not liable for their personal belongings, and that they are required to insure their belongings through a renters insurance policy. These are typically really cheap policies anyways. I would review your local landlord tenant act/laws, and talk to some other investors in your area about wording they have in their leases regarding this topic.

@Account Closed

My duplex is a side-by-side, but many multi-family properties in my area are the above-and-below style you mention. My plan has always been to live in the upper unit if I end up purchasing one with this floor-plan. Just so I dont have to listen to the noise of the upper unit.

@ Miles Rose

As long as you feel comfortable living in the neighborhood, and the property, then I say go for it! I am currently house-hacking a duplex. My experience has been fantastic, so far! I don't know your market, so I cant speak for the contract price, but the over-all numbers look good to me. Especially, if this is your first real estate purchase. This will allow you cut your expenses, build capital, and gain experience in dealing many facets of real estate.

I am looking for another house-hack right now. I run my numbers just like you are here, as if it is rented out as an investment property, since that is what it will ultimately turn into. If I found a property that had the numbers this one is giving you, I would jump on it. The price adjustment seems reasonable to me based off of what you have shared with BP. However, if it were me I would be bugging a local investor just as a sanity check(if you know one, if not, hopefully someone familiar with your area can weigh-in on this thread).

I don't know how close you are on your estimated repair costs, but I imagine you are within the ballpark. Just make sure you have access to extra funds, in case you run into surprises during the rehab, or if you underestimate the repair costs. 

Good Luck!

@Joshua Herald

Is the attached analysis only considering rent from one unit, or from both? I am assuming you ran this analysis with $2100 being the gross rent from both units. 

I am currently house-hacking a duplex, and looking to house-hack another small 2-4 unit MF. When I run my numbers on prospect deals, I run them as if I were purchasing it as a pure rental/investment property. As long as it makes sense as an investment property, meaning, I am hitting my personal cash-flow and ROI goals while covering all the expenses you have accounted for in your analysis, then it is a WIN, and I move forward with the deal. When I was looking for my first house-hack I had a big spreadsheet where I ran numbers for each property as a stand-alone investment property, me living in one unit, and then living in a unit and renting out a room or two if that was possible. Now, I just run the numbers as if it is an investment property for simplicity. I know that I will only occupy a unit for a limited time, and the house-hack is just a way to get more favorable rates, better loan terms, and elminate, or severely decrease my housing costs today.

I am sure there is someone on BP who has built some wild spreadsheet, or other model where you can actually calculate the value of no mortgage, but for me, as long as I am covering most, or all of my PITI while I am occupying a unit, and the deal works as a stand-alone investment deal, then I am done running numbers.

Hopefully that helps, and if not, maybe some other BP members can fill-in where I fell short.

Good luck!

Andrew Terrell

Recently purchased a package of properties out in Shawnee Oklahoma. One is vacant and in need of a rehab. I am currently getting quotes for the work that needs to be done. I am having trouble finding siding contractors that offer reasonable quotes. Do any BP members have siding contractor recommendations that service the Shawnee area?

Do you have other contractors, or handymen that you recommend, that service the Shawnee area?

Jason,

I made a post asking about this same thing early this past holiday weekend. There has been A LOT of multi-family development in the OKC metro, and Norman markets. Like Will, I use a 10% vacancy rate for all my analyses, but I have been trying to find REAL numbers backed by data to make sure I am on track. I did some research this weekend, and I am going to throw three seperate links in my post that I think you may find beneficial. Some of the data goes back to 2016, but I think it still paints a good picture of the overall market. It is hard to find data just on Norman. The last link states that there is a 8.56% rental vacancy rate in the OKC metro, based off 2016 data.

 https://www.eeda.com/sites/eeda/uploads/documents/...

https://www.huduser.gov/portal/publications/pdf/Ok...

https://www.deptofnumbers.com/rent/oklahoma/oklaho...

I hope that helps.

Andrew Terrell

Following

Hey Kara,

First off, thank you for the detailed response! You provided some great insight, which pretty much echoes what I have heard regarding supply. I wonder if this will equalize over the next 3-5 years? This weekend I will look at some stats on population growth vs. housing supply in, and around Norman to get a better idea. 

I originally used 10% for a vacancy rate when analyzing deals, but I have seen more than one economic report on the OKC metro that shows real vacancy rates sitting around 8.5%. The 5% value that I use now, came about from my experience managing my duplex, and a SFH rental that I own in Midwest City. 5% is the real vacancy rate I have seen between those two properties, since I started investing in real estate in January of 2015. I know that is a short window in time.

I will run the numbers again with a 10% vacancy rate, since there is obviously increased supply in Norman that isn't going to decrease for some time.

I do currently manage my house-hacked duplex, and will manage this Norman property, assuming I close the deal. But, when I run my numbers I account for PM just in case I ever need, or want to hire that part out. I tend to just save that portion now, to help increase my cash reserves to cover MX/CAPEX, and help accumulate down payment money for future purchases. I have had higher MX/CAPEX expenses than when I ran my original numbers on my current properties, right around the 15% mark, but that was for the first two years of owning my properties. Since then, those costs have lowered considerably. Obviously, like you stated, those are variable costs from year-to year, though. Are you, or your family still able to find deals that cash-flow using your analysis method?

My realtor is the person that turned me onto this deal, and he PM's for the current owner. Both units are currently rented, one tenant is long-term and on a month-to-month lease. The other has a lease valid through June of 2019. The long-term tenant probably has a higher chance of staying, but it would be much easier for me to have them move, vs. having to buy-out the current lease of the June 2019 tenant (or do cash-for-keys). So, I would send the month-to-month tenant notice once we get a contract and start moving forward with the transaction.  My plan is to only live here for the 1 year owner-occupied time requirement, and then purchase something back in Midwest City, or Oklahoma City. Also, I have worked out a deal with my realtor that I will place a tenant in the unit I reside in once I leave, and he will PM the property for me from then on.

I plan on doing a test commute this week to see if it's something I am willing to tolerate. I will also see what the added commuting expenses will be.  My realtor and I will be doing a walk-through sometime this weekend. He is sending me more comp information too. So, I will have a better idea of what kind of shape both units are in, and see if my value assumptions are accurate.