All Forum Posts by: Brittany Minocchi

Ohio has great investment opportunities. Some of the markets I'd suggest (assuming cash flow is your goal) are Cleveland, Akron, Canton, Toledo and Dayton.

Welcome Justin! 

Ohio is a hot market. Is your goal cash flow or appreciation? Some of the areas you might want to check out are Cleveland, Akron, Canton, Dayton, Toledo and Columbus. 

Not much difference between a 2 unit and a 4 unit other than double the number of tenants to deal with. If this is your first property, you might want to consider starting with a duplex. Even if you're using a property management company, it'll be more work to run 4 units vs. 2 (more phone calls, more repairs, etc). 

As far as paying cash vs. financing, that's a personal preference. I like to use other people's money when I can. You can pay $300,000 in cash for one quad, or use that same cash to buy (4) $300k quads with a $75k down payment on each. 4 doors vs 16 doors. Financing works the same for 2 units and 4 units, 5+ units is where you enter the commercial space and things start to get hairy. 

Hope that helps, feel free to connect! 

 You are very welcome! If you'd like a second opinion, I'd be glad to take a look for you. 

it's definitely possible - do you have 2 years of tax returns? Feel free to reach out to discuss 

Me personally, 30 years all the way. I want the ability to pay it down faster without the obligation. I like flexibility. I also don't look at it as costing ME more in interest, because I'm not the one paying the interest. Depends on your needs/goals/preferences. 

You mention a gross income of $140k - this is self-employment income from the arbitrage? Or do you also have a W2 job? If it's self-employment income, the net income on your tax returns from 2022 and 2023 will be averaged. If you have a lot of deductions and the amount you show as "real" income on your returns is low, this will be problematic for FHA financing. There are financing options for self-employed borrowers in these sorts of situations, but they require a higher down payment than FHA. It would be best to speak with a lender so they can calculate the amount you're approved for, and then you can shop from there. We need to look at income, debts, DTI, down payment, cash to cover closing costs and reserves, verify employment history, credit, etc....you mention having no other debts which is great, but there's a bit more to it than just looking at gross income. :) Feel free to reach out!

There are different ways a loan can be structured. If you talked to a direct/retail lender, their compensation is typically "baked" into the interest rate and is paid by the lender. Brokers can either do the same and make their comp from the lender they broker to, or the borrower can pay it out of pocket at closing (this results in higher closing costs) and get a lower rate in return. Pricing this scenario out, I'm still in the mid-7s with lender paid compensation (and no points), or you can opt for borrower-paid compensation and get a rate in the low 6s. It all depends on the borrower and what works best for them. If the borrower is very liquid and they are rate-conscious, typically borrower paid comp is a better option. For the borrowers with limited funds, lender paid comp works better. 

For comparison, a DSCR loan with 25% down, 3-year prepayment penalty and a 0.25% credit also prices out in the mid 7s (but requires a much larger down payment compared to owner-occupied). It all depends on the scenario and the lender.

You mentioned owning 10 apartment buildings - do these all have conventional financing? If so, that could be an issue...Fannie/Freddie have a limit of 10 conventionally financed properties. 

As corny as the sayings "marry the house, date the rate" and "don't wait to buy real estate, buy real estate and wait" are....they're true. 

Looking at how much interest you're paying over the life of the loan is gross, but how realistic is it to think you'll actually be paying on house for 30 years? Not to mention with a house hack, YOU aren't paying all of that interest, your tenants are (you will be at first when you're occupying a unit, but you get the point). Is it better to not buy a property to avoid paying interest, or better to buy and pay the interest and have someone cover some/all of your mortgage? Of course paying cash is the the best case scenario, but not feasible for most people. 

I don't like to tell people to plan on a refinance because I don't have a crystal ball, but you have 2 possible outcomes. Rates get higher or stay the same and you do nothing, or they drop and you look into refinancing. 

I don't have as much info as the lender that pre-approved you, but based on the info you've provided and assuming you have decent credit, there's a good chance you can get that rate closer to 6%. I'm also in Ohio and priced a $250k duplex with the minimum 3.5% down and a 700 FICO, and came in at ~5.9%. While I don't believe you should pick a lender based solely on interest rate, that is an important factor in evaluating cash flow when you're talking about house hacking. 

Hope that helps a bit, happy to connect if you have any questions or would like to discuss further. Good luck! 

Welcome! I'm a fellow Ohioan, lender and investor in Stark County. Happy to connect if I can ever be of assistance. Good luck in your investment endeavors!