All Forum Posts by: Dan K.

It is absolutely kicking around as an idea. Rent control is bad for landlords, but terrible for a community and tenants as well. I joined a group called MassLandlords. They help to represent landlords in local and state issues, including the recent talk of bringing back rent control.

@Stephen Anderson -- You've received some great advice, however, you said:

Unfortunately, student loans is one of the worst types of debt -- student loans and taxes are the only debts that will follow you even through bankruptcy! When you are doing mortgage affordability calculations, keep in mind your debt service because banks will care.

If you can get 2-years of consistent 1099 income, that will be very helpful. Banks are competing heavily for business. I always recommend making a list and then reaching out to as many local and regional banks as possible. Even Manhattan has smallish local banks.

@Kate Murphy -- Makes sense. If you are able to sell the units to two separate people, you are going to help the 3rd unit owner since banks aren't fans of one person owning the majority vote in a condo situation.

Personally, I don't think your market is an investor. Investors in that area typically want value-add opportunities (like what you two did), and/or entire buildings. In places like Cambridge, Brookline, and more centrally located in Boston you will find more investors that want to buy turn-key. Those investors typically want to diversify their investment portfolio and ride the appreciation (along with the depreciation). 

Keep in mind, banks don't move fast. You should assume about 60-days for a local bank to close on your refi. 

@Kate Murphy -- Seasoning the title is often required for traditional loans -- good question. You're already almost at 3 months, so you might be okay depending on the bank.

After you establish rental income, you may be able to increase your debt to income ratio by counting the rental income as income. Essentially, if you establish a relationship with a local bank, they might say "we're not going to count the rent as income, but we're also not going to count the investment property as debt because you are fully servicing it through the rental income."

So why didn't you do the third unit?

Again, I'm not extremely knowledgable on exactly the area, but perhaps your buyer pool fits the following description -- moving our of downtown a little, want everything new with no headaches, still want to be able to host friends, start a family, and will move to the suburbs in 3-7 years. The third bedroom might be doing you a disservice versus having more common space. Three bedroom in under 900 square feet sounds like a rental versus end user.

Refi Thoughts -  If you're going to keep it on the market and try to sell it, don't go through the time, hassle, credit checks, etc. of a refi. Only refi if you are going to fill it up with tenants. I assume you know 9/1 is a major lease date in Boston. If you miss leasing by 9/1 you are going to enter into a renter's market. Of course interest rates could change, but between paying for an appraiser and other fees, you're better off just selling the property.

Hi Kate,

Looks like you did a terrific job on colors and finished. I think your level of finishes are obviously a little over the top for what renters might expect; however, it might make one decide to take the place because of the care you put into the renovation.

One immediate question is why didn't you renovate all of the units? 

Why not also list the entire building as a multifamily? There is a huge amount of multifamily interest in the area. If you didn't finish a third unit, there is also opportunity for forced appreciation.

You aren't going to really get turn-key investors in that area if the numbers don't support positive cash flow.

You can absolutely re-fi out of the HML if your primary jobs (pay stubs and taxes) can support mortgage payments. IF you are an owner occupant you can qualify for more advantageous loan terms. Given the fact that you don't have a record of renting the property and don't have a long history with a bank as a landlord, getting a re-fi based solely on rents will be nearly impossible. Happy to give you traditional banker contacts if you PM me.

How has your experience with Compass been?

Hi @Ryan Kelly, it's a great but challenging problem to have -- big deductions but still making money. That being said, if you are still saving for 50-75k for a downpayment, you probably aren't clearing enough money after real (not tax) expenses. If your clients tend to work with a few local banks I would suggest you approach them.

@Alex Johnson, perhaps you want to look beyond those areas. I don’t know him personally, but you might want to talk to @Charlie MacPherson  about areas on the South Shore. I believe you will find better values MFPs south of Boston. 

@Alex Johnson -- Plain and simple, if the house is going to be held in an LLC you aren't going to get an FHA loan or any other conventional financing. Any bank is going to require the both of you to be personally liable for the loan. FHA loans are for owner occupants, not LLCs. Additionally, LLCs are so opaque that unless you have a track record, a bank is going to require personal guarantees.

I hate to be negative, but raising outside capital / investors isn't really going to happen unless family wants to pitch in some money. If I'm willing to give you $250,000 how are you going to make me more money than a simple CD? You want to hold onto the property forever and collect rents. If I'm an investor I want to hear about massive renovations and a cash out option via a sale or cash out refinance.

If you are going to go the short term rental / Airbnb route, just please make sure to look at local regulations before buying. Personally I would only buy something with an Airbnb angle if the town has already discussed how they are going to handle short term rentals.

Hi @Alex Johnson,

In general it's a great idea -- "house hacking" can help to launch you into real estate. Keep in mind that there are limits for FHA loans. For a two family the property is going to need to be under about $881,000.

You need to think about how you are structuring the purchase. Are both you and your brother going to be on the loan? What if one of you meets somebody, gets married and wants to sell the property? The cleanest option is for one of you to buy the property and the other to pay rent. Another option -- if you find a two family you could turn it into condos and you each own one unit.

As @Seth Williams said, there is no reason to limit yourself to a du-plex. If you can afford it get 3 or 4 units.

Hi @Alan M.,

First of all, sorry about your mother -- tough situation I'm sure.

As you realize, it's a great problem to have. Often it's difficult to talk to friends and family about because they don't really understand the "problem."

My first thoughts:

• What are your goals? If you want to go all in with RE, invest in RE, but you also have the ability to diversify. You could refinance your mother's old brownstone and get better returns in CD's these days -- and of course could look at ETFs and other investments. Basically "set it and forget it" investments.
• As you said, the HELOCs are nice for cash availability when needed
• Potentially talk to some local banks about options. I'm currently in a portfolio loan in Boston with a local bank and the service has been incredible compared with multi-national banks
• Identify your RE goals. Your risk adverse -- If you lost your job today you could probably live off of the rental income today. Do you want to ramp up your rental income to provide multi-generational wealth?