All Forum Posts by: Bradley Padula

Unfortunately sounds like a tough situation for a successful STR. Once a few people leave bad reviews "house itself was great but neighbors were very noisy etc" it will deter people from booking. I know the first thing I look at before booking on vrbo or airbnb is recent reviews

Are you able to pivot and sell this place (would a light cosmetic rehab help you sell for more? This would become an unintended flip more or less) and roll the $ into a different deal? If the regulations/law allows you to build a fence, I'd build the fence. You're not doing it for no reason or out of spite to reduce the neighbors view, you're doing it to improve your renters experience during their stay by increasing privacy 

In your post you mention your now have 3 properties. If two are cashflowing, why is the 3rd not cashflowing? Is there a way to fix (i.e, raise rent, does it make a good investment etc)

 The lenders (regular / conventional) I've used will go off a % the rented amount on the lease if it's been rented under a year, or will go off schedule E tax return if over a year factoring in rents, expenses, depr etc. Some I've networked with will just go off 75% of the rent amount. You need to call 10+ lenders and ask then all and see what their answers are. Different lenders have different processes

I have not yet found a lender that will include househacking income as part of my income. They don't consider it rental income since its an owner occ situation. Maybe you will find a lender or smaller local credit union who will consider it as income 

If you are trying to find another househack / new primary, some lenders will include the proposed rental income from your (now former) primary residence that you'll turn into a rental since you're moving out into a new primary. Usually they require a signed lease with tenant either before closing or something along those lines

In summary, call 10+ lenders 

Good luck!

Good for you for thinking to househack! There are loan options with as little as 3.5% / 5% down. Don't feel like you need to do 20% down and tie up all your hard earned cash. Talk to a lender now so you know what realistic price range you should be looking in. Ask them about the FHA loan program for 1-4 unit properties, conventional fannie /freddie loans, and whatever else they may recommend as potential options. Have this convo with 10 lenders. At this point I'd say give them a ballpark credit score so you don't have a bunch of soft inquiries on your credit report and a standard income typically of a new grad entering the workforce in your field. They likely won't give you any sort of preapproval since you aren't working yet, but they can mock up some scenarios so you have a better gauge of if you can afford a 200k house or a 600k house. Keep in mind, with 2 to 4 unit properties, the income from the rented units , a certain % gets factored in as income and boosts how large of a loan you can get. Good luck!

If you're wholesaling is 1099 / self employment income, most lenders require one to two years before they can count it as income. So depending on when you started working the job, you may still be a year or two out from being able to get a mortgage. Maybe get a w2 job on the side to make/save more money quicker

 You should talk to a lender and see what a realistic timeline is in terms of having your income count towards qualifying you for a mortgage. 6 months from now may be unrealistic / not possible. Don't put the cart before the horse, talk to a lender and see how the income portion works, and then go from there. 

A tri or quadplex purchased via FHA is required to carry itself and be self sufficient. So the deals you look at with 3 to 4 units, the rented units would HAVE to cover the PITI on the property or it won't qualify for the loan. FHA is a popular, and realistic, way to get into anything with 2 to 4 units because of the 3.5% down. Conventional loans with 2-4 units you are looking at anywhere from 15-20% down minimum. Again, talk to a lender and learn how it works, all this info is online too

Unless you served in the military and can get a 0% down VA loan, then the downpayment and closing costs have to come from somewhere. If not from you, who's pocket with the $$$ be coming from? The 3.5% down is usually the easier part, the harder part is finding a deal in this hot market. To be straightforward it is unrealistic to think you can own a property without putting any money into it, reserves are needed for repairs, maintenance, vacancy (when a one or more heating systems need to be replaced, a few tenants stop paying, etc.)

I agree with @Dennis Wayne, as would many other experienced real estate investors

I have a macerating toilet in the below ground level finished basement of one of my single families. (top of the line sani-flo unit). The blade in it is essentially a mini-blender blade. I couldn't see it handling potato consistency waste on a regular basis, let alone for an extended period of time. The machines do not appear to have the torque of a garbage disposal in terms of being able to grind up solids the consistency of potatoes. If you have it installed, definitely be prepared to replace the blade (gets dull) or entire unit more often than normal due to heavily increased wear and tear from grinding up "potatoes" daily, versus regular soft waste it's designed for. It's also a specialty plumbing item and not all plumbers know how to work on them

The unit itself is a grand for the toilet and macerating pump, then on top of that keep in mind you'll need an electric outlet nearby to plug the unit into (added potential electrician costs to add an outlet nearby) and also the plumber to not only set the toilet, but to plumb the macerating pumps plumbing into the houses plumbing and also tie into existing vent piping. There would also need to be some sort of cap or cover to go over your existing toilet waste pipe / flange, since the saniflo toilet doesn't use that and I imagine you'd want the saniflo toilet to sit where the old one did. Could be a several thousand dollar project all said and done 

There is a special sani flo overflow siren you may want to get as an add- on to the unit if you get it installed. If the unit stops grinding after a flush (jam etc) the water still flows from the toilet into the saniflo unit from the flush, if the water is beginning to get to the point where it would overflow with water, the siren goes off and stays on until the unit is unplugged or the water level drops. This could help save the motor burning out from running but not being able to spin (blocked with hard "potatoes") as well as water coming out and damaging floors, walls etc. It's basically a, unit needs to be fixed and is not pumping out waste/water, something is wrong, siren 

I can't imagine many apartment buildings or landlords would be willing to not only spend one or two grand for a specialized toilet system because this tenant has hard waste, but also modify their property to make the special system work. Could you just have a higher gallon per flush / more aggressive flushing toilet installed instead to help the potatoes move down the plumbing pipes?

Good info to share for those who don't know. That is correct, 3 months of reserves for 3 to 4 units with FHA loan. No reserves required for 1 or 2 units with FHA.

Be aware of the self sufficiency test for 3 to 4 units if using an FHA loan

Keep in mind, for retirement accounts (IRA, 401k), lenders will count a certain % of that towards reserves. So people sometimes have more 'reserves' than they think

To help boost income / qualify for a larger loan, you could plan to occupy the "smallest" unit that would bring in the least rent if rented out, and rent out the larger, more profitable units

Cozy (now Apartments.com, since they purchased Cozy). One thing I like about Cozy/Apartment's.com is that is sends rent reminder emails a few days before rent is due, can clearly see when a tenant has initiated a rent payment , easy to setup

@Jason P. Unfortunately I don't think you'll get much of a boost regardless of how much it cost you. However you can easily search for, find, call a few local appraisal companies and ask then in their experience what, if any value add to an appraisal your type of shed adds. You'd probably be able to get an answer before the weekend. The bay area is much different than boston, so maybe appraisers in your area put additional weight on sheds than where I'm at in boston? 

If you still have the appraisal report from when you initially bought the house, poke through that and you'll get a sense of exactly what the appraisers look for and the value) add or value reducing properties (main road, value detractor, finished basement, value add

If you're doing the refi anyways, definitely proceed if you like how similar local comps look and you have enough equity to pull out the amount of cash you want based on the LTV you've discussed with your lender (80% LTV, 75% etc)

Not really, maybe on the appraisal report you'll see a note for Shed $2k value or somewhere close to that appraisers don't really include sheds, patios, decks as big money appraisal items

The real appraisal results are based on comparable recent sales in terms of big ticket things like # of beds, baths, sq footage, and smaller things (from an appraisal standpoint) like busy road vs non busy road, finished basement, garage, porch/patio/deck, etc

You can also call an appraiser and ask them what, if any, value add it would have on the appraisal 

2.65% is a great interest rate by the way! Nice!

Welcome!