All Forum Posts by: Damian Bialonczyk

@Nathan Helm

I strongly suggest finding a different mortgage broker, or using a bank. What you're describing is not typical - sounds like someone trying to take advantage.

If this is your first property, and it's distressed/in need of repair, I suggest obtaining an FHA mortgage with a 203(k) rehab loan.

@Matthew Pettit

What are you using for your PMI estimates when you analyze your deals?

Generally speaking it'll always be more difficult to cash flow positive when you're putting down a lower downpayment, compared to putting 20% down. And PMI makes it even more difficult. But personally I always try to put down as low of a downpayment as possible. If it's a cash flowing deal then lower downpayment means better ROI and more capital for the next property.

@Raymond Cazis

Great buy, thanks for sharing. I totally feel you on the "If only I had done this a dozen times!" sentiment... 

@Vijay Chadalavada

Will your second property be income-producing, or just for personal use? I'll assume the latter. Purchasing a home shouldn't really have a dramatic negative effect on your credit score. I owned a couple of properties before I purchased my first single family home, and I distinctly remember my credit score increasing by a few points despite all of the new debt. As long as you meet the DTI requirements for the lender and your credit score is within the same ballpark range (which I suspect it would be) I wouldn't really stress the sequence in which you purchase the properties.

@Stephen Mwangi

I got my foot in the door using a similar approach, but with 3 partners instead of 4. We ended up starting an LLC once we had 3 properties because we wanted to evenly distribute assets between the partners (each house had a different price tag). In order for the LLC to "own" each property, you need to transfer the deeds into the LLC, which is typically prohibited by lenders and could trigger the due-on-transfer clause. So there is some risk with doing this.

You have to keep in mind that if you are to purchase a home with an FHA loan it's going to need to be in one of the partner's names. So that partner will legally carry the burden of the mortgage, not the LLC. Once you purchase the property you could transfer the property deed into the LLC but not the mortgage. 

Take my advice with a grain of salt (I'm not an attorney or accountant) but I wouldn't personally worry about the LLC until you at least acquired a few properties with your partners.

@Julius Marchi

House hacking is a great way to get your foot in the door with real estate investing. It'll be difficult to finance any property with a conventional loan if you don't have any documented income or tax returns, though. If I were in your shoes I'd probably spend the next year focusing on learning as much as possible about real estate and making sure you land a decent job with a steady income. The market has been extremely hot over the past several years (at least in my area) so you might even benefit from waiting a couple of years!

Alternatively, you could try to find a property with a seller that is wiling to finance the deal for you (ie seller financing). 

@Jay Hinrichs agreed

@Mike Van Kleeck rentometer.com offers this but as a paid feature. There are others I'm sure, I'd recommend doing a search. Sometimes just looking 45 minutes outside of your immediate market might make better sense - you could still retain most of your team.

Just caught this thread about Woonsocket - I'm originally from that city, so any prospective investors free to drop me a message if you're interested in a particular neighborhood and I can give you the scoop on whether it's a good area or seedy.

I'd recommend doing a search into alternate cities with low mean price to rental income ratios. There's a few different sites that will provide this information based on zip code.

I'm not familiar with the area, but it's going to be difficult to rationalize this property as an "investment" if rental income is just 5200/mo. Your expense calculations look reasonable but cap ex is probably higher than I would estimate (again, not knowing anything about the property).