All Forum Posts by: David Romero

If you are going to do owner occupied, you can do a 203k I believe, but Ill have to check guidelines. That would allow you to build in construction funds to the original loan, and have a GC do the reno.

You could also just do an FHA, and live in each unit as you fix them up. I would hesitate on kicking out the current tenants, as some income is better than no income, and you will be able to use that to help qualify you initially, as well as help offset DTI in any other transactions you are going to do.

Hi Wyatt, thank you I'll have a talk with my lender regarding 203k. And good point, I haven't really thought about renting out bedrooms however I'll give it a look.

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Quote from @Julien Jeannot:

I'd recommend talking to a loan office about that second loan before closing. You want to make sure you qualify after the acquisition.

Hi Julien, thanks for your recommendation. I'll be taking a look into it.

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Quote from @Lorien Rollins:

To clarify, the property is 50% occupied and you'll purchase that way, yes? They are currently paying $675 (Section8) but the potential is $1,200 once upgrades/required maintenance is complete? Are they long term tenants, and that is why you only intend to raise rent by $100? The program grants up to 50% per HUD income guidelines, which can range from 25k-101k, depending on the number of occupants in the home. The Law for occupancy is the same as here in NC, two adults per bedroom, occupancy can be five adults, with proven extenuating circumstances. The point I am rambling on to make is that if they're good tenants, pay on time, and are interested in staying you have the 'power' to increase to your benefit. I'm not saying rip them to shreds and make it difficult for them to stay, however, the variance is available to you. I think owner occupied is smart while you renovate. I would also consider discussing occupied renovations with the current tenants, when are their leases up for renewal? This way you can get those upgrades completed prior to their renewal and increase the rent to the max per Section 8 when the time comes to renew, thus shortening the length of time you'll be 'losing out' on the potential rent increase.

Are your student loans lowering your DTI?

Yes, I'd purchase it 50% occupied. The two current tenants are tenants that have been there for multiple years and in good standing, they are not section 8. I'd like to ramp up the rent increase slowly however ideally within 12 months I'd like for them to leave the property so I can replace them with Section 8 tenants. In order to bring in a section 8 tenant I would have to redo the flooring, some appliances, doors, cabinets and the electrical for it pass inspection. Average rent for the area is about 800 - 1000 for 2bd/1bath. They are on a month-to-month lease as their lease just expired two months ago. My student loans increased my DTI.

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Quote from @Lorien Rollins:

Hi there, David - what State is this deal? I'm a seasoned property manager and can reply better with a bit more information on your 'plan of attack'. I have successfully completed occupied renovations, renewed/nonrenewed tenants, etc. I'd love to provide some deeper insight.

Also, tagging my favorite MLO @Wyatt Wolff

Artfully,

Lorien

Hi, Lorien

This deal is located in Texas.

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Hello, I'm looking into closing on a fourplex (8bd 4 bath) down in the Mid-south region . I am using an FHA loan and bringing about 6500 (+ 2900 that is in escrow) to closing, I've got about 20k in Seller Concessions, that includes 3 points being bought down.

My monthly payment will be around 2400. There is already two tenants that live in the bottom two units, both pay 675. Top two units will need fixing, estimating repair costs about 15k, that is including flooring, appliances, doors, getting the electrical up to code. Total fourplex upgrade cost would be around 35k on high end, this includes new flooring, gutters, electrical, cabinets etc. I only plan on fixing up the two units for now as I do not want to inconvenience the bottom tenants. I plan on raising their rent by 100 each if I close.

I'll be buying this property for about 299,000 however I plan on renegotiating and dropping it to 285,000 with the max being 290,000. My favorite part of this property is its potential to cashflow, Section 8 rent is around 1200 for a 2 bedroom, 1 bath. I plan on living in one unit and renting out the other 3, one of those units being a Section 8 tenant. Ideally after a year I want to move out and repair the bottom two units so I can 4 Section 8 tenants paying me around 1200 a unit.

My hesitation is how much money I would have to put in just to rent out one unit to Section 8, I have to fix the flooring, doors, window and some appliances and the electrical in order to qualify. I think it would be a great play especially in the long run however I'm just hesitant and worried about funds being tight. I have about 6 months worth of reserves but would have to take a loan out for the repairs.

About me: I have good credit, have about 15k worth of debt including student loans, and live with my parents. My field offers remote work however I'm currently an intern, I'm looking for full-time position which should raise my income to at least around 65k. My income is around 45k which fuels my hesitation as my pockets are going to be tight. Any input is appreciated, thank you.

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All Forum Posts by: David Romero

David Romero has started 1 posts and replied 5 times.

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