All Forum Posts by: Derrick Dill

I don't think much is holding them back, I see many properties with ADUs in bay area. If not ADU, converted garage to room, or extra room in the back with the same concept in mind.

New investors can get financing doing renovation loan, HELOC

Not sure how competitive your market is, but in California here, FHA 203k is not competitive since 60 day close is the norm instead of 30 day close. The properties that need work usually go to cash buyers, but there might be one just right for you somewhere in the middle, I would think a property that needs work that has been on the market for awhile. I'll be buying FHA, then refinancing into FHA 203k in a few months to do the renovations is current plan

@Anthony Lynch My focus has been finding properties with potential for adding ADUs. Convert the garage, make a living room into a bedroom, add ADU in the back and then renting it out while house-hacking

I'm currently looking in Bay area, it's very doable. Here's one that just went pending in Hayward 

https://www.redfin.com/CA/Hayward/22790-Woodroe-Ave-94541/home/957789

3 unit triplex, can live in the 3bd/2ba, 1/1, 1/1 rented for 1700$ +1500$=3200$ from the 2 other units. can rent out 2 beds you're not living in for 1500$ (at least). 3200+1500$=4700$ towards mortgage, depending on terms of your loan, should be living for free. 

Will you get exactly where you want? probably not. You'll have to sacrifice some to live for free in the Bay, but it's doable

Hey Taylor,

I happen to have properties in both of these cities. My KC, MO property I bought for 100k in 2016, I refinanced all of my properties this year, and it appreciated the most at 135k. My Cleveland, OH properties appreciated about ~3%/year. Property taxes are higher in OH, and I pay for utilities there as well. Ohio properties cash flow a tiny bit more for me.

This is my personal experience with 6 properties, purely anecdotal

child/elderly care by taxing people making over 400k? Sounds great. Thanks for bringing to our attention

China currently holds 15%+ of our debt. It seems many posters are getting very political, and their bias are showing. This is our percentage of the worldwide debt, we have the most debt BY FAR, and it's climbing RAPIDLY. Did we take on tons of debt (the most) during the previous administration, YES! It was expensive to get us out of the Iraq war and to end the great recession. 

National debt is 26 Trillion and climbing exponentially. The pandemic/crisis/whatever you want to call it isn't over. The idea that "we won't be able to pay off the debt anyway, just keep racking it up" is a slippery slope. 

The best way to lower your monthly payment will be to have 20% in equity in your home (=20% down). If not, you can refinance out of your FHA 3.5% and get a conventional 5% down loan (still PMI [private mortgage insurance]). You can refinance out of your FHA loan into a conventional renovation loan. Do some research on your renovation loan options: FHA 203k, Homestyle, Homeready, and see what fits best for you.

Your 401k holder will be the one to take care of your 401k loan and you can usually decide on terms. I like it because you're paying yourself interest, but keep in mind you're missing out on stock market gains.

^How soon you can refinance will vary lender-to-lender, but about 6 months. You can switch to a 5% down conventional loan, free up your FHA. Ideally, make renovations to your property, boosting up your appraisal price, giving you more equity and more "down" on your property.

In those 6 months, add a bedroom, rent it out. Or refinance into a renovation loan and add a bedroom that includes the new appraised value of the property (homestyle, homeready).

I've done 401k loans to help finance my properties, but everyone has different comfort levels.

@Account Closed

^JJ should have cleared it up for you a bit there. Your chart shows strong appreciation year over year on average. Does it have dips? sure, like everything. For the most part it's up and up and away.

I work in the Bay and my colleagues here who have bought houses 15 years ago don't have a 30% increase in value, they have 300% increase in value. 

I'll use your example anways, 1,000,000 home, take out a HELOC and buy whatever cash flowing properties I would want. Leverage is the name of the game. Give me access to more $ and I'll invest it and beat out the 4% interest rate (that is tax deductible). In addition to claiming the mortgage interest tax deduction, you can deduct depreciation on the 1,000,000$ property. All of the issues you mentioned are tax deductible and insurance takes care of 3/4 of them as well.

I have 5 out of state properties, one in California. The one in California I leveraged and bought the other 5 BECAUSE of the appreciation. It cash flows the most, it appreciated the most, it gives me the most tax deductions BY FAR.

Investing in California has worked out well for me, if it goes down, that's fine. I'll take the cash flow and 5 properties it provided me. To each their own.