All Forum Posts by: Emil Pinlac

Hey Chad! 

Thank you for your response to this original thread. I would very much like to connect in order to discuss potential lending options for myself, if you would have me! 

@Sebastian Marroquin

I'm mostly asking these kinds of questions even though I'm 3-4 years away, because I want to know what I can currently afford in terms of purchasing a home with my current financial situation, and what I can "project" to potentially afford, 3-4 years down the line (with a higher salary, better credit, and DTI ratio.)

I don't want to buy now for two reasons:

1) I do not have enough liquid cash available to control how much I want to put in for a downpayment, or for unexpected repairs/expenses/ or for renovation costs. 

& 

2) the market is currently unstable amidst the global pandemic. [this is more of an ancillary reason. I know better than to necessarily "time" the market. my primary reason is #1 above]

I am not ready - however I would like to know from a Lender what my options COULD be in terms of my loan terms AND how much house I could buy; at this point of time, and in 3-4 years. 

Have you worked with clients who have dealt with ADU projects on their homes?

@Christian Rozo

Hey man! Congrats on working with your lady on your first potential SFH in Sacramento! I think it's super beneficial that you two are working together, and that you'll naturally have someone else to bounce ideas off of when making your plans.

@Sebastian Marroquin

Hmm, but wouldn't a pre-approval only be valid for 60-90 days? And on that note -

Would I be able to/is it common practice to get multiple pre-approval letters from different banks or credit unions to "shop around" and see which ones would give me the best terms?

I'm mostly worried that if I requested an appointment THIS early (3-4 years early), they wouldn't take me as seriously, or they'd feel that I might be wasting their time, especially since I don't have the cash reserves in the bank to back myself up (even though I have a relatively stable job, and my credit score is excellent.) Is that the wrong line of thinking? Should I just go out there and scrounge up what W-2s, bank statements, and retirement account balances I have, and talk to a lender?? 

Qualifying for a down payment assistance program could be a potential opportunity to really get started; however, a huge part of me is skeptical/uncomfortable with paying an additional interest rate from the Downpayment Assistance, on top of the mortgage interest every month. I'd rather just save up for a downpayment and just make the play when I can. 

Thank you so much for your quick example (with numbers!!) I'm a little wary of building an ADU at the moment (est. is an additional $75k-100k on top of the mortgage). I'd rather just first get started house-hacking a duplex or a triplex. Let's keep things simple.

There are still a lot of moving factors, but I would really like to hear your follow-up insight. 

And also - I currently pay $250 in rent per month. hahhahah. 

@Sebastian Marroquin

Timely reply, haha. 

Thank you so much for your response, Sebastian! 

Yes, I am currently in the very early stage of my REI journey; I've been watching a ton of YouTube videos, taking a lot of notes while reading the PDF Guides BiggerPockets provides for Pro members, and signing up for newsletters for other resources like Maxable, which focuses on ADUs in California. I've honestly been fortunate enough to have lightly met and corresponded with a few investors in my area who are way more seasoned than I am lately, and so I am trying my best to keep up with their grasp of the material, as I only started a couple months ago. I'm definitely a little embarrassed to have been asking about the 2% Rule in this post but hey, now I know. haha.

I'm doing everything that I can to mitigate my risk in jumping into the game, and for now, that's mostly building my knowledge base, analyzing deals, and saving for a downpayment. I've created my 3-4 year timeline. And while my actual REI strategy still fluctuates between SFR + ADU, or a small multi-family, at least those are some pretty solid options. (and I think my downpayment amount in 3-4 years will help determine that).

Currently, I am now trying to determine if I need to reach out to any credit unions or loan officers in order to get a solid idea of what I can expect from a financing standpoint. I currently have excellent credit, a very low DTI ratio, and my income is expected to grow even more in the next 3-4 years. Do you recommend I reach out to them now, or should I wait once I am closer to my projected timeline?

 Hey DJ - 

I love this idea of going 50/50 with a partner on a duplex or multi-family property, and then the both of you living in one unit splitting costs, while having tenants living in the other units. I currently house-hack renting a single family house with a couple of friends now, and it wouldn't be that far off of an idea to buy a property together, and just live in one of the units. At least now we'd have an appreciating asset. Thank you!! haha. 

@Kelsey T. 

Hi Kelsey - Thank you for your insight! 

This is great to know. Initially, I was feeling disheartened seeing that I wouldn't easily find something that would cash flow right out the gate - and that to have any potentiality of having it "cash flow" would require implementing the BRRR method and fixing up a terrible property (I know nothing still and would not like to touch the complexities of rehab work just yet!) haha.

I guess my first main goal then is to get my feet wet in real estate by house-hacking a property in an area that appreciates in Sacramento: either through the purchase of a small multi-family, or a single family home with potential to build an ADU in the garage or the backyard. I'm glad you brought up to not put yourself in a risky negative cash flow situation - I plan on being completely debt-free in the next year., and have lived pretty frugally throughout my life. Hopefully that will be enough to really nail this down.

Hey @Brian Garlington! Thanks for your reply, man. 

Is it justified to have a strategy in California to be buying small multi-family properties, even if they do not cash flow then? Obviously house-hacking a duplex, triplex, or a quad would help make your mortgage payment, but you would still be in the red, as far as budgeting for other operating expenses go. 

For someone starting out, and with a long-term plan to buy and hold - does it make any sense to do that? 

Hey @Erik W.

Thank you for this insight. I was recently browsing through Realtor.com and found a promising 3/1 SFH that was at a very modest price - only to scroll through the pictures and find that the roof had caved in, and it looked like there had been squatters living there. (which was scary.)

Perhaps I am looking for more-or-less turnkey properties at this point ... but at the same time, I'm just trying to really solidify my initial preliminary investment/real estate strategy. I know I still have a tremendous amount I need to learn, which includes being able to estimate rehab costs, being able to consistently analyze property deals, and actually learning about my Sacramento market - so I'm hoping that'll all come for me in these next few years, not to mention continuously saving for the downpayment. 

Hey @Kevin Reinell! 

Thank you for your response, man. 

If you do not mind me asking - if you aren't looking for 2% Rule in buying the MFHs you've seen, what has been your approach/strategy with buying MFH in Sacramento?

Are you buying MFHs in specific areas because you are betting on appreciation (I know conventional wisdom isn't to bet on appreciation, but hey who knows?), or are you working the BRRR? or are you just scooping up small-minimally producing cash flow properties to build up your portfolio in general?

Forgive me with all the questions - I am just trying to find a reason to justify my strategy to purchase a multi-family home in Sacramento to house hack as my first investment/primary residence.