All Forum Posts by: James Likis

FHA PMI sucks so bad. As rates do come down some, this property continues to be your primary residence, and you have more and more equity (and therefore a lower LTV) you could hit a point where the refinance won't add too much to the monthly expenses when you account for PMI being gone. As your equity builds and rents increase, a cash out refinance to fund your new down payment could also be an option.

My wife and I were fortunate to be able to keep our condo in Jamaica Plain when we did a cash out refinance to fund our two family househack in Dorchester. We also used some of that cash out money to payoff student loans. 

As time passes, you should have more and more options. Good luck!

Agreed with all the posts about being complicit and creating potential legal issues. Definitely pass. 

And at a more simple level, there are plenty of times when we can feel pulled as an investor to make things work. If at any point, though, something doesn’t feel right, trust your gut. Your peace of mind is worth waiting a little longer to get a tenant in — and probably will ultimately be a better financial choice if anything close to what you think could go wrong does go wrong. 

I’d add to the cons that contractors can be turned off to the necessary monitoring and stagger payments that come with the 203k process. It worked great for the contractor we used, but we had a LOT of contractors bail before even giving a quote. 

Reflecting on it, that’s actually probably helpful in weeding out some contractors who aren’t as organized and tight with their processes as they could be. But I do think overall it leaves the homeowner with fewer contractor options that they’d have otherwise. 

Love the emphasis on “labor” 😂

And love 203k loans. What's your ARV looking like? Is the garden apartment covering a healthy percent of your mortgage? Congrats on getting this rehab done!

This is a great approach, @Caleb Hood. My wife and I used a 203k loan on a two family in Boston. Building off @Alan F.’s point about price per square foot, also know a 203k loan will turn off some contractors. As you look to connect with GCs about your potential project, it’s worth asking if they’ve gone through the 203k process before — you don’t want them bailing on you last minute. Good luck!

@Andrew Postell really appreciate those organization and search tips. I've been digging into our network and plan to keep at it. Good to have the smaller the better for bank size confirmed. I have made my way up the food chain at a few regional banks, but think going even a tier smaller will help. 

@Andrew Postell unfortunately this bank only allows for this on a single family primary residence and we’re in a two family. I am going to see if we can work an exception. I know we’re looking for a need in a haystack!

Hi everyone,

My wife and I are looking to add an ADU to our primary residence. We have a wonderful 3.25% interest rate, so we do not want to trade that in using a typical construction loan. So far we've found one bank that'll do a construction loan in second position (https://www.websterbank.com/personal-banking/borrow/mortgage...) and are wondering if anyone knows of any other banks that will do this. 

I do know a HELOC or home equity loan is an option, but those won't allow us to access to post construction ARV which we need in this case.

Thanks in advance for the help or any insights!

Thank you @Michael Plaks! Thank you for clarifying that you cannot unlock past accumulated losses through REPS. These only accessible when a property is sold then, correct? 

And follow up on this point: Doing cost segregation after you qualify for REPS, on the other hand, may solve the problem. Which is part of my "Myth 4" that you asked about. 

How long do I have to do a cost segregation study and capture accelerated depreciation? Am I understanding correctly that we could do a cost segregation study in, say, 2025, for properties purchased in 2022 and apply losses to 2025's Schedule E? What's the longest I could wait to take accelerated depreciation on a 2022 purchase?

@Marcus R. I appreciate these examples of how STR arbitrage can add value for a landlord!