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All Forum Posts by: Jim D.

Jim D. has started 17 posts and replied 409 times.

Post: New Member - Aspiring "House Hacker"

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Sam, that is great to hear! Glad things are going well for you. Once you have someone else paying your mortgage, it's hard to ever go back!

Post: How do you negotiate with wholesalers?

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

I walked a rough house with a wholesaler last week after he had emailed me about it and given an estimate of $15-20k in rehab costs. When we walked through the front door, he mentioned that it was his first time seeing the house as well. A wholesaler's rehab estimate ain't worth a picayune.

Never hurts to try negotiating on the price--I've seen them accept lower than asking before if they don't have other takers and want to move it.

Post: Has anyone who has house hacked had children?

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

If you buy a in a good neighborhood, I see no issue at all. I don't have kids, but my wife and I have house hacked 5 times in good neighborhoods and have always enjoyed our renters. Hardly ever see them, and we take care of each other's pets when we are out of town. The only uncomfortable thing for me is wondering, "Do they know they're paying my entire mortgage payment?" every time I see them.

My wife actually says she feels safer having renters upstairs when I am out of town, just having someone else around so she's not totally alone.

Post: Shorter term leases in GR?

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

When I have to rent a unit in the fall/winter, I just let the renter know that I prefer leases to end in the spring/summer, and ask them if they’re ok with a bit shorter lease. So their initial lease will be 6 months or so, and then in the spring they have the option to renew for another 12 months.

Everyone’s pretty cool with it if you just explain why you prefer to have leases start in the summer.

Post: House Hack: FHA or Low-Down Conventional

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Homepossible can only be used for first time homebuyers, so you wouldn't be able to use FHA first and the Homepossible.

I'm not an expert on the 100 mile rule; I would call a lender and ask about that. Don't quote me on this, but I believe they can make exceptions if there's a reason for the move like size of home, work location, etc.

Post: House Hack: FHA or Low-Down Conventional

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

The low down payment conventional you can use for an owner occupied purchase is called “HomePossible“. It’s generally 5% down and covers 2-4 unit properties if you live in one unit. To qualify, you must be a first time homebuyer and earn less than around $60k/year (that’s number varies by location). 

This loan is better than FHA because the mortgage insurance is lower, and can be dropped when you reach 80% equity. With FHA loans, the mortgage insurance is higher and will remain for the life of the loan.

If you are married, best route for your plan would be to use a HomePossible, then FHA, then have your spouse do a HomePossible, then FHA. Of course, that all depends on whether you qualify but that's the ideal route. If you're married, don't put your spouse on title or the loan so that they can also use a first time buyer loan in the future!

Good luck!

Post: Tips on estimating taxes, insurance, and water in Grand Rapids

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Taxes should be shown on a listing. Note that GR gives a small discount for owner-occupied units. For example, if the owner lives in one unit of a duplex, they get about a 33% discount on that portion of the building. You should be able to see on a listing if they are showing the homestead or non-homestead amount. Also note that if the property is being sold for a much higher amount than it has in the past (often if it hasn't sold for 20+ years), there is a good chance that on year two your taxes will increase substantially as the county records the new value.

Insurance figure around $1,000/year for a $100k price, or around $1,500 for $200k. Will vary based on your coverage but those are decent ballparks. 

I use $100/month to ballpark for water/sewer/lawncare generally on multi units.

Post: Stuck on the last "R" of my BRRR

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Resurrecting this old post to report that I was able to get the refinance done with a local credit union. They offered a portfolio loan for 20 years fixed and waived the requirement for the 6 month seasoning since they're holding the loan themselves. Thanks for the tips!
 

Looking back at the whole project after 8 months, it was a success overall. However, when I add up all the extra costs involved in the BRRR (missing several months of rent while the rehab was getting done, worse LTV on the cash out refi, higher interest rate on the cash out refi), I am not sure I prefer this method over just buying properties that are ready to rent from day one. Adding up those extra costs make it less attractive than it appears at first glance, and it was a huge amount of work to manage.

Post: Transfer from LLC to Personal?

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Note also that when you go to refinance with a conventional loan in your personal name, the title needs to be held under your name for at least 6 months for them to do a fresh appraisal. So after you're done rehabbing, if you transfer title back into your name, you'll have to wait an additional 6 months (unless you want to be limited by the purchase price as your value). I recently got stuck on this and have to wait another 6 months to do a conventional cash out refinance, and am instead using a portfolio lender who is willing to do it.

Post: Most common unknowns while flipping

Jim D.Posted
  • Investor
  • United States
  • Posts 415
  • Votes 487

Good answers above on some of the big items. Also common is just all the little stuff that ends up being a long list and adding up. I figure $3-5k just for small misc items that I didn't spot going in.