All Forum Posts by: Jason Wray

Seller basically drafts up a contract and decides on a rate and term to calculate a monthly payment. You pay him however you want check or you can use unit rents.

Have you thought about just getting an approval for a mortgage and not use the seller?

It does get complicated when you buy the seller out because even on a cash out refinance you will always be maxed at 80% cash out for a primary and 75% for an investment.

Getting an approval for a mortgage has gotten a lot easier since COVID...

Rose,

Yes you can purchase as a primary and rent out the other unit as you see fit STR or LTR. You can use FHA 3.5% down or Fannie Mae 5% down to qualify. You do not have to live in the property for 12 months. There is also a way to Refinance on the 5th month to close on the 6th month and transition it into a investment property.

Once you refinance its no longer an FHA and the 12 month occupancy applies its called an FHA to conventional refinance. You may also get lucky and be at 80% LTV to drop off the FHA MIP monthly insurance. You only need a 85% LTV to refinance a duplex so with a little TLC, repairs or renovations you can expedite the ARV (Future value).

John,

I am not sure I see the major benefit of that conversion and just as an FYI you cannot put the title or change the vesting to an LLC unless your Bank/Lender allows. If they do not allow then the loan can be "Due on Sale" and violate your agreement. Even if you live in a Home or one of the Units you can still set the address or other units up on your "Schedule E" and claim the standard deductions.

To be totally compliant I would tell you to refinance and transition the property into an Investment property and close it in an LLC. That will allow you to buy another home as a primary and reap the benefits of the increased passive income & deductions.

 Adam,

Just to clarify I think your post was good to establish the changes coming and it does help to offer insight.  My questions was more or less asking you what your thoughts were since we are both in Florida.  Hopefully you didnt take my post as negative....

Adam,

I am up in Pinellas County by Madeira Beach and wanted to chime in since you had more information. I read that it was a fairly simple bill that was mostly concentrating on Maximum occupants per bedroom and more or less a small fee to register in the system. Any negative take away that you noticed that would impact the purchase or investor in general?

I was leaning on the positive side that if there is a small government/County fee to establish the home. It may mean more counties may adopt the STR versus banning them Thoughts?

Khu,

You can easily get into more than just (1) Duplex 2 unit with $50K to $75K in cash reserves. My biggest piece of advice would be to focus out of the state of California. May states ca provide a good return/cash flow on a purchase price of $175K to $300K. Now those prices do not exist in Cali for the most part but in states like OR, AZ, IN, OH, FL, TN they do in many counties.

Most of my investors who live in CA buy in those states above just to avoid the taxes, HOA, and over priced homes. Buying out of state can seem a little out of your comfort zone at first until you see it can be managed. You also do have to always hire a management company there are other options. For the most part you can buy a home that needs a little TLC or a home that is run key.

I would rather buy a duplex for $200K with solid rents versus a $800-$900K duplex in CA. even with higher rents once you calculate in the taxes, insurance and PITI based on the price its little to No cash flow.

All funds must go into new purchase or you pay on the boot.

Sage,

Vegas is a tough market and its slowly becoming an overpriced market in many neighborhoods. In some places its well over priced with HOA fee's that make Miami look cheap. I work with a lot of investors in Vegas and they are all headed out to buy their REI. Most of them are looking at places like the Oregon Coast that has huge potential for STR cash flows.

Texas is a hot market and priced much better than Vegas in more than a few markets. A lot of lake home options that can make for an easy Vacation home 10% down and then transition into a rental. Indiana, Ohio, Tennessee, and Florida are also on the Hot market radar for STR/VRBO and LTRs. MTR in Florida is hot due to traveling nurses, corporate remote work and other.

As far as vacant land goes Modular homes are taking a huge step into the REI market with some upgraded luxury home styles. The best thing about Modular is you do not have to break ground or wait 8-12 months to build. They are generally completed in 3-4 months and offer a much more cost efficient way to buy a nice home. They are also much easier to finance versus manufactured or Mobile homes.

One way to start is to get an approval to either purchase or build a 2-4 unit multifamily home as a primary. That way you can qualify for either FHA 3.5% down or Fannie Mae 5% down and once completed you can occupy one unit and rent out the other units. After you have lived there for 12 months get an approval to build or buy another 2-4 unit home to start the process all over again.

There are some tips and tricks to speed up the process to ensure you can buy or build another 2-4 unit. If you can find a vacant lot the bank includes the land cost into the loan so you save money in the long run. Biggest take away is finding a location or a property that you can run the numbers on any renovation or market to check future ARV/equity.

You want to have equity built up in the shortest amount of time to try and refinance to take cash out or take out a Heloc.  The cash you get form either of those options helps to cover the down payment on future purchases.

After you have purchased a few homes and have a good chunk of change you can get into 5+ units and start using DSCR to buy apartment style homes where you can focus on affordable living options and things like section 8.

Welcome a board and should you ever have any questions feel free to reach out or send a quick message.