All Forum Posts by: Jaysen Medhurst

Hi, @Sergey Vasylkov, if you're looking to house hack AND get some cashflow, duplexes are not your best bet. Look at 3 or 4-family properties. That way you're spreading the expenses across more units. 

Look into FHA loans to get in for less than 20% down. BofA and Wells Fargo are also offering low-DP loans. I don't know any of the specifics there.

They key is to decide what you want and focus on it. Something turn-key that will attract great tenants or a fixer-upper where you can build some sweat equity.

You can definitely quit your job in 5 years, with some smart planning, hard work, and a bit of luck. BP just did a webinar on that.

@Douglas Depte, no need to do a full gut unless the mechanicals/repairs require it.

Hey, @Alexander Spira, I recently looked at a multi-family in Greenwich with what turned out to be an illegal unit. Didn't work out for a few reasons...

Yes, you can get in trouble for renting out an illegal apartment. Beyond just the local authorities, you may be committing mortgage fraud if you claim "illegal" income when you go to refinance. G

This sounds VERY fishy to me:

1) If the unit is illegal you're taking a huge risk buying it and continuing to rent it out. You can't evaluate this place while including the illegal unit. Nothing, but pain awaits you there.

2) The other red flag is that the owner wants to do all-cash. No time for banks? That's not how legitimate business people do things. I can almost promise you that once you dig in to this, some dirt's going to turn up.

I wouldn't be surprised if there are liens against the property or even that he doesn't have legal title. 

Run, do not walk away from this deal.

Hi, @William Toomey, welcome to BP. I love the enthusiasm. Reach for the stars.

20 unit properties is pretty big to start with...really big...

Beyond the steep learning curve of finding a property, evaluating and underwriting, finding financing, and then closing there are other challenges.

At that size, you're dealing with commercial brokers, very few of whom are willing to waste their time on someone with no real estate experience. 

Beyond that, financing is very different than traditional 1-4 residential properties. You'll have larger down payments (25% or more), higher interest rates, shorter amortization periods, and typically a ballon after 10 or so years.

I think that a 20-unit in the Boston area is going to be at least $2-3mm and probably much more. That's $500-750, just for a down payment.

Better to make your mistakes on smaller properties and ladder up to the bigger ones.

Not trying to burst your bubble. I think it's great that you want to jump in with both feet. There's a ton to learn and BP is a great place to do it.

Hi, @Daniel Colamartino, welcome to BP. You've come the right place to learn and grow.

Good luck.

Hi @Tim Porsche, eventually you'll have trouble continuing to do 10% down on future properties. Lenders are going to get wise fast and with a low DP your Debt to Income is going to go up fast (remember they won't count all of your rental income, only a part of it).

You might be able to work something out with a local/community bank. I would start shopping around to them and build relationships with the folks in commercial mortgages. Tell them what you want to do and see what they say. Local banks that don't sell their loans to Fannie/Freddie have a lot more flexibility.

The key is if (when) they say no, get clear guidance on what would make it a yes. Bigger down payment, lower debt to income? 

Good luck.

Hey, @Taylor McMullen, I'm in NYC and feel your pain.

I recommend looking at areas an hour or 2 outside your city. The problem with an expensive area isn't just the cost of the down payment. You won't see great (if any) cashflow. You're really betting on appreciation, which might be great. But what happens when there's an unexpected roof leak or the furnace breaks down? All of your cash has gone to a big down payment and you're not bringing in any money to rebuild your reserves.

There are places to invest closer than you think. Focus on areas that have solid working-class populations. The BRRRR strategy is a great way to obtain properties and continually recycle our capital.

Hi @Nnena O., you may not like this: you're not going to see the money for March, April, May. You didn't have a lease with this tenant, so your legal standing is already not as strong as it could be.

Heck, you'd probably spend more money tracking this person down, serving papers, etc.

Write it off and spend your energy getting a new, great tenant in place (with a strong lease) ASAP.

The cost of education...

Hi, @Mark Senecal, there's a whole forum category for Self-directed IRAs. You should definitely spend some time there.

Hi, @Bob DuBoise, welcome to BP.

You're going to have a difficult time getting hard money on your 1st flip. HMLs typically like to work with investors who have been successful already. 1 good flip might be enough to prove yourself.

You can explore conventional financing options like FHA 203(k) or HomeStyle. Those programs typically require that you live in the property for at least 1 year, which might not be the worst thing.

Can you raise private money through friends and family? Going all-cash is the best way, if you can make it happen.

Your best bet is to find someone in your market who's already doing what you want to do and try to partner with them. If this is really a good opportunity, then you won't have too much trouble. Offer to take a small "finder's fee" or no money at all, in exchange for letting you shadow them through the process.