All Forum Posts by: Jeff Schemmel

@John Woodrich (CPA) and @Scott Jensen (Financial Advisor) are the two local professionals and investors I know who are best equipped to properly answer this question and give you advice.  Both are local, people I personally work with, and have extensive tax expertise.

@Ashley K. Butler Nice update, and glad to see you're excited to house hack.  Give Craig Curelop's "The Househacking Strategy" a read.  I found his perspective healthy and energizing.  I like to "double-dip" by househacking and forcing equity, similar to what @Jordan Moorhead did when he was in Minneapolis; his network has really enabled me to be successful in a big way.  You can learn to own a property, manage tenants, make repairs, choose the right contractors for the job, what improvements make sense for the area/rental strategy, etc while househacking.  Good luck, you're so close!

I would also add, i'm not against non-owner occupants, and I tend to feel that a DOM threshold could be implemented such that 30 DOM is required for any corporate entity (like the one they're targeting with this) just has to wait 30 days for an owner-occupant to have a chance at winning the property.  That would still allow distressed properties that are typically not doable for a financed buyer to still be purchased and rehabbed by investors with the capital to do so.

Hey @Amarion Carter you are in the right place!  I recommend househacking as well.  Educating yourself on the local market, styles of homes, house hacking strategies, and lending options to buy your first place are some of the things you can do now that cost nothing.

Check our Craig curelops book called the househacking strategy and Brandon and heather turners book on the managing rental property.

I Househack here with my wife, our second, and we try to double dip by also making improvements within our capability to the property while we live there.  Reach out anytime, man!  Always happy to help.

@Jamil Khan 

SF365 & HF685 both directly state: family LLCs are excluded provided the following is true.  

(f) "Family limited liability company" means a limited liability company meeting the
following standards:

(1) it has no more than five members;

(2) all its members are natural persons or family trusts;

(3) all of its members who are natural persons or spouses of natural persons are related

Really hard for me to believe that "MOST investors" now won't be able to buy properties and turn them into rentals. Most investors I know are small LLCs. Also...preventing large investment firms or development firms from buying up perfectly good owner-occupiable SFHs and sMFHs is probably a good thing... We should be paving the way for more owner-occupants and knocking down that high barrier to entry to allow more people the opportunity to build wealth and own a home. It's a primary driver behind high sale & rent prices in MSP. It also probably helps sustain the quality/condition of properties in the metro if more owner-occupants buy them. People who live in their SFH, duplex, etc take much better care of the property and are more respectful and mindful of tenants in my experience.

1.) no, not in Minneapolis.  The average duplex is about 350k, 100 yrs old, and needs at least some short term repairs.  Don’t forget you also need to pay closing costs of 3-5% on top of your 20-25% down payment for a non owner occupant investment property.  You could buy a single family rental in Saint Paul with 50k and rent it via section 8 for a reasonable return.

2.) @Jordan Moorhead how far can 50k go for a non owner occupant investment property in Louisville?

@Account Closed While I do enjoy Fishtown like most millenials, I feel like the triplex is better long-term and probably supports a better cost of living reduction for you (hard to say without details). The big question I have is, does it meet FHA's self-sufficiency rule? 75% of the rents must pay the mortgage or you can't use an FHA loan to buy it. perhaps that will decide for you :) I haven't seen many 3 or 4 unit properties that meet this requirement in my market Minneapolis/Saint Paul, but I haven't kept up with Philly prices since I left there.

@Emily Capozzi I bought my first house hack with $5,000 in. I was broke when I bought it, and I got a bit of an unconventional property for househacking (SFH condo) but I was able to rent half to a friend and slash my cost of living by $750/m. That's the goal. Do what you need to do to get this part accomplished and learn from there. When buying your first deal, worry less about finding the perfect deal and waiting for the "BEST" opportunity and worry more about reducing your cost of living as much as you can. Don't be silly about where you buy, but don't wait a year or two to find a perfect deal and miss-out on the wealth building that househacking brings you. If you've got enough of a down payment, speak with a lender who demonstrates a track-record with investment property lending (bonus points if they're also an investor), and then partner up with a realtor who also knows investment properties (best if they are also an investor).

From there, just go see a few places and make it real for yourself.  Practice your deal analysis daily and develop a sense for what a deal looks like in areas you like and just be decisive.  

@Sophie Grizzle glad to hear this. Do you qualify for any low-down conventional options? Here in Saint Paul, I often recommend clients take advantage of a 5% down conventional option that's only available to first time buyers so they can keep that FHA in their back pocket for deal #2. Then you have two low-down options available instead of going FHA, then immediately to 15+% down payment on deal 2.

I found that who you partner with in lending is so critical.  they can seriously make or break your deal, and I would make sure you are working with someone that is also an investor, who knows the local multi-family market, and can give you some real advice on lending options and even creative solutions to get competitive in your local market.

I looked for value-add because I wanted to house hack, force equity, improve revenue, and capture both equity and cash flow as soon as I could.  This is the way if you can hack it and you're willing to get your hands dirty.  take good notes on capital expenditures when you're touring a property you're serious about and practice your deal analysis daily to train your mind to spot a deal.

Good luck!

 Did you hold rentals in Saint Paul?