All Forum Posts by: Jeremy Segermeister

Wanted to get everyone’s thoughts on this deal. I recently closed on a property in Hawaii because I never found ANYTHING that could cash flow in the Bay Area. I was not planning on buying another unit for a few months but I came across this one bedroom condo literally around the corner from my house for $439k. There was another unit in the same complex for $499k that is under contract now for ~$470k (slightly updated).

I put in an offer at $430k with an aggressive close date. The seller had another offer at full ask. Despite having the lower offer, I just received the verbal acceptance, on account of my financials and close timeline!

Now I’m a bit nervous because I wasn’t expecting to buy something so quickly. I expect the unit will be able to rent for $2500/month once fixed up ($15-20k in rehab). Nearby complexes with more amenities are renting for $3k+. Cash flow should be just about break even with 25% down.

I normally would not considering buying something to simply break even, but I’m very bullish on the area. It is right near downtown Campbell and is close to the future Google HQ in San Jose. There really are not many units at this price point which makes me think it will appreciate over the next 5-10 years.

What are all of your thoughts?

@Adam Mayberry

Thanks. So if I signed a long term lease, say 99 years.. would I be able to then build the ADU myself and either "sell" the remaining term of the lease or rent the unit out? This reminds me of a leasehold in Hawaii.

Hi All,

I see a lot of homes in my area that have detached garages that would make perfect ADUs. With the relatively recent changes to the ADU policies, I would love to find a way to invest in them.

Is it possible to buy someone’s garage or portion of their land and purchase it? I would need to work with the townships on some sort of subdivision of the lot.

Has anyone done something like this before?

@Jon Crosby

Very impressive! Nice job.

@Greg Gaudet My broker has a brand new program that enables him to offer conforming loans on some vacation rentals that can be considered a 2nd home. There are some unique restrictions, such as the condo cannot have a front desk and a few others. PM and and I’d be happy to put you in touch or provide additional details. Although it might not help you because you live on the island. I can qualify for the same type of loan again as long as I “upgrade” and my next property is more expensive than what I purchased.

And yes, very familiar with the on island representative requirement. That is why if I ever did take it over, my PM fees would not go down to $0. I still would want to pay someone to be a proper on island host and not just put the cleaners’ number down.

Jeremy

@Greg Gaudet

I purchased on Maui for the purposes of a STR. This is going to be managed by a property manager who will manage everything.

Purchase price: $450k

Expected gross annual income: $65k (I’ve stress tested this many different ways and under much more conservative assumptions)

25% down, 4% 30 year fixed.

$16.6k cash flow, 8% cap rate.

My break even cash flow is at about $44k gross (mortgage, taxes, property management fee, insurance, AOAO etc.).

At some point I may consider managing the unit myself and obviously my cash flow would go up significantly. Overall very excited about my first deal and ready to do some more!

Hi All,

About to close on my first property in Hawaii. My LLC is setup and ready to take the title of the LLC after the mortgage closes (I discussed this with my lender and no concerns over the due on sale clause).

However, I have yet to select a bank and credit card for the business. I did not realize I couldn’t open a chase account because they do not have any branches there. I’m thinking an online bank might be best.

Any recommendations? I just need an account that my property manager can deposit/withdraw funds from. I don’t expect a high volume of activity.

Jeremy

 I’m in Lahaina. How does yours perform?

I’m about to close on my first property.. it will be in Maui, Hawaii!

Hi All,

I've been reading a lot about the BRRRR strategy but am still confused about one thing. Assuming you are taking these loans out in your personal name, won't the banks stop lending to you after the first few properties? Or are they using the rent to keep the debt to income ratio down?

Also, I'm very conservative and hate to have these loans out in my name and put additional risk on my family and my personal household. I keep very high reserves but still would prefer to keep all liabilities in the LLC. I like to plan for worst case scenario. Any tips on getting these loans secured with the credit of the LLC? Do I just need to do a few deals with the same lender and they will eventually be able to lend to the LLC?

Thanks