All Forum Posts by: Jessica Perkins

Hello Bigger Pockets Family!

I've been looking for local single-family homes to purchase.  I'm currently in Beaumont, California.  I purchased my home 10 years ago and have been house hacking it for 90% of the time.  My cousin lives 1 mile from me.   She just went through a divorce and needs to sell the home.  She knows I've been looking, so she came to me first.   I asked her to call her mortgage company to see if the loan is assumable...it is!

Here's what I'm up against:

Home location: Beaumont, CA 

Year Built:  2002 

Bedroom:4

Baths: 3 (Full) 

Sq. Footage: Approx 2700

Current Interest Rate: 2.375%  (yay!)

Current Mortgage: $2730 (PITI) - PI- $1680ish

Mortgage currently has PMI that is approximately $250/mo of the current mortgage.

Remaining Loan Balance: $386k

Years remaining on loan: 26

Home Value:  approximately $600k (no appraisal yet) 

Approx. equity: $214k

Home has leased solar for $300/mo.   She liked living in an ice box and didn't like having an electric bill. 

Home has a pool where her pool service is $165/mo

Interest rates are holding steady at the moment. One concern is homeowner's insurance. That's a nightmare in California at the moment with all of the fires. I would imagine property tax would increase   :(

My current situation:

Home location:  Beaumont, CA

Year Built: 2002

Bedrooms: 4

Bathrooms: 2.75

Current Mortgage (PITI): $1375 (will likely increase when HOI renews in August) *tear*

I currently house hack my house.  Midterm rental in one room and airbnb another room.  I currently live for free. The renters cover mortgage, utilities, yard service and streaming. I have been claiming the income for over 2 years, thankfully.   My midterm renter has been here 2.5 years now. He is a travel nurse and keeps renewing.  Easiest tenant EVER! 

I do not have $214,000 to completely buy out my cousin and assume the loan.  This means a second loan is in order.  I'm comfortable with putting out $65k of my savings, but no more than that.  I want to make sure I have plenty of emergency reserves.  

$150k @ 6.75% is $972.90.

I'm thinking the only way this will work is if I were to house hack in this house to have most of the mortgage covered.  I'm ok with not living for free in the acquired home if I move forward with it.  I could learn how to maintain the pool myself to cut that cost.  My travel tenant is open to moving over to the new house.  I would continue to airbnb rooms in my current home while I'm getting things sorted out.  I would be cashflowing at this house.  I could also rent out my house as a whole for $3k.  

Over a 30 year period, the low interest portion has a savings of over $300k.  If I were to finance $386k at 6.5% for 30 years- Principle and interest would be ~$2400.  Total interest over 30 years $494,323.00.  You would hope to refinance at some point in there.  >.<

Current terms: total interest is $133k on remaining 26 years of loan.  

Beaumont, CA has grown tremendously over the last decade.  New homes are constantly being built as well as big businesses coming to the area.  I'm not an expert, but I do not foresee property value decreasing much, even in this economy.   Even if it did, I plan to sit on this house.  

Thoughts?

Advice?

Suggestions?

What am I not taking into consideration?

Good idea?  Terrible idea?  

Greetings to the Bigger Pockets Community.  I've been house hacking for the last several years.  Part of this time, I didn't realize I was doing it.  I have a 4 bedroom, 3 bath home in Southern California.  For the past two years, I have been doing mid-term and short-term rentals for two of the bedrooms.  I've been saving my pennies and waiting for the two-year mark so I can show the rental income for a loan in the future.  I'm hoping to be able to find a home nearby that I can manage and rent by the room or house hack like I have been doing.  Last year, I was able to bring in enough revenue to cover the mortgage and all of the utilities with a little extra to spare.  I would like to grow my real estate portfolio and ultimately make real estate a big chunk of my retirement plan.  

Investment Info:

Single-family residence other investment.

Purchase price: $245,000
Cash invested: $58,000

House Hack

What made you interested in investing in this type of deal?

I was looking for a single family residence for me to potentially start a family in one day.

How did you find this deal and how did you negotiate it?

MLS - No real negotiations since the market was on the rise in 2014.

How did you finance this deal?

Conventional Loan

How did you add value to the deal?

Appreciation over time along with minor updates here and there.

What was the outcome?

Started renting out spare bedrooms to cover all or most of the mortgage.