All Forum Posts by: Jon McCarron

@Jeffrey Allen

Hi Jeffrey,

For my house hack, I did 5% down payment. I bought that house with my girl friend. To fund the deal, we used a combination of savings, stock sales, and profits from another rental I have.

I think using the 5% down payment is a great way to get started with a house hacking and building your rental portfolio. I plan to do another within the next 12 months. We are refinancing our current property now to a conventional loan, so that we have the option of an FHA loan for our next multi-family house hack, this time will be a 3 or 4 family.

Hope this helps!

Hi @Account Closed 

For a house hack to work in my opinion, it either needs to make you make at the end of the month, or drastically reduce your living expenses. For example, if you had a rent payment of $1,000 a month, then you bought a house hack and had to come out of pocket only $100 a month, I consider that a win. Note: I tend to look at straight mortgage payment vs rent payment with that.  

However, be disciplined with your new savings! I have read some other comments about other expenses such as cap ex, maintenance, vacancy, etc., and all are important. The money you are saving should go into the property to cover these expenses, until you have a solid cushion. So the above example: you are saving $900 a month. The whole $900 should stay with the property in a separate bank account. Build up your reserves. You may have to determine what is a good amount. Once you have reached a comfortable reserve number, then you could put those savings to other uses.

Your example of a rent payment of $750 to a "house hack payment" of $400-$700 doesn't quite make sense to me personally. 

Other things to consider: Would there be a chance for value add? If you moved out of the unit, do the numbers work as a traditional rental? Could you do a small multifamily to house hack vs a condo? 

I love house hacking as a strategy. Doing one now with a 2 family in Beverly, MA with my girlfriend. We bring money to the table every month, but it is a serious reduction in what our old rent payments were. Had value add opportunities. Increased equity by around $130k according to a recent appraisal. We are refinancing to eliminate PMI and reduce interest rate. Obtaining a HELOC to increase our investments. And, when we move out, our unit will make it a pretty decent rental.

I hope this insight helps!

Hi Francis

With out any real knowledge of your goals or areas, price points of homes, etc., I would have to agree with some other comments and that you might not have the funds yet. However, this is a great time to learn. I would read as many books as you can on the subject. Read until the major points in the books all kind of sound the same and you can almost guess what the next chapter is about. It will help to be that immersed.

Since you are going to going to college (hopefully on campus), you might be able to get a job at a property management company. That could give you some hands on experience in the rental space, or at least see how to take care of property. This will also give you some income throughout the school year.

Keep saving, keep learning!

@Sam Abazari Do you handle South Boston?

Hi @Ryan Hazelwood

Great question! My age is 31. I have 2 rentals, 5 total units. I bought my first property a day after my 26th birthday. I partnered with my mom. The 2nd property I bought with my girlfriend at the age of 29.

Set clear goals, and execute! Would love to hear about that first deal when it happens!

@Mike Hoefling I did a cash-out refi on my 3 family in Salem, MA a few years ago. I believe they allowed up to 75% LTV. The company was called First Choice Loan Services, and was recently bought by Cross Country Mortgage LLC. I am not sure if they still have that LTV limit, given everything going on right now in the world.

A cash out refi will come with a higher interest rather than a regular refi, as a side note. I'm not sure if there are any banks that do HELOCs on straight investment property, but that could be an option to look into if you are looking to have access to cash. You should be able to do a HELOC if property is owner occupied with less difficulty. I guess it depends on what you intend to do with the cash once you have it.

Hope that helps!

@Jon Muldoon are there any areas in central ma you invest or are looking into? Hudson , Marlborough, Clinton? My girlfriend grew up in Northborough, so we thought about that area in the past. Just curious on your thoughts.

Have a great day!

@Greg Gervais I love that!

@David Shapira as far as inventory, Salem has more multi family homes for sale typically . I think they both have good prospects for the future. Both areas are still developing, following years of prior development. That’s why I like them both going forward.

I think It does come down to neighborhoods as far as competitiveness. I think Salem has more of those competitive neighborhoods.

@David Shapira I have done it in Beverly. Helped a buyer do it on a 3-family in Lynn with 5% down.

Look for distressed properties. Maybe it needs rehab, maybe it has tenants in the units, sold “as is”. Sometimes an investor who is doing a 1031 is distressed if their “clock” has started in that process. I think that why my above mentioned Buyer in Lynn got his deal. He got ~$30k off asking price, three new heating systems, and the seller even kicked in cash towards closing costs, which included buying down the mortgage interest rate. It was awesome!

I would definitely just keep putting in offers! Sometimes offers can win with terms and not just price.