All Forum Posts by: Jon Schwartz

Can you use the rebuild cost calculated by your homeowners insurance provider?

Yes to both!

You can rent a room in your primary residence for less than 30 days. You can listed multiple rooms for rent, but you can have only one rented at a time.

And you can short-term rent your entire primary while you're on vacation. I believe there's a limit, though -- like only six months a year.

Airbnb's actually done a really good job of outlining everything:

https://www.airbnb.com/help/ar...

Best,

Jon

Joshua,

You have really great options!

Two opportunities really stick out to me:

1. As you clearly have a job, you won't be relying on your real-estate investments for immediate income, so you should strongly consider house hacking in the Bay Area. Let's say you spend the next five years working your butt off in the Bay Area. House hacking in the Bay Area for five years will 1) save you a ton in lieu of renting for that time, 2) earn you a ton of equity in principal paydown, and 3) earn you even more equity in appreciation. If you live in a HCOL area and would otherwise be paying market rent and have income from a day job, you should definitely be house hacking!

2. Spending five months in Dallas is an amazing opportunity to really understand a solid OOS market. Instead of getting drunk with your fellow trainees all weekend, you should spend your free time discovering neighborhoods, understanding what's up and coming, meeting investor-friendly agents, meeting property managers, etc. Dallas is a great market. Either way, you should come back to CA with a solid understanding of the city's many neighborhoods and good relationships with realtors, property managers, even contractors!

If I were in your shoes, I'd rent cheaply in the Bay Area from February to May. Rent a bunk bed in a shared bedroom -- stay cheap! Don't have any responsibilities in the Bay Area when you head to Dallas.

In Dallas, as I said, spend all your free time as an investor. Really know the market.

By August, decide to either house hack in the Bay Area or start buying up property in Dallas. The fall and winter are better times for buying, anyway.

Best,

Jon

If it's your primary home, I would refinance to a lower rate, then find the most competitive HELOC (home equity line of credit) product and open a line.

HELOCs offer a higher combined LTV ratio than cash-out refi's, and you don't borrow/pay interest until you actually pull money from the line.

Is this an investment property? If not, I'd refi for the better rate and open a HELOC.

If it isn't owner-occupied, take the equity out if you have (or are confident you will have) something to put it toward.

Love the videos on your site!

Best,

Jon

Agree with you there! 

He lives in LA, so LA makes sense for an owner-occupied investment.

Plus, do you know any LA real-estate investors who aren't filthy rich? This the best market in America — if you can afford it!

 Bill,

I hate to be the bearer of bad news, but the LA eviction moratorium prohibits all no-fault evictions. That includes owner-occupant relocations.

Additionally, LA has enacted a rent freeze until one year after the local emergency is declared over. So not only are you stuck with this tenant, you can't raise his rent anytime soon!

If I were you, I'd connect with an eviction attorney ASAP. My understanding is that if the tenant isn't paying full rent and hasn't gone through the necessary COVID protocol (namely, delivering a letter saying he was impacted financially by COVID), then you have ground to evict for non-payment of rent. You'll probably have to stop collecting any payments (accepting a partial payment will forestall the eviction process) and sit tight for a few months while your case goes to court.

Bottom line: don't rely on us knuckleheads. Google "los angeles eviction attorney" and get a professional opinion.

Good luck!

Best,

Jon

I really disagree with the notion that a house hack has to break even to be worthwhile.

If rent for a one-bedroom apartment on Long Island is $1500/month, but you can buy a duplex of one-bedrooms and live in one for a net cost of $500/month, you're saving yourself $1000/month. So long as your down payment and closing costs stay below $120K, your return on that investment will be 10% or better -- just in the form of savings instead of earnings.

If you're living in a high-cost area like NYC or LA, the savings derived from house hacking can be a game changer even if you aren't living for free.

Best,

Jon

@Amir Ainsworth, I'd recommend you start by house hacking in La Verne.

Two questions:

What are you paying in rent right now? And do you have income from a day job?

If you're currently paying a lot in rent and you have income from a day job, I would definitely house hack. The big benefits is house hacking in Socal are that you're able to significant reduce your cost of living while capturing the appreciation gains on a large asset. Over the next five years, the appreciation gains you'll make in Socal will significantly outpace the cashflow you'd experience from a Cleveland property.

Also, you really need an owner-occupant loan to get into a decent property. An investor loan will require 25% down, and with only $34K, you're looking at $125K or so max for an out-of-state property. You can certainly find duplexes in Cleveland for that price, but you'll be buying in a terrible neighborhood. Your cashflow will be eaten up by turnover and maintenance.

As an owner-occupant in La Verne, you can put, say, 5% down on a duplex, easily getting you to a $650K purchase price. Actually, you'd probably do better by putting 5% down on a house with an ADU in the back, living in the ADU, and renting the house. You'd maximize your rental income that way.

Anyway, if you have a day job, don't sweat cashflow right now. Spending a few years building equity is just as valuable as spending a few years building cashflow.

Best,

Jon