All Forum Posts by: Justin Poulsen

I flew with a pilot a few years back that had a crashpad in Kansas City.  They had a crew car and he got insurance on it.  I don't know the type of policy.  But he said that whoever was driving the car was covered.  It was really expensive like $600 per month.  This was before Uber was big.  The car expense surprised him, but by that point he was committed.  

The car expense ate up most of his cash flow.  

I think you might have more luck looking for commercial car insurance.  All kinds of businesses have employees who drive their vehicles.  

With Uber now, I don't think the crew car is necessary unless it's a valuable perk to attract tenants.  

Good luck!

This is a great list.  +1 for Penfed.  

Crashpads have the potential to be a great investment.  They are not passive.  You are managing a community in top of managing the property.  

CVG is kind of a small market in terms of airline bases.  A base closure could make your business plan obsolete.  

if you do go forward there are a few things you need to plan for:

• transportation to or from the airport.
• house rules
• Regular cleaning
• Advertising

Getting established can take a few months.  Once you have a presence lots if your business should come from referrals.  Plan for all the expenses up front and little to no income for at least 2-3 months.  

There is definitely a need out there.  Good luck to you.  

The extremely low interest rates do present an opportunity to re-deploy some capital.   Since the property will still appreciate at the same rate with or without the mortgage on it the decision point is the rate of interest he would pay on the cash he accesses.  If he's paying 3% and can earn >3% in anything else then it's a go in my opinion.  Personally I would pay 3% to have a fully funded opportunity fund for whatever happened to come by.  

Stocks aren't my area of expertise.  I do know that in terms of PE ratio the market in genera could be considered expensive or over valued right now.  If your friend in confident about his expected returns in the market then the general market conditions shouldn't stop him.  

For any investment I think the advice to stick to what you know is really solid.  It would be terrible to take money earned from a good investment and put it into a bad one.  

One strategy I have seen work really well recently is to select a higher interest rate in exchange for a lender credit to cover closing costs.  This works really well if you're planning to keep the property for a relatively short length of time.  With your 1 year live in flip idea it could be perfect.  

As an example I just saw a loan with a $5,000 lender credit that covered all the closing costs. The rate was about .5% higher than without the lender credit and it changed the monthly payment by about $30.  

Good luck on your next project!

Kevin,

Congrats on your first rental.  I think the 1st one is the most important even if it's not super profitable.  The reason I say that is the first one is where you learn how this all works.  

Real estate is a great side business to pair with flying.  You can work on it on your days off, but it doesn't require a Monday through Friday type of commitment.  

Good Luck!

Scott, I am an airline pilot myself, I rent to other airline pilots in Chicago, and when I got my furlough notice last year I became a loan officer.  So, here's my take on your situation...

There is one loan program that allows the use of "Boarder income".  That is a home ready loan.  To use the boarder income you need a 12 month history of receiving it before it would be counted towards qualifying.  So if you have had a room mate for the previous 12 months who payed you rent and they are moving with you to the new place then you are in business.

That same home ready loan will even allow you to count income from a mother in law unit towards qualifying

If you're buying a multi unit property almost all loan programs will allow you to count a % of the expected rents from the other unit(s) towards qualifying.

There are 2/scenarios where you can have more than 1 fha loan.  Those usually involve moving to a new area.  

You can get a conventional loan with a 3% or 5% down payment.  From my perspective the big advantage of fha loans is they allow for higher debt to income ratios.  But they also have more fees.  Up front and monthly mortgage insurance which generally can not be cancelled.  

This 1st property will either springboard you on to the next one or be a drag for qualifying.  

If you are looking at the Utah Housing loan here's a little more about how it works.  

its an fha loan. You got 2 loans at the same time. The 1st is a standard mortgage for 96.5 perfect of the purchase price.  The 2nd loan is for 6% of the purchase price.  So you end up with total loans for 102.5% of the purchase price.  The 2nd loan covers the 3.5% down payment and most or all of the closing costs.

Utah has seen very solid appreciate the last few years.  Wil that continue?  If it does you would have no problem refinancing in a year or two.   But you may not want to.  The Utah Housing loan features higher fees up front but then really good rates for the duration of the loan.  The longer you keep it the better the loan it turns out to be.  

When you go to move out of your home you can use some of the rents that you will get from it to qualify for the next mortgage.  For most loans you would get to count 75% of the rent shown on the lease towards your qualifying income.

if the 75% is more than your PITIA than it counts as positive income.  If it's less than it would be negative income.

Good luck!