All Forum Posts by: Kris Wong

I see a few problems with what you're asking about doing:

• If most of your down payment comes from a line of credit, then this will likely throw off your DTI ratio. You may want to talk to a lender about that.
• As @Kyle Rountree mentioned, an unsecured LOC will typically be quite expensive.
• You will not have any cash reserves. The lender will want to see 6 - 12 months of cash reserves (which you definitely need, in case any CapEx repairs come up, or you go through an eviction, etc...).

I would recommend you try to find a passive partner who is willing to finance the deal in exchange for equity (say 50%). Half of a deal is better then no deal at all.

Yeah, I suspect it's a YMMV kind of issue. In the past I have had to submit a simple letter stating that a particular item on my credit report was associated with a commercial (5+ unit) loan. That allowed underwriting to proceed.

The official guidelines are clearly documented here: https://www.fanniemae.com/content/guide/selling/b2....

Specifically:

The following property types are not subject to these limitations, even if the borrower is personally obligated on a mortgage on the property:

• commercial real estate,
• multifamily property consisting of more than four units,
• ownership in a timeshare,
• ownership of a vacant lot (residential or commercial), or
• ownership of a manufactured home on a leasehold estate not titled as real property (chattel lien on the home).

However, I am sure there are many lenders out there who prefer to be more conservative than the guidance (CYA).

In Ohio, the sale price is reported to the assessor at close. So, if your assessed value is above the purchase price, getting it lowered is easy. If it's the other way around, you're probably going to have a difficult time demonstrating the property is worth less than you paid for it. Perhaps it's possible, but I am not sure how you could go about that.

Brokers. Find the top brokers in that area, and reach out to them to introduce yourself and let them know what you're looking for. One way to go about that is looking at the listings on LoopNet in that area and calling those listing brokers. Once you have a list of brokers, you'll probably want to follow up with them occasionally. 

I think you need to start thinking a few steps ahead. Say you get it livable and lease it out. What next? What are your financial goals, and how does real estate fit into the picture? Obviously you don't want to house hack in that same duplex indefinitely. Are you going to try to continue to build your portfolio? If so, how? If not, then maybe you sell it and get yourself a place that you would like to live in.

I am intrigued by some of the other opinions from local investors. Admittedly it's been a while since I have been in Westwood, though I did live there for a short time. Some of my bias is definitely based on hearsay, so happy to hear that parts of the area are seeing development.

I would not invest in this area unless I found a home run deal. The west side in general is heading in the wrong direction. And you're seeing some of the people who have been pushed out of OTR (historically the most dangerous area in the city) moving to Westwood and surrounding areas.

I love living in Austin, but I am not looking for investments here. I am investing out of state, for the reasons mentioned in the OP. If you have cash to burn and are looking to play the long game, w/o the monthly cash flow, then buying here with a larger down payment may help you achieve your financial goals. It's not for me.

Never set yourself up for negative cash flow, or you have created a liability, not an asset.

My quick analysis, based on your numbers, shows a small cashflow at $1195 a month rent. I wouldn't do a deal in that area (not a great area), with an HOA involved, for a 5 - 6% return.