All Forum Posts by: Louis L.

I'd love to hear others' experiences creating a (secondary) mortgage with the seller of a property to finance a portion of the down payment. I am pondering the situation where the seller finances 10%, I put in 10% and the bank covers the rest.

Legally, how do you go about this process-who should I contact first? I hear some people make informal agreements but Id like it to be as official as possible. I understand the mortgage would be "subject to" and the seller would need to be comfortable with that.

Additionally, would it be possible for the seller to theoretically sell this mortgage on the secondary market? Does anyone have experience or know about this? Is it feasible/possible/common?

Thanks in advance!

@Brent Coombs Timing isnt the biggest issue for me, if I can get a good deal by going back and forth with the bank, i would certainly do it.

Good point @Ro Maga - Im sure there will be competition i should be aware of. I wont expect any miracles. Ive been monitoring some of the REO's in fort Lee/Gutenberg/Union city. A couple seem pretty good. Im not at all set on an REO to start out, but was pretty curious what these would actually sell for.

I posed the REO question because I was wondering who the buyers of these properties tend to be. Flippers? First-time buyers? It would inform whether or not i even pursue it as well as what the psychology behind the other offers is.

Can anyone list some benefits/drawbacks of purchasing an REO property?

Im sure there are more details I need to be aware of such as home inspection, making sure title and CofO are up to snuff. Any other big triggers I should be aware of?

Im looking to do my first househack in NJ along the hudson river, to be close to Manhattan. Prices across the river are dirt cheap in comparison and in many cases just a 15 minute cab ride! It seems things get picked up quickly, i do see some REO's listed online though.

Im wondering what others actual expenses are for mortgage recording tax. From my research (I live in nyc) mortgage recording tax for a $600k mortgage on an $800k multifamily is a hefty $11.1k (roughly - but im calculating this per the NY formula). I want to see if this is reflective of what others are actually paying.

I still have more research to do, but if my LTV was 96.5% with an FHA loan, this tax would be astronomical.

How have others dealt with this? I'm sure it varies by state but for those of you in a state where this is significant, how has it affected your returns?

Thanks in advance!

@Nicole (Dunlap) Pendergrass Great words of wisdom. I appreciate you laying out your numbers. gives some good perspective and something to sound my own calculations against. I really dont want to over-stretch myself with the larger down payment, which obviously makes the FHA loan so appealing. Also a good point that if i do not end up doing an owner-occupied investment, i need to consider that ill be making frequent trips to the property.

To clarify the rents i stated, i was trying to lay out the situation where the rent for the owner-occupied unit in the bronx ended up being able to collect more rent than an apartment in manahttan. So if your unit costs you 1750 a month but you could rent in manhattan for 1100 a month (which is what i currently pay), then this would be in my favor right?

Also how did you find managing your tenants and property while working a day job?

Again thanks so much for your details response!

@Avi Garg true - if I could get a roommate to cover my rent entirely then that's the best case scenario. I think it would be such a quality of life sacrifice however. It's something I have to consider. I may focus on obtaining seller financing. 

@Ceasar Rosas thanks for your response. My calculations actually showed the MIP and upfront charges made cash flow nearly impossible! Very reassuring to hear that others face this too. Seller financing of 5-10% seems to me like a better option. This will probably lead to my next post, about whether a seller that creates the loan for me can sell it off in the secondary market if I have awesome credit and income.

@Andrew JohnsonGood point about having the additional funds in hand. higher leverage really does free up cash to be used for other purposes/investments. Thanks for the tip on the interest rate for an investment property. That wasnt on my ind initially but yes i will consider this factor.

@George Hermann These numbers were all hypothetical - I used round numbers to try to illustrate the concept of my dilemma. But yes i would be the super and be interested in cutting expenses deeply, especially in the beginning when cash flow is smaller.

Ive been struggling with the following situation and would love other's input. What i've been reading so far regarding house hacking seems to not address the following situation. I live in NYC where we all know its a bit more difficult to househack in the true sense. Living in the outer boroughs isn't the most attractive given long commutes, less vibrancy etc.

Lets say im considering house hacking a 3 unit multifamily in the bronx or deep brooklyn for example. For simplicity each unit is equal in size and rents for a fictional amount of $3000/month/unit. For the moment, ignore by how much the property will be cash flow positive. If all three units are rented, that $9000/month.

Now this is where i'm stuck. Lets say my current small apartment in Manhattan with a roommate only costs me 1000$/month to live in. In this situation I can collect the full $9000/mo from my multifamily and pay my $1000 rent. Here i end up with 8000 for debt and operating expenses as opposed to 6000 if i had lived in one of the units.

In more concise terms, the spread between what my "househacked" unit rent is and what i could pay in rent in Manhattan (and not sacrifice quality of life) is positive.

I'm trying to determine if I am missing something here. Obviously there are financing benefits of the FHA or 203k loan, but as a millennial in a tough real estate market, this is my natural progression of thought.

Thank you all in advance for your input and advice. Much appreciated.

Ive been struggling with the following situation and would love other's input. What i've been reading so far regarding house hacking seems to not address the following situation. I live in NYC where we all know its a bit more difficult to househack in the true sense. Living in the outer boroughs isn't the most attractive given long commutes, less vibrancy etc.

Lets say im considering house hacking a 3 unit multifamily in the bronx or deep brooklyn for example. For simplicity each unit is equal in size and rents for a fictional amount of $3000/month/unit. For the moment, ignore by how much the property will be cash flow positive. If all three units are rented, that $9000/month.

Now this is where i'm stuck. Lets say my current small apartment in Manhattan with a roommate only costs me 1000$/month to live in. In this situation I can collect the full $9000/mo from my multifamily and pay my $1000 rent. Here i end up with 8000 for debt and operating expenses as opposed to 6000 if i had lived in one of the units.

In more concise terms, the spread between what my "househacked" unit rent is and what i could pay in rent in Manhattan (and not sacrifice quality of life) is positive.

I'm trying to determine if I am missing something here. Obviously there are financing benefits of the FHA or 203k loan, but as a millennial in a tough real estate market, this is my natural progression of thought.

Thank you all in advance for your input and advice. Much appreciated.