All Forum Posts by: Mike Wood

@Jason Powell Yes, but the SFH was a gut project when I bought it. I picked it up for just a bit more than land value, with the original layout being a 2/2 1600ft2. We reconfigured in a 2/1 duplex, one unit being 850ft2 and the other being 750ft2.

I did spend more on the renovation to convert it to a duplex, and the finished project was worth less than a SFH, but I'm a build and hold investor.

I don't think it ever makes sense to convert a turn key SFH to a duplex, unless your talking a basement conversion.

@John Lee Yes, the damage would be deducted from the security deposit.  For what it is worth, you can purchase replacement handles for most OTR microwaves, and its considerably cheaper and easier to just replace the handle.

@Keith Everette Smith While I like the concept, and do build new rentals for long term hold, I question your $500/month in cash flow if your leveraged 75% LTV. That's incredibly high for a single family rental. Are you sure you have accounted for all your expenses? I can build in the $100/ft2 range in my area, but I would not be able to cashflow that high on a single family house (rents just would not be that high).

Whats your rental basis. My guess to get $500 in cashflow, you would need to be renting your place for more than $1500/month, and likely higher to cover all expenses like vacancy, capex, maintenance (which still exists even with new), management (if not self managed), etc.

@Zach Coleman I have built five new construction duplexes. For me, it takes around 12 months from locating/identifing the land/lot, until I can get the units rented. My area is very fast in getting the permit for construction, like 4 weeks or less, so that needs to be considered.

Unless you have tons of cash, you will need to a construction loan, which requires very solid financials to give the bank enough security to loan to you.

Building something from scratch is not as easy a renovation.  Tons of decisions to be made. 

Use the search function and you can find topics discussing the process of building new construction.

@Brandt Bronico  You will find that New Orleans is not short term rental friendly.  Our city counsel and mayor are for the most part against them (they see them as a primary reason for our affordable housing issues).  As mentioned by @Stephen Keighery, in most areas you need a homestead exemption (meaning it must be your primary residence) to get a STR permit. Other area that you an get a STR permit without a homestead exemption requires commerical zoning (think apartments complexes) and even there, there is limits to how many days you can rent it. This assumes the city figures out how to enforce the rules, which they have not been very good at up to date. But I would not bet that your STR would not be shut down, as the city started to enforce things and slapping big fines and having the utility companies turn off power and water to properties that were found to be in violation of the STR rental rules.

There are currently alot of properties that were previously used as STR for sale right now in the city. This is because they are not able to get another permit. I would suggest staying away from New Orleans if your goal is STR.

@Pierce Rubenstein  For the price, the rents are quite low.  $1200 in NOLA likely means each unit is a 2/1.  I would say that your expenses are low, insurance is crazy low (you likely aren't including flood, which may not be required, but should be considered), your termite contract costs is too low. I would also be surprised water/sewage/trash was separately metered, meaning owner pays. And as others stated, your missing lawncare costs (you may be doing this as you live there).

Personally, I would not be crazy about a 4 plex where the estimate cash flow was only $100/door.  On my duplexes in NOLA, im at least running $200/door.

WIth the above being said, there is something to be said about living in an area that make you happy.  If this allows you do to that, it may make sense for you. Then consider keeping or selling when your ready to move.  

@Alexander Vest 
I would highly recommend professional photos.  They make a world of difference, and almost every single perspective tenant will find you property on the internet, so photos are a very big deal.

I just did a photo shoot of a recently completed project in January 2020, duplex with each unit being a 2/1.  Cost was $120, this included photos of each unit and exterior photos.

@Wilson Lee Given that the unit has been in use continuously for 20 years, I would consider requesting from the city that the unit be grandfathered in.  It is very likely that this unit was not "illegal" at the time it was put in service, and having it being in continuous use for 20 years should have alot of sway with the local city officials.  While I am not in CA, in my area, if the violation has been in continuous use for 5 years without issue (i.e. no code violation issued or notice to correct), it will be accepted as being grandfathered in and no longer be considered a violation.  I would think it would be very worthwhile fighting this with the local city.

When I discussed this with my loan officer, he state he did not need any paper or statement from us that we were not in forbearance on our loans, but the soft credit pull would find any if they existed.  He was calling to give me a heads up in case we it was an issue for us, as it would cause the loan to be denied.  He thinks this will effect alot refi and purchases currently in process, particularly investor loans.

I am in the process of completing a cash out refi on an investment property, going thru a local community bank.  We are days away from closing, with everything being approved.  I got a call today from my loan officer asking if any of our mortgages are in forbearance, which none of mine are.  He advised that he has had two (2) mortgages be denied (one refi, one purchase) at the last minute after the bank ran the final soft credit pull and saw the loans were in forbearance, just days before closing.

He stated that his bank and most others are NOT allowing loans to be funded if the borrower has current loans in forbearance.  He even stated that he personally owns investor property with loans and had personally put them into forbearance not know it would effect his ability to purchase or refi in the future.  He also stated that the refi loan that was cancelled, the borrower was informed that they would not be able to do a refi for 12 months (going along the lines of what @Chris Mason stated above).

While that is the only details I have, it is worth getting it out there as this will likely affect alot of investors.