All Forum Posts by: Matt Huber

@Account Closed

Thanks to both for the advice! 

@Alex Forest I noodled this over with a loan originator today. She read directly from the Fannie guidelines. We found that it doesn't qualify as a single family with ADU because "The ADU must be subordinate in size to the primary dwelling." In my case, both houses are the same size. (They are essentially duplicates of the same house.) Further, the Fannie definition of a 2-4 unit property is "A property that consists of a structure that provides living space (dwelling units) for two to four families." It seems to me that this specifies that the two units must be contained in a single structure in order to be eligible. The property I'm looking at has a total of 2 units in 2 separate structures.

So, unless there is some guideline that specifie properties with 2 units in 2 structures are permitted, I think that getting this funded with a conforming product is unlikely. @Matt Devincenzo if you have a precedent or any authoritative reference, I'd love to hear it. I'm not sure I can structure this deal to work with a non-QM product.

Now, is it possible that one of the houses is a little smaller than the other? (ie "subordinate in size) Sure; after all, two stick built houses constructed to the same specification will probably be slightly different (if you want to get out a yardstick). Is it possible that an appraiser would report this as an SFR with ADU? Again, yes, but I unlikely I think. But even if you made it over this hurdle, the next problem is finding good comps to support the sale price.

And to think: I expected this to be a relatively clean deal!

Hey Huntsville folks,

I'm wondering if there's anyone in HSV operating in the 5-20 unit MF space might be available for a few questions about the valuation and marketability of a unique property. 

Please PM if you're able to help. Many thanks in advance!

Hey BP community,

I'm trying to fasten some fixtures to the wall of a garage, however my Zircon stud finder is giving me erratic readings when I run it over drywall. I know that the adjacent wall is a plywood shear wall, so I suspect the wall that I'm working on is the same.

Anybody have good advice on precisely locating the studs on a shear wall?

@Ned Carey I agree, sounds like they just use PITI. I've talked to a couple of non-QM lenders today and the rates and terms are quite a bit better than I expected.

@Matt Devincenzo Yes, it is two single family homes on one parcel. The houses are almost identical. Each home is 3 beds, 2 baths, very much like tract homes (but no garage). So you're saying they should qualify for conventional financing?

@Daniel Hennek

I understand and agree with all of the above. Subdividing was my first thought on this, however according to the engineer on the project, subdividing into 1 house/parcel is not possible.

Appreciate your feedback.

@Daniel Hennek 

They have separate addresses and utilities are separated. So I guess the financing solution is now in the non-QM / DSCR realm?

@Ryan Garrison @Nick Belsky @Ned Carey

Cool, thanks guys. Yes, it will be a single tax / parcel number for both houses.

I've never used a DSCR loan before. The rents are currently about 60-70% of market. We plan to fix that after the leases expire, but as far as historical income goes, I don't think the DSCR would be high enough.

A question about DSCR loans for small properties - is there a standard algorithm that a lender would use for maintenance and repairs? Or is it based on historical expenses?

Thank you Niobe for the great info.

I did look at fire insurance, was quote about $5500/yr. 

It was fun to think about operating an STR up there, but I'm not going to touch it with a 10 foot pole. Between the regulatory environment and fire insurance uncertainty, I'm out. For those who got in early, at a lower price point and got their permits before the quotas and buffers, it's probably worth it to keep going. But for a new entrant, this would be an endeavor of passion, and not of steady, sustainable YoY cash flow.

Best of luck to all who are doing it, and thank you again for the advice. For me, this was a shiny object; I'm sticking to long term rentals in cash flowing markets.

Hey guys,

If a property has two single family homes on one parcel, could it be eligible for conventional small MF financing? i.e. be underwritten like a duplex?

Thanks in advance!