All Forum Posts by: Drew Castleberry

I'm not familiar with Chicago, but I have house hacked 2 houses with FHA loans so far. The biggest thing is paying PMI which increaeses your payment substantially. Also l'm assuming that you're probably going to be putting down the minimum amount (3.5%)?

Depending upon what your plans are for the house, this is what I did with my first house hack. Utilize an FHA ARM loan. The rate right now I think is around 3.25%. This will lower your payment quite a bit and could be the difference from being able to cash flow your property or not. For me it was the difference, I was able to cash flow an extra $300 a month compared to a mere $50-$100.

The big thing is though that you HAVE to have an exit strategy before the rates rise on you. You would need to double check, but I believe FHA ARM loans still only go up a max of 1% a year and will cap out once you hit an additional 5%. So year 6 would be 4.25% and it would max out year 10 at 7.25%. So the rates wouldn't be crazy high, but it would still give you some flexibility if you need time to refinance.

I'm not saying its the option you should go, but its an option I used and it worked well for me. With saying that, I sold my property at year 5 and took out my equity to reinvest in another property.

I know some have traveled to the area and met with the Turn Key company and property management company prior to purchase (recommended by many here on BP). Of course do your research on the TK company (turnkey-reviews.com). Regardless if you do or don't travel to the area, make sure you do research on it prior to purchasing, ask local PM companies on the area the property is in, and be sure to always get an inspection done.

By doing a cash out refinance (assuming your 1st property will still cash flow) it provides you with the cash that you can utilize to use as the down payment for your 2nd property, rather than pull the money out of your bank account. So essentially the equity that was built from your renters in your first property paid for your 2nd property.

A con is that you lose equity in your 1st property and your cash flow is reduced as well. But you gain a 2nd property with no out of pocket expense.

@Brian Knox

You can count me in.

I would give him a couple options on seller financing. If he wants $75k, the give him $75k but ask for a 0.5% reduction in the interest rate, or amortize it to 30 years. If you offer him $70k, then give him his full asking rate. Or offer full price with only 20% down. Quite a few ways you can package it. In my opinion I would give him 3 options, non of them giving him everything he is asking for together, the deal should work for both of you. Ask him what his priority is (down payment, rate, etc) and then make your options based off what he tells you.

The only one's that are crazy are the ones that tell YOU that you're crazy! House hacking is the best way to get started! Good luck on your plan!

I'm no longer in WA but am from Pasco, the Tri-Cities area. It's a great area surrounded by a lot of different industries including DOE complex at Hanford, all the wineries in the region and much more. RE there is great, and there's a good stable economy. Rent levels are great and you should be able to find some decent properties that cash flow well that will be able to appreciate. My family that still lives there tell me what West Richland is growing the most, and West Pasco is a great area as well. Great areas that are convenient to everything.

If you end up deciding to invest in the Tri-Cities area I can let you know who what realtor and property management I've used. Both were awesome and took very well care of me.

Good luck in your search!

South Carolina is a great real estate market. Either the Upstate / Greenville or Charleston areas are great right now. Very business friendly and a TON of new well paying jobs.

@Joe B.

A few reasons why turn key companies would sell to investors (assuming the ones that aren't in it to screw people over)

1. Fast sales, many turn key properties are sold before renovation is complete. Minimal holding costs if any compared to having holding costs when they try to sell to an owner occupant.

2. If they're doing it right, they'll have repeat business. Happy investors means repeat investments and also more investors = more work.

By belling able to sell fast at a decent profit and being able to put those funds back to work is a huge benefit than potentially have a house sit on the market for a couple months at a time, in areas where there aren't many owner occupants. The markets they target are typically high cash flow areas.

Quick update - called around to a few more property management firms and and they stated that I should be able to rent it anywhere from $1,500 - $1,800 so the upside is there.