All Forum Posts by: Michael Doherty

@Sal Morello and @James P. thank you both for your responses. I will definitely take that route moving forward. 

@Auria Moore So it is an FHA guideline that you 'live' there. From my experience no, they are not sending anyone to your house to check in. However, if for the off chance they do, you could be in trouble. My suggestion would be to just have your mail sent there to make it appear like you live there. But you are only going to be eligible for one FHA loan at a time. Meaning you cant use FHA for one house, not live there and have a second FHA mortgage.

@Filipe Pereira this is great stuff. I was actually about to post a similar question as James. As you may know I have two tenants living together upstairs from me. Rent is due the first of every month, so far this month only one tenant has paid. I looked back at the contract to which I assumed in the purchase of the property and it say's there is a 9 day grace period. 

This is my first time being a landlord. With that said what do you think reasonable steps would be to ask for the rent. Keep in mind I live in the same house so I don't want to create a hostile environment but at the same time it's a business not a charity. 

My thought was to first send a text to see if they had forgotten? And then possibly send a notice similar to yours. Thoughts? 

@Cade Ruthardt the loan originator will count 70% of rental income towards your debt to income.  

You should be able to qualify no problem - the only major stipulation is that you occupy one of the units. With regards to your income- you will only qualify up to a specific amount but they will also take into consideration many other factors such as current expenses, any debt, student loans, credit score and things of that nature. 

I personally just went through the process a month ago- if you have any other questions feel free to reach out. To Jaysen's point about duplex's, tri's and quad's he's not wrong, it is easier to make the numbers work with more units but it usually comes at a higher price tag- one which you may not qualify for.

I was able to find a great deal on a duplex I picked up for 185k with 6k back at closing. My total monthly expenses (P&I, home insurance, PMI insurance- required with FHA and taxes) come out to 1350 a month and I have 1250 of rental income (top unit rented) while living in the bottom unit. My point is don't necessarily discount duplex's as the the above example will be a decent cash flow once I move out.

I went through Eric Desrocher at The Mortgage Giver. The underwriter was Freedom Mortgage- let me know if you have any other questions. 

Just closed on my first MFH Duplex in New Britain, Ct. I am currently living in one half and renting out the other (house hacking). I was able to utilize an FHA loan, put 6,300 down and finance the rest.

I would first like to thank BP and everyone here for contributing and helping out. I can confidently say without the continuous content and support from the folks here at BP I wouldn't have had such a successful first purchase. After reading and listening to countless articles/forums and podcasts I was finally able to make that first plunge. The only way to get started is to challenge your self and be open to making mistakes, but more importantly learning from your mistakes. So with that said- the numbers:

Purchase Price: 180K

Appraised for 192k

Taxes: 3800 yearly

HO Insurance: 125 per month

PMI: 120 per month

Electricity: budgeted 50 per month (yet to receive electric bill)

Water/Sewer: 50 per month

Repairs: 5% of rental income

CapEx: 5% of rental income

Vacancy: 3%

No property management costs 

Cap rate: 9.79% which is decent for my area

Interest rate on loan 3.625% 30 year fixed

All in all my P&I, taxes and insurance runs about 1350 a month and I currently have the top unit rented for 1250 a month. Once I move out I will be able to rent my unit for 1000-1100 per month for a decent cash flow.

The house has already been redone- I purchased from a guy who flipped it. He bought it foreclosure from the bank for 47k and Invested about 75k into it, gutting the entire home. All new windows, electrical, plumbing, appliances, tile, paint, finished hardwoods and new roof provided by bank when it was foreclosed on. He stands to make a nice profit and I stand to have a turn key house that will cash flow- win win. 

I would recommend the BP calculator to anyone seriously looking purchase an investment property. It will save you time and money and help you determine which houses to walk away from. After going through the process I definitely have caught the "bug" and can't wait to get started on my next property. Currently deciding what to do next- flip, BRRR or another rental.

Thank you again for all the contributors on here and those who helped along the way. Please reach out with any questions or comments! 

I just purchased my current MHF using FHA- both units were occupied but it ended up being pretty seamless. The tenant I kicked out was okay with moving so long as she was given enough time to find a new spot (closer to work/friends) and was given a hand in moving.

The seller assisted her moving and I was able to occupy with no extra money out of pocket. The point is, simply asking if the tenant is willing to move might go over well. Especially with some help in the process and as long as the owner is okay with terminating current contact with no penalty's to tenant.

I am about to close on a duplex (house hacking) using FHA. I put 3.5% down and used that in my analysis. My 30 yr fixed Interest rate is 3.625% which is low in my opinion.There is no way 'really' to know what your exact interest rate is going to be until you start underwriting the deal. Rates my rise in the near future (again) so until you start underwriting the deal you can only ball park.

Your biggest asset if you plan to analyze multiple deals/ investment properties is purchase the BP property calculator (if you haven't already). They make it very easy to implement a specific strategy (BRRR, Flip, House hack ect.). From there you input all your data (that you know) and it will give you a good understanding of what the numbers will look like. I first started using my excel sheet for analysis but quickly realized my time is money and with the BP calculator I was able to cut down time and re-run numbers over and over again without the headache. In addition, not only will it help you analyze cash flow, but more importantly it will tell you which deals to walk away from.

Hope this helps.

@Jeshua Patrick

http://www.bankrate.com/finance/mortgages/removing-private-mortgage-insurance.aspx

This is as of June 23rd this year, hope this helps.