All Forum Posts by: Mike Cangi

@Mike Levins - $100/mo isn't cheap, for sure, but if it's the difference in making a confident decision for the property I'd say it's well worth it.

Even if you did as you suggested and canceled after 1 mo, I'm sure the data would be worth the investment.

Additionally, Mashvisor has a free 14 day trial that may be worthwhile (althought I've never use their service before): https://www.mashvisor.com/pricing

@Charles Prem - sounds like a good find!

I'd also consider a Fannie Mae Homestyle product: https://www.fanniemae.com/content/fact_sheet/homestyle-renovation-product-matrix.pdf

For a single unit investment property, they will go up to 85% LTV on the total: purchase + rehab

I'm working through one right now with my lender and can intro you if your interested.

Christina,

It sounds like you've built yourself a great opportunity with your purchase during the downturn!

There are so many different ways that you could go with this, but here is what I would do:

1. Cash out refi on your primary (likely able to pull 75% LTV with good rates)
2. Find a place to live for the next 12 months (a nice rental)
3. List your home as a STR and learn the game

Then you have optionality - if it's working well, use your refi cash to line up your next investment or search for your next primary.  If it's not working as you planned, you can move back in whenever you want and reassess the situation and next move.

This is the exact path that my wife and I have taken over the past 2 years.

1. Bought our first home (4 plex)
2. Renovated the units and listed 3 of them as STRs (http://bit.ly/thefifehouse)
3. Cash our refi (pulled out ~$80k)
4. Move to a nice apartment (literally across the street from our STR - https://bridgeonrace.com/)
5. Listed our unit as a STR
6. Instead of looking for a new primary, we just went under contract for our next investment and renewed our lease for another year (https://www.zillow.com/homedetails/109-W-Magnolia-Ave-Wildwood-NJ-08260/38390839_zpid/)

We currently have a 9 month old and found that we love the simplicity of apartment living and by renting instead of buying right now were able to leverage our refi capital to buy another property, which we will BRRRR :)

We may look for another primary in the future (specifically so we can leverage a high LTV loan product) but as of now we've been heading Grant Cardone's advice to "Own what you can rent and rent where you want to live."

Again, it sounds like you guys have a lot of exciting options, but this has been a great path for us.  Best of luck and keep us updated on the progress!

“If everything seems under control, you're not going fast enough” -Mario Andretti

Learning how to push yourself to your personal limit is challenging. Constantly look for situations that make you uncomfortable, it’s this situations that force you to grow the fastest.

@Carmela Zaragoza - I have no experience in HI, but I would suspect that $2k/mo would be no problem in the that area, especially if you follow some STR best practices and put in the effort to get the listing started on the right foot.

Similar to what @Julie McCoy said, we have 4 STRs in Philadelphia and our tiny studio apartments gross $2k+ in the slow months without issue.

It sounds like you have some more research to do, but could be a great opportunity.

Good luck and keep us updated!

@John D. - Great points here.

I love your idea of adding additional units and we are now looking at this more seriously.

We just completed a cash-out refinance of the property at a $1.025m value and that was based solely on market comps.  We are now considering a 4th story addition (2 studios) and conversion of the 2 bedroom unit into 2 separate studios.  This would net us 3 new units and bring the building to about 3600ft with 7 units.

@Alexander N. - it may also be worthwhile looking at a Fannie Mae Homestyle Renovation mortgage: https://www.fanniemae.com/content/fact_sheet/homes...

Homestyle loans require a higher down payment for 2-4units and loan limits aren't as high as FHA in some areas, but I think this could be a better option long term if you can figure out the remaining down payment:

• No upfront mortgage insurance premium (1.75% on FHA)
• Cancelable mortgage insurance (once you reach 22% equity) 

We bought our 4-plex with an FHA loan and it has been incredible - 3.25% interest rate and 3.5% down on $700k would be really challenging outside of FHA, but my mortgage insurance is almost $600/mo. And I will have that MI for the duration of the loan, unless I can refi out to something else (which will also be challenging because I got in at such a low rate)

So, there is definitely value in a 203k, but I would encourage you to look at some other creative solutions that might be out there as well!

Yeah, I agree with you and I think that is going to be my next step @Sam Shueh

I'm sure they will challenge the $150k/year as well, but I actually think those are conservative projections based on what we have been doing for the past few months now that we have all the units activated.

Yes, the units are furnished as well, but I was not including that in the NOI calculation because my understanding is furniture would be considered CapEx for my use.

You can see the units here: bit.ly/thefifehouse

@Patrick Liska - good feedback. I think the additional unit would definitely provide a substantial increase in NOI, but I thInk you make a great point about the upfront cost and I’m not sure if it would be the best investment long term (vs a potential down payment for another property)

I agree with you Alexander.  

Thumbtack/HomeAdvisor/AngiesList can be good starting points, but often leave a lot to be desired when it comes to understanding how a contractor really works.  A localized resource that shares previous investors experience with how a contractor deals with timelines, deposits, payments and subs would go a long way in determining the right fit.