All Forum Posts by: Mike Malyy

I typically stop by a dollar tree and put together a small welcome package for $10. As Chris above mentioned, I get shower curtain, toilet paper, paper towels, hand soap, body wash/shampoo, and a welcome greeting card. After a day of moving, it’s nice to be able to take a shower or use a toilet without digging through your boxes or driving to the store. It’s a cheap way to start the relationship on the right foot.

Hi BP community,

I would like to get your opinion on my situation. I am currently under contract to buy SFH (3/1, 1058sf), with a half done garage conversion (450sf). Previous owner already put in a full bath and weatherproofed it, but hasn't done anything else. Because I will be doing the rehab and garage is a clean slate, here are a few options I am considering:

1. Convert it to a master suite, which will make the house a 4/2 with 1500sf
2. Convert it to a studio
3. Convert it to a 1/1 

My goal at the moment is to maximize ARV for refi, but I am not sure how the appraiser will look at it. Once the refi is done, garage will most definitely become a 1/1 for additional income. My dilemma is whether I should just go for it right off the bat, which will save me some money, or make it a master suite first, and then convert it after the appraisal.

Thanks for your time.

@Nathan Leger I was in your shoes 2 years ago. We would get together with buddies and all discuss our strategies of how we are going to become RE moguls. Reality is, everyone is afraid of the risk. Out of all my buddies, I went out and got a duplex to house hack in. Wife wasn’t impressed as she was on week 36 with our first boy... To this day, none of them bought anything and I already moved out and getting ready to buy another property. I’m still afraid though because in my market it’s tough to make numbers work without being creative, as all the “deals” get snapped up by people with established systems and connections.

You won’t overcome this fear on your first, or second, or third deal. I would just say go get a property to house hack with 5% down conventional loan. It will keep your initial investment to a minimum. Do some rehab yourself, hire 1 or 2 contractors for specialty labor, self manage your tenant. All of that will be an incredible experience and will allow you to become more confident. Fear won’t go away, but as you scale up, and it may take a few years to get your second property, your confidence will overcome your fear. As they say on the podcast, there’s not one investor who owns just one property.

Best of luck.

@Patrick Thomas Dickinson I used AmeriSave. In the end, they gave me the best deal out of 8 lenders I shopped. If you want contact of my loan officer, send me a DM, although I would still encourage you to shop your local lenders as well.

@Patrick Thomas Dickinson I refinanced my investment property (Duplex) earlier this year at 2.875%, but I did by points. If you are not planning on selling your California property any time soon, you might consider going that route.

@Moaaz Malik I was in your shoes 2 years ago, except I didn’t have that much capital. I’m in Sacramento and only had about $15k to get started, plus my wife was really skeptical about all of this.

I wanted to go OOS and BRRRR everything, just as it is promoted on BP, but in the end I had a really tough time finding an agent I was comfortable on using in the market that I was looking at and couldn't overcome the fear of getting taken advantage of, so I decided that I will start locally, even though it would be really tough for me financially.

What I ended up doing is finding a duplex to house hack and borrowing the rest of the money for down payment. I did 5% down as I lived in it. It also needed about 20k in rehab. Due to appreciation, I was able to refinance it this year as an investment property and pull some cash out, pay off my debts, and keep some for next deal. One side now completely covers my PITI and my total CF for that duplex is $300 per door, but I do self manage.

Going forward, I'm looking to live in BRRRR, get a SFH and add ADU. Rinse and repeat. Maybe one day I will muster up the courage to go OOS.

I understand my process is slow, but it’s better than not doing anything. As much as I would love to get a 100 doors in 5 years, my realistic goal is to retire from my job in 15 or sooner.

@Codey Yingling My lease states 5% on first day (after grace period) and 3% each following day, until day 10, which is when I would give them 3 day notice. Rent is $1500 so this works out to be $75 the first day and $45 each day thereafter up to the cap of $300.

@Joe Splitrock Thanks Joe. Just to be clear, I don't intend to do anything illegal. Not worth risking my family welfare for this, but, there's wording in the code that if I put a tenant in there on a long term lease (6 months min), I'm allowed to use part of the property as STR, not ADU though. So I'm thinking of either separating a master suite, putting a long term tenant into the "majority" of the house and renting master suite as STR, or, putting long term tenant into ADU, and renting out primary property as STR. Still have to consult city planning on this. That also eliminates any day count limitations as this does not reduce the number of available long term housing.

@Joshua Kolnitys thanks for your response. I’ve got a few ideas of my own too as I believe there are loopholes in the law. Going to read the code a bit more thorough to see if I can make it work legally.

@Joshua Kolnitys But my understanding is Airbnb has all of your booking information stored and would provide it to authorities upon request. Also, we are legally required to store all information pertaining to visitors up to a year, which would also show that place is being booked for more than allowed. And even if you do book it for more than 183 days per year, it is no longer considered your primary residence... I know that a lot of owners operate Airbnb illegally in our area (number or registered STRs is lower than actual available STRs), but I’m not looking to go that route and that’s why I’m wondering what other strategies may be used. I was considering running it short term for 90 days and then use it for traveling nurses for the rest of the year, which still doesn’t solve the primary residence problem legally.