All Forum Posts by: Nicholas L.

@Matthew White the answer is... it depends.  A loan for what - an owner occupied property, or a rental?  Try a couple big banks and a couple local banks and compare interest rates and closing costs.  If it's an investment property you're going to finance conventionally and not live in, they're probably going to be pretty similar in terms of origination charges and interest rates.  For big banks I've had a pretty good experience with Chase - nothing special, just found them to be responsive.

@Matt Aquino congrats and thanks for the detailed post.  When you purchased the 3 duplexes at once - how did you finance?  All cash, 25% down on all 3, etc?

@Rae Bryant do you have your own agent?

You said "Owner...will 'be around' after the sell, knowing I am a newbie" - this is irrelevant, do not include this in your analysis in any way.

@Joseph Griffith yes, it's about those things and also a lower barrier to entry.  If you go to purchase any old investment property, you might be required to put 25% down.  If you house hack, you can typically put much less down.

@Joseph Griffith I am not sure why you are so focused on equity; that's only one point of a house hack. Think about it this way. You buy a duplex using an FHA loan and live in one side, which lets you put way less down than if you used conventional financing.  It may or may not cash flow.  You build equity for a while.  Then you move out.  Now it's cash flowing (because both sides are rented out) and you have equity.  You move on to the next one.  Does that make sense?  Equity is only one factor of real estate investing.

@Jimmy Lieu that's right.  Except I wouldn't say that the property appreciated, you forced the equity via a rehab. And, as you might expect, it's very tough to find a property to buy for $100K that only needs a $10K rehab to take it to a $150K ARV.

@Account Closed that is awesome.  Good for you.

@Jimmy Lieu you would not get $40K in cash in your example, because you don't get 100% of the ARV out when you refinance. Say you got 70% out - that would be $105K. You bought for $100K, spent $10K on the rehab, and also had holding and closing costs - let's call those $10K just for ease of example. So you spent $120K and got $105K out. That's still great - you now have a property worth $150K that you bought effectively for $15K. But you did not get $40K in cash - you spent $15k.

And, why is cash better?  Because if you use conventional financing, you pay both (1) closing costs on the loan when you buy, and (2) interest on the initial mortgage while you rehab.  If the property is bought in cash, there is no up front loan (no points, no origination fees, etc.) and no interest to pay during the rehab.

@Trey Klauss got it, that makes sense.  I definitely agree with a welcome letter, and any information tenants need to know.  I give mine a one-page "cheat sheet" that has information on what utilities they are responsible for and how to set them up; details on move-in and move-out and associated fees (for my condos, this is applicable and a huge deal); and a copy of the tenant handbook.  Are your rentals high-end / high cost?  If so, I think wine and a gift basket would be greatly appreciated.  Other threads:

https://www.biggerpockets.com/forums/52/topics/405438-welcome-gift-for-a-new-tenant

https://www.biggerpockets.com/forums/81/topics/454017-gift-baskets-for-first-time-tenants

@Trey Klauss I think this is a great question, and there are some good threads on BP about this, especially as to whether there is any ROI to the landlord. I give some of my tenants small gift cards at Christmas. Not sure if it makes them better tenants or not... but I like doing it. So I do it.

Have you listened to Joe Asamoah's episode on the BP podcast?  He goes all out on this type of thing with his tenants in DC.  If not, check it out - maybe it will inspire you in some way.

https://www.biggerpockets.com/blog/biggerpockets-podcast-356-joe-asamoah

@Joseph Griffith one of the reasons to house hack is because it enables you to buy an investment property with financing only available to owner occupants, like an FHA loan. Cash flow is one consideration, but not the only consideration.

BRRRR is most effective when you're purchasing with all-cash or something cash-like (like hard money.) It is much tougher to do with conventional financing.