All Forum Posts by: Pat Lulewicz

In my experience, that 1-year rule is only in the context of completely moving out and using it as a "100% rental". The concept behind it is that the Bank will sell the note off, and those agencies which buy the note want to make sure they're actually buying a loan for a primary residence. They never would, but they have the ability to come by the house and make sure you're actual residing in it, and haven't turned it into a 100% rental. Otherwise, everyone would be taking out 3% DP loans on houses, claiming them as primaries and renting them out completely. 

So as an example, if you have a cousin who wants to rent your basement because they've fallen on tough times and pays you $X, would this be considered a "rental property"? Obviously not since you're still upstairs and using it as a primary residence. Same concept behind renting the basement out while you live there (Airbnb, ST or LT). That's why 1-4 unit multifamily properties can also apply for residential loans. You live in 1, rent out the rest, but its still owner-occupied by you.

From an insurance perspective, you walk a fine-line. If you don't tell insurance you're conducting business at your rental, any potential damages could be declined if you make a claim with them as a result of a renter destroying the place. Notify insurance, and you're definitely going to have to pay more in premium as a result of the increased liability. So therefore you're PITI goes up. Its a personal decision. There's also the requirements of Airbnb that i'm not familiar with and what exact type of insurance and supporting documentation they'll need. Definitely all things to look into.

Ramakrishna - I have done some researching and called about 10-15 institutions in NC for some projects in the Triad (BRRRs and Buy+Hold Investments). Feel free to PM me and I can share some thoughts/contacts.

I've used Dana Hamilton who works everywhere in the Triad. She is not on BP, but works with investors and is extremely helpful and flexible. PM me to grab her contact info.

I'm doing a BRRR in the Triad at the moment, so would love to connect and chat on these if you'd like.

@Bhavin P. Welcome! 1) Congrats on the engagement and future wedding. That's awesome. Could of thoughts:
1) If investing is your main priority right now, save your $110k of hard-earned money that you would spend on a downpayment and deploy it among a handful of rental properties. I sold my home when I moved to Raleigh and all that money from my prior downpayment was used for downpayments on rental properties. If you can get a few 10% ROI properties, you're talking about a passive 11k a year to cover almost 4 months worth of your personal rent in CA.

2) As far as building equity goes - remember that your $3,000 PITI is barely any actual "P" or equity. In reality, your equity build will only be about $5k/yr as your payments will mostly be interest. Would also be very useful to cover those high wedding costs!

3) Your analysis on NC is solid - the Triangle, Triad and Charlotte are all great places if you're willing to be creative. IL and IN can also provide you great opportunities, many of which you can find already pre-rented so you just stumble into cashflow from day 1 - these 3 are speaking from experience and current investments. PM me if you'd like to chat more and have a call.

It'll all depends on what your expectations are. I don't focus too much about the 1% rule or the 2% rule. I aim for anything that's around the 11% or 12%+ expected ROI with adequate CapEx and Maintenance reserves. So naturally you have to consider HOA and property tax variables as well. In addition, the "knowing the geographical market" discussion comes into play of where the rent falls within that $700-900 range, and where the rent could get within the next 2-3 years if you're making this a long-term play.

As with all things in life, "it depends".

Personally - I find a lot of success in the $700-900 range. If you follow the standard financial advisor rule of "rent being 25-30% of your income", this equates to an annualized salary of $33,600 - 36,000 for that potential family/tenant. This is a pretty reasonable salary expectation for any individual OR make renting even easier for a family. Not to mention, in the event of market downturns, you can get your previous high earners who looked for B+/A- rentals, to come down to a lower price range of rentals, but still have enough space and a backyard for their family.

Hi Tiffany - I'm an investor in the Greensboro area. Have properties in both High Point (20 minutes from GB) and Raleigh (hour from GB), and am always looking for partners and opportunities. Shoot me a PM

7 months ago moved from Chicago to Raleigh. Move was completely life-style based, and fortunately I was young enough where the down-side was minimal, and had all the up-side. These days its unbelievably easy to pack everything up via a moving company, find a place to rent within days (even in A and B apartments/townhomes) and get movers to unpack you. Terrifying at first but, as with all things in life, feels like I could do it at the drop of a dime now.

@Joshua Vilchis

@Joshua VilchisOriginally bank wasn't going to approve the loan because i did not have landlord or investor experience. Complained about it to my cousin during a holiday and he had been thinking about real estate for a while. It was a done deal after that conversation. We pooled our money into a joint checking account and off we went buying 2 properties in 2 months. We're riding about a 14% ROI after 1 yr and 3 months, and very happy with how its gone. Not planning to change that dynamic anytime soon.

Since then, I moved from IL to NC and have branched out to invest on my own as he does the same. We also help fund each others' short-term deals like BRRRRs or flips. We are always looking for something to invest in together if it makes sense; its just a cash flow/availability decision that we approach case-by-case.

If you can display a good business reason based on your strengths or abilities, partnering is the quickest way. I partnered with someone for my first 2 deals, specifically to get through underwriting and not lose a property, but it also made the capital generation easier. 50% (or even 10%) of a good deal, is better than 100% of no deal.