All Forum Posts by: Ryan Howell

Basically, your scenario doesn't cash flow if you take into expenses, vacancy, property management etc...its not a good enough deal. If for simplicity you assume you buying deals that meet the 1% rule, I think you'll see the DTI is more constant and your DTI goes up more gradual. Which means BRRRR may not work in your market or requires more work to find a worthy deal, but house hacking / live in flip, etc may work well.

I'm with @JD Martin, pay off the car loan. If $9k buys you ~$400 in cash flow by getting rid of debt on a liability and lowers your DTI... That's tough to do with a rental. Even a great BRRRR won't always get you that return on your investment. Plus on a liability like a car loan, its much easier to get upside down than on an asset that generally will appreciate.

Look solid to me.  You could consider diversifying into something that will give you more appreciation in the long run and keep a mixture of both to balance you risk.  It depends on your goals and what you want to accomplish.

Thanks @Account Closed - I'm an agent and investor in the area.  Happy to talk goals and understand what would work best for you.

@Klint Ruud. Those that bought assuming the STR market wasn't ever going to correct are struggling to pay extravagant mortgages for a few months will likely be out of the game, but COVID probably is going to grow demand for STR in the long run. Hotels will be hurt as people want more privacy and distance on their vacations. I believe that's will help the STR market overall as well as the camping industry, etc.

@Christian Trieu I would likely never buy in NY or CA, but it is dependent on your strategy and goals. I would say get your first deal in your area to learn the ropes, and then decide if another area better meets your criteria. It’s more important right now to get started.

@Łukasz Juraszek. In my experience 1% deals cash flows ~$100/door with 5% 30y fixed loans, in my market. When you factor in ~40% for property management, repairs, vacancy, capex, property taxes and insurance, leaving roughly 60% of gross rents for the mortgage and cash flow. I just refinanced at 3.5% which means I can cash flow at <1% rule.

What I have found is if you are buying a cash flowing deal and you get them stabilized on leases, then your DTI is relatively constant, as you're adding to your debt and income both as you grow. If you are stretching the first deal thin by pulling out so much it won't cash flow or you have one unit vacant / not under lease, then it can raise your DTI. Typically the lender will only count the rent if they are a long term tenant (years) or have a long term lease in place. This highlights the advantage of "cash" deals because you can get your tenants and leases in place before taking out the loan. In your situation the lender probably won't be counting that extra $1200/mo for you.

I would want to be able to pick my own tenants and buy with that unit vacant, but if you have to, maybe you need to get it filled beforehand.  Just be aware of the risk of someone else picking the tenant, as they have no incentive to work in your best interest. I would treat this as a last resort. 

Do you need $55k cash out?  Can you lower that to the minimum you need for a downpayment?  That may also help.

Mechanical Engineering - I wouldn't say the degree has helped, but the work ethic and skills I've learned through my career definitely have.

I just met someone doing STR's... They have four townhomes (not divided yet, so technically a fourplex), 6 bed / 4 bath each. They live in one and rent the other three. They are grossing ~$7500 each, easily netting >$10k. They are worth about ~$2M for all four. If you could get an owner occupant loan with 5% down (not sure since its in jumbo loan territory), that would be $100k down and you've done it in 1 deal.

Now...your question was the fastest way, irregardless of risk, etc...I think STR's in the right area would be the way to go.