All Forum Posts by: Rick DiAgostino

@Matthew Conner

Wow great thread. My brother and I were asking the same question, since I would be the non-occupying co-borrower and he would be the occupant. Looks like anything beyond an SFR we can not use the FHA loan

Jordan,

I hope all is well! I am a house hacker in Middlesex County looking for house hack #2 at the moment. What type of real estate are you involved in down in South Jersey? Would love to link up and discuss real estate strategies.

Rick 

Hey Ravi,

I replied to another post of your just a moment ago. In my experience when determining if a house hack is good it needs to meet 2 criteria.

1. When I am living in the house hack this property must be cheaper than renting and saves me money. 

2. When I leave this house hack and this turns into an investment property it must cash flow and meet the standard investment criteria (cap rate, cash on cash, etc.)

The calculation for a house hack is different and more involved then an standard investment property. The best case situation is when you can find a house hack that will cash flow while you are living in it, but its OK if you need to pay a little bit while you are living there, because it is financially advantageous for you and you get plenty of other financial benefits (loan pay down, tax breaks, cheaper then rent living). You just need to make sure after you are done living in that property you are cash flowing.

For example: I have a duplex house hack. My monthly payment is $3,200 per month and I receive $2,250 per month in rent. When I leave this property my rent roll will be at least $4,200. Before this house hack my rent was $1500. I have cheap rent now, and cash flow later. It's a win-win. 

Hope this helps!

Rick
 

Hey Ravi, 

I am a house hacker in Middlesex County NJ. I purchased my duplex in December 2019 using an FHA 203K loan (the house was in disrepair and required a construction loan). The home cost $340K with $30K in construction cost, which seems to be similar to what you are planning to do. Reach out if you would like to discuss further.

To answer your questions: I built my own excel calculator that matches the bigger pockets calculator, not sure what a pro forma sheet is, I am not at the point where I want to do a cash-out refinance but am hoping to refinance to a lower interest rate soon, I just passed a year in the house and my wife and I are looking into property #2 for 2022 so we will be here for a little while.

Something I want to mention to you is you plan on the conventional financing. Conventional financing is a great option, but for multifamily homes conventional financing is a little tricky. In my experience the bank would require a 25% down payment for a 3-4 unit, and a 15% down payment for a 2 unit. I would absolutely recommend the FHA option because you can have a 3.5% down no matter if its a single family or a 4 unit. There are obvious drawbacks to FHA (mortgage insurance and higher interest rates) but you can always refinance in the future to a conventional loan.

Best of luck with house hacking! Its really fun!

Rick

I should also add that if you do a 203k loan you require to use a 203k registered contractor. So the work required can not be done by any contractor.

@Jerome Adams

Hey! When I purchased my fixer upper back in December 2019 I also did a 203K loan. The contractor I used, and recommend, is 203K Construction LLC. The person who I worked with is Chris Silva and he was great! They were reasonably priced and worked with us to get our project budget within the cost requirements. They even came back and patched a few things no charge. They did a good job.

Best of luck with your potential 203k fixer upper!

@Dave Smith

So I am currently in the northern part of the county (near the town of middlesex). There are some great investment opportunities along the train line (plainfield and bound brooke area). I personally think this area is unique since the single family homes cost about the same or more as the multifamily homes.

I'm not sure what your situation is, but house hacking (the strategy I am currently using) is also extremely easy to do here. There are so many great house hacking opportunities. House hacks dont need to cashflow to be a good investment. As long as it will cashflow when you move out.

Also, there is nothing wrong with investing in a good index fund (I like vanguard).

@Dave Smith

I would not recommend relying only on appreciation. I purchased a house hack in middlesex county that does cashflow. There are many locations in this county that will cashflow.

I would also recommend trying to find something that requires a little bit of work to fix it up. Sweat equity is another great source of wealth creation and there are plenty of opportunities in middlesex county for that as well.

@Adrien Salvador

Hey! I too am a mechanical engineer (MEP design engineer in NYC). I'm 26 and my wife and I currently have a house hack and are on the sidelines for a second investment property.

Nice job with the quick real estate growth. How did you get your second property? Did you BRRRR or get a second personal loan? Curious because I'm in the planning stage and want to see what other people are doing in the area.

@Briana Gilbert

Hi! We purchased around the Plainfield area on the Raritan Valley train line.