All Forum Posts by: Scott Trench

Quote from @Mike Levene:

Thanks @Scott Trench this makes a lot of sense. We have talked about things such as rent by the room and acknowledge that the operating model will likely be very different while living in the property vs. when we move out.

I think the point you made about assumable loans is very helpful to get into a property you might not otherwise be able to afford. Of course "hoping" rates will come down is not a sound strategy so finding a way to assume a loan that already took advantage of low rates is a great option.

If you were starting over and targeted a large SFH, would you try to maintain the property in a way that would still attract regular homebuyers (not investors) if you needed to sell? I suspect maximizing the investment might make it slightly less desirable as an owner or at least the renovations might have lower ROI if sold to a homeowner. For example, an ADU is nice for a rental, but not every home buyer wants to pay a premium for an ADU on their property.

This would be case by case and property dependent. I think the ultimate situation for what I described above (not the plan, but a possible outcome) could look like this:

Rent main house by the rooms while constructing ADU. When ADU is complete, rent it or move in and remodel main house.

After a few years, I think it is highly likely (again wouldn’t count on it, but would leave the possibility open) that CO allows and encourages those who build ADUs to subdivide their properties so that more people can own their homes.

sell the ADU and main house separately, benefit from enormous upside. Until that happens, enjoy major cash flow.

I think that you have to take what the market gives you when it comes to house-hacking. 

The problem is: 

A traditionally financed low-down payment house-hack with traditional long-term rents simply won't cash flow during occupancy, or after, in many MCOL-HCOL markets in the US. 

95% leverage at even 5.7% just won't work in a lot of cases right now. Hard to produce cash flow or break even with that much debt, at that rate.

House-hackers, however enjoy certain one time (non-scalable) advantages that should be taken advantage of in the early days: 

- They can assume pre-existing debt like VA and FHA Loans (rather than take it on Subject-To which is dramatically riskier).

- They can rent by the room and self-manage to produce day 1 cash flow.

- Many of these HCOL areas also have strict limitations on AirBnB or short-term rentals... that do not apply to owner-occupants - thus allowing for extreme cashflow potential for house-hackers. If no one but owner-occupants can STR... then that should mean opportunity for owner-occupants who STR their primary residences in many jurisdictions.

- Large remodels or construction projects (Live in Flip) can be self-managed, worked on directly, and the value add, after 2 years, is largely tax free up to certain limits. 

- Many areas around the country allow for ADU Construction - house-hackers enjoy similar benefits to remodeling projects by being naturally on-site for ADU construction.

Putting it all together: 

If I were starting over and looking for a house-hack in Denver, CO today, I'd be looking for a 4 bed / 3 bath property in the $500K - $600K range in an up and coming area (like Aurora near the medical campus). I'd be looking for a property with an assumable mortgage on AssumableLoanFinder.com (Screenshot below of live deals available today for a house-hacker). I'd underwrite the property, with that low interest rate assumable mortgage, to cash flow positively from day 1 as a long-term rental, but be willing and able to use the rent by the room strategy or to rent out part of the property as a Short Term Rental to dramatically increase cash flow during my occupancy. 

The ideal property would meet the above criteria, AND would have a large yard, or ideally, a detached garage that was a suitable candidate for an ADU construction project (CO now allows ADU construction on most properties), and/or a primary structure that had lots of value-add potential.

This might give a one-time (non-scalable) boost to cash flow, offer multiple value-add options, and allow the house-hacker peace of mind, via the assumed mortgage, in long-term breakeven or positive cash flow in the event that the value-add plans end up not being executed, and/or the person has to move out, and rent by the room or STR become unavailable for some reason at a future date.

@Barbara Potts - you should check out PassivePockets.com - a new platform we introduced just yesterday! There is a storage deal that is actively being raised for over there that you can practice analysis on.

Here's a spreadsheet I made that will help you think about the house hack vs buy vs rent decision - available for free here on BiggerPockets: 

https://www.biggerpockets.com/files/user/scotttrench/file/ho...

Two conflicting truths: 

- Wholesaling is definitely a real part of the real estate investing industry and makes up at least 3-5% of transaction volume by members of this forum when polled, especially flippers. 

- I believe (and will bet anyone who cares to oppose me) there are less than 1,000 people in this country who can claim $100K or more in assignment feels or similar wholesaling income for at least 3 years in a row. Yes - I believe that odds are better at making an NFL roster than sustained modest six-figure success in wholesaling.

Most of this industry is filled with broke no income no job, no assets types who paid a large educational fee to one of the ~5-20 major gurus in the space and will never make meaningful income. Worse, they pollute otherwise reasonable deals by re-listing other, more legit, wholesale deals as their own in a daisy chain-like process. 

But, there are a few home runs out there. And a few who do real, sustainable business.

For an industry that loves to hate on agents, it's remarkable how most of them earn less, and do nothing compared to their peerset who simply get licensed. 

Welcome back, @Sabrina Shaulis. Your situation is surprisingly common. Did you know that each week, several thousand people sign up for BiggerPockets, but nearly 10,000 RETURN to BiggerPockets after being away for more than 90 days (often for years). 

This is totally normal for investors. The key is to do what you just did, and introduce yourself to the community. I’d also recommend networking with a couple local investors in your area, including a few agents and one lender. 

Doing that will get you a couple of touch points that will bring you back to investing and be that little push to whatever "pull" brought you back to REI and BiggerPockets!

Also, doesn’t hurt to analyze a few deals using the calculator :) 

Welcome to BP and thank you for joining as a Pro Member! Please let me know if there is anything we can help you with. Definitely encourage you to practice analyzing a few properties using the “Deal Finder” at the top of your screen, and the Calculators (Under “Analyze Deals). 

That’s the most direct path to getting comfortable making investment decisions, alongside connecting with a few local agents in your area. 

I agree that Florida real estate prices (and rents) are likely to either grow less quickly than the rest of the country, or decline more rapidly. Florida as a state, and many of it's major markets are some of the worst positioned in the country for real estate investors in the near-term. 

But, affordability is only part of the issue. New supply and rising expenses are probably even more impactful.

Florida has some of the most new construction going on in the country, and is seeing rapid increases in insurance costs. These two things directly impact gross rents and cash flow. 

While it's not AS bad as markets like Austin, TX, Florida real estate is near the bottom of my list in terms of return potential for the next 1-2 years. 

Long-term? As long as you don't fear climate change impacts, Florida is probably fine and buys today will probably work out great over the decades. But, I would not bet on a boom in rents or prices until 2026 at least. 

@Dan H. I think AI generated posts are like [insert euphemism]. You know it when you see it.

Let us know when someone is using AI to create generic, useless posts, and we will remove it. If someone uses AI to supplement original thought in an extremely valuable way… don’t report it and let’s thank them and learn from them. 

Quote from @Nathan Gesner:

Quote from @Scott Trench:

We need to find a way to reward high quality, human generated content, and deprioritize low value posts to discourage workarounds. 

I agree. Something like a $1,000 bonus for every 5,000 posts? 

Two tickets to Cancun for every 20,000 posts?

Partial ownership in BP?

 @Nathan Gesner - while I cannot give you an ownership stake in BiggerPockets (let's talk at 100,000 posts...), I would be very grateful if you choose to attend BPCON, and your 26,550 posts have certainly contributed so much value to this platform and not just the tens of thousands of people who you responded to, but the hundreds of thousands or millions more who have read your comments, that I'd be delighted to give you (and a guest) a completely free ticket to BPCON Cancun, including food, beverage, access to all events, and a room at the 5 star moon palace resort.

@Alexandra Hughes Pailet - Can you please help Nathan get set up to Attend BPCON? 

I also, for the record made the same offer to @Jay Hinrichs, but he can't make it this year.

You guys are the top two forum posters of all time here on BiggerPockets, and we are grateful for you all you do!