All Forum Posts by: Seth Wilcock

Hi @Lee Wilber - there is a large back room/addition where I was going to put up a partition and separate that room from the hallway.  It's a good size and could easily be the master bedroom.  It has a window already, I just need to add a closet to make it conforming.

I'm under contract on this property and I'm looking for a second opinion on this project.

Would you do this deal? 3/2 single family residence BRRRR in St. Louis. The property needs some foundation/moisture mitigation work, a trash out, and a full rehab. Gross rent will be $1,000/mo on the low end, and $1,200/mo on the high end. A bid for the foundation and rehab are below.

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*This link comes directly from our calculators, based on information input by the member who posted.

Foundation/moisture mitigation bid:

Rehab/Renovation Bid:

https://drive.google.com/file/d/152kHeajMwed3ESagi4IN304sUmU..

I'm under contract on this property and I'm looking for a second opinion on this project.  

Would you do this deal? 3/2 single family residence BRRRR in St. Louis. The property needs some foundation/moisture mitigation work, a trash out, and a full rehab. Gross rent will be $1,000/mo on the low end, and $1,200/mo on the high end. A bid for the foundation and rehab are below.

View report

View Photos/Videos

*This link comes directly from our calculators, based on information input by the member who posted.


Foundation/moisture mitigation bid:

Rehab/Renovation Bid:

https://drive.google.com/file/d/152kHeajMwed3ESagi4IN304sUmU..

@Jared Schweiss - I was going to reply, but @Eric Veronica beat me to the punch.  What he said.

@Jennifer Dargento - it's a realistic goal, but definitely depends on a few variables.  The first question a lender is going to ask will be in regards to your employment and income.  You should expect some questions surrounding your intent to occupy the home as well.  If you have a job offer letter from a new employer, or a relocation letter from your existing employer, that will help.  I'd also recommend finding a good quality contractor in the area that is familiar working with 203k rehabs.

Hi Dalton - I might have an outlet for you.  Hang tight.

Hi @Mark Singleton,

Great questions!  Welcome to Denver if you decide to make the move out.

1. You can buy a 1-4 unit property with an FHA loan and put as little as 3.5% down. To meet the primary residence definition, you must have the intent to occupy the home for 12 months past the date of closing. After the 12 months, you can do whatever you want (convert to a rental, etc). That being said, the city & county of Denver has rules/regulations about short-term rentals. You would only be able to do a short-term rental in Denver if the property is also your primary residence. The city & county of Denver doesn't allow short-term rentals on pure investment properties. You would (however) be able to occupy for a year and do short-term rentals during that time in which you occupy. If you decide to move out after 1 year, you would then have to do long-term rentals instead of short-term rentals.

2. If you bought multi-family (2-4 units), you can use net rental income on the unoccupied units to qualify for the mortgage payment. The net rental income would work out to be 75% of the gross rent as determined by the appraiser after you're under contract. The gross rent would be based on long-term fair market rent, not short-term rental income. You can do this on FHA or conventional financing, and the property doesn't need to be rented prior to close in order to use net rental income to qualify.

3. I don't recommend renting right now either. Renters are getting pummeled by rent increases right now.  It's expensive to buy, but renting is no picnic either. Some renters saw as much as 50% rent increases last year.

4. Again, double check the short-term rental laws depending on where you're looking to buy. Adams county may be a little bit more flexible on short-term rentals, but it's been a few years since I last checked the rules and things may have changed. If you're dead set on converting to a short-term rental later on down the road, your first step would be to double check the short-term rental laws. Once you have an area identified, you can do as little as 3.5% down on FHA, 0% down VA, and possibly as little as 5% down conventional on 2-4 unit properties (qualifying ability would need to be determined by the lender). It would also be important to recognize that municipalities may change their stance on short-term rentals after the first year as well, so be aware that the rules could change. If you're not going to occupy the home, you would need at least 15% down for a 1 unit property, or 25% down on 2-4 unit properties. If you will occupy the home for "some portion of the year", then you might be able to structure the deal with as little as 10% down (1 unit only), but the area/scenario would need to make sense as well. Most underwriter's won't approve the deal as a 2nd home purchase if it's in Denver-metro since the city wouldn't really be located in a "resort-type area". If it's in the city, there would need to be a different reason (e.g. traveling there for work from time to time, or to visit family when you're in town).

If you're looking for short-term rentals, the most friendly markets that come to mind off the top of my head are Grand county & park county.  These areas are "resort-type" areas and would likely be fine for 2nd home financing with 10% down.

@Paul Wakefield - I recommend setting up a HELOC on your current primary residence, and then use that HELOC to buy a property in need of work. Pay cash for the rental, do BRRRR, and when the rehab is complete, use the cash-out proceeds from the refi to payoff your HELOC. Rinse and repeat.

@Eric Olsen - It looks like you have a lot of great responses on here. Just wanted to chime in and provide my two cents and perspective. The FHA loan is NOT for first time home buyers. The FHA loan is a different kind of loan program, just like conventional, VA, USDA, DSCR, etc. There is no first time home buyer restriction for any of these loans, and there is no first time home buyer requirement for FHA. You could literally own a home now, and get an FHA loan on a new property. You can put as little as 3.5% down on an FHA loan, and again, no first time home buyer restriction.

The FHA loan is ONLY for primary residences, so if you live in DC, you would need to buy a primary residence in DC or be able to document/support your move out of state. It is mortgage fraud if you claim to have the intent to occupy a home and then you never actually occupy the property, so be honest with your intentions.

On the subject of first time home buyers, there's really not much benefit to being a first time home buyer these days. Even most down payment assistance programs have removed their first time home buyer requirement. For instance, the CHFA and metroDPA programs here in Colorado do not have a first time home buyer requirement. You can literally get an FHA loan with down payment assistance and not be a first time home buyer.

I agree with @Reid Chauvin 100%.  Besides, waiting 6 months right now might actually work out to your benefit as mortgage rates may be lower then.  They've been recovering all week so far, which is the best positive momentum we've seen all year.