All Forum Posts by: Steve K.

@Mark S. , I'm on that email list too.

I looked into that crowd funding site a few months back, and saw that new offering in the past 2 days. I have not personally invested, but I first read about it here:

https://www.biggerpockets.com/blogs/6664/60797-hav...

You might get feedback from @Larry Fried , who is very familiar with it.

@Aaron Ohri , house hacking is likely the best plan for you to invest starting out.

There are markets in USA (Omaha may be one) wherein the renter is paying about 2% of the purchase price in monthly rent....and thus, really favors the landlord. If you can swing the 3.5% down payment and qualify for the loan as your personal residence.....having a couple roommates help pay the costs, build equity for you....could be a smart buy. 

Your investment needn't be just a year.....but you could move on and acquire hack#2 and rent hack#1 thereafter. Caution though, if you're only in it for the short haul (1 year only?), the transaction costs of selling (realtor 5.6%, closing costs) can eat up most of your gains.....but otherwise, you could be launched into the first of many.

good luck 

If you're renting, @Account Closed , you should consider house-hacking a duplex, triplex or quad-plex.

@Randy Walters , your mom should be able to sell the house (primary residence for last 2 years or more) and $250k of gain is non-taxable. Unless that threshold is exceeded, I don't know what "tax savings" you're seeking. 

If the kids are all heirs in her will, and otherwise going to inherit her house and any bank accounts, then it seems like those same heirs would inherit her promissory note upon her death. At that point, the owners of the home (kids) could record an instrument at the county clerk that says the mortgage is fulfilled in full, and the kids then all own the home  (free and clear from a mortgage).

Be careful of: what type of ownership the kids take title to the property in. Could be an LLC, or could be Tennants in Common....but think ahead of what happens if one or more need to/want to liquidate. How do you vote? Who controls?

One side issue, what if mom needs a nursing home.....I've read elsewhere that the Medicare folks are smart enough to ask: "does mom own a home or other assets that she should use to pay for her nursing home (and exhaust those funds) before Medicare pays more.....and they're smart enough  to ask "has she gifted her home to the kids in the last 5 years? So, look into that unintended consequence.

Good luck; more folks smarter than me will no doubt contribute shortly.

@Ikhtiyar Uddin , also, check with your loan officer....some of the low down payment, owner occupied.....require you to commit that you will live in it for at least 1 year (before moving out and renting the 4th unit). Proceed only if you're willing to commit to that requirement.

@Ikhtiyar Uddin , if you verify with your loan officer.....you also need one of the units to be vacant....if there are 4 sets of tenants with ongoing leases that you're about to inherit.....you won't be able to close (because you can't occupy one unit)....so check also the lease status of all 4 units from the Seller.

good luck

@Ikhtiyar Uddin , the "house hacking" strategy to live in one of your four units is aimed at getting a rental property with 3.5% or 5% down payment (because it's owner occupied), versus usually needing 25% down on a non-owner-occupied rental property.

I hadn't seen anyone offer a 10% down non-owner-occupied loan that you speak of.

@David J. ,

I'm not the best person to answer; I only have 4 rental loans (BRRRR style) and haven't begun to bump up to the limit.

Keep reading. You're seeking the lowest cost loans that are "conforming" and are originated by your banker/mortgage company, and are available for them to spin off (sell) on the secondary market because they are Fannie Mae/Freddie Mack "conforming" residential loans. As I understand it, the 10 loans maximum means that you eventually need the 9th or 10th (and beyond) loans to become "commercial" loans. Others I have read about and learned from, get a relationship with a local lender and have loans on 30 or more properties. They can borrow (HELOC) style on multiple properties in a combined/blanket loan to easily access cash for another purchase.

Rates on the commercial side will be higher. I've seen online nationwide lenders (colonyamericanfinance.com and b2rfinance.com that offer these loans....I think they even advertise here at BP)

John, I'd encourage you to begin to think of these things as being independent of each other. You can raise the rent (and keep the extra profit). Separately, you can investigate points vs. $22/mo.

@John G. ,

the proper analysis is to compare the two (or six) options "apples to apples". Simply put, if you put the max $2285 in points upfront, and the max monthly mortgage of $382 into a savings account each month...for the next 30 years, and then from that savings account, pay down loan A or loan B from that account....which leaves you the best balance in the end? This keeps you from considering either the $22/mo as being "free" , or the extra points as being "free" in one case, but not the other.

The trick is that you need to then assign a yield to what that "savings" account is earning over the years. If it's earning less than the ~4.75% APR on the mortgage, you're going to favor saving the points and investing in that higher yield. If it's earning 4.75% or less (i.e. if its' under the mattress earning zero), you're going to favor paying the points (since the "opportunity cost" of investing it elsewhere isn't too great).

However, now that you're a RE Agent and an investor, I'd encourage you to make an Excel spreadsheet (use the =PMT() function) to calculate mortgages).....so that you know as much as the loan officer. Also, it's not a lot different than the analysis of how much leverage you want in your investments? Do you want one property 100% cash, or 4 properties with 25% down payments, or dozens with BRRRR method?

In the end, although $1500 extra cash in hand doesn't get you a down payment on another rental, if your BRRRR rental investment is earning 10% to 20% IRR, it's theoretically better to reinvest that $1500 in another house, than pay down the mortgage (where your IRR is more like the 4.75% APR)

Good luck