All Forum Posts by: Tom Wagner

There are a handful of factors to consider here. #1, if you buy a fourplex you will only have to close once, vs four times. #2, you will get a better loan and can put just 3.5% down if owner occupied, which is a really powerful way to build wealth without cutting into your liquidity. #3, you may eventually hit the 10 mortgage limit. What are your goals? If you think you are going to hit the 10-mortgage quota down the road a fourplex would allow you to increase the number of doors while still staying below the 10-mortgage limit.

Following! Would be very curious to see what your $/sqft nets out to so please post updates here!

Could you expand on what you mean by "companies moving to North Austin"? I would love to hear more and love your investment hypothesis!

A house hack is definitely the best way to get the ball rolling quickly and really jump start your investing career. With $50k you'll be able to buy a $800,000+ house (assuming it passes the FHA self-sufficiency test).

No other investment provides that sort of upside with just $50k down.

Time to introduce a metric from the CRE world: DSCR! DSCR stands for "debt service coverage ratio" and is net operating income divided by total debt service, with total debt service being your total principal/interest payments for the year.

It is a good way to look at how much margin for error you have regarding vacancy, maintenance, CapEx, etc.

If you have a 30 year fixed note at sub-3% interest, I would consider taking on a more aggressive project with lots of leverage, while a commercial project backed by 7-year or 10-year note at 4.5% decrease your DSCR substantially, therefore making it more risky.

It's all about zoning! Dig into the land use and zoning code for the area you are in. If quadplexes are allowed I would be very surprised and equally curious.

(If you find anything that shows they are allowed please post here and quote this message so I am notified)

Wow - awesome numbers! A few questions:

1) If the area is turning over rapidly why not BRRRR the property and let it continue to appreciate?

2) What is your construction/rehab budget and how did you determine it?

 While I get where you are coming from, this is a reckless and privileged statement.

Keep in mind the 1% rule is just a guide. Whether it is a "good" deal should be determined based on the property's ability to generate rental income relative to other property's in your same geographic area!

Ex: passing the 1% rule in Cleveland doesn't make the property a "good deal", but any property that meets that rule in Los Angeles would be an amazing deal.

Figure out what the threshold is for your area (0.8%, 0.7%, etc.) and go from there.

Finding good comps is important because it allows you to project what the "Refinance" portion of BRRRR will look like. If 3BD/2BA houses in your town go for $350,000 completely remodeled, then you'll be able to pull back out $280,000 when you refinance (assuming 80% LTV).

For more detail you should read Brandon Turner's BRRRR book!