PadSplit: Introducing the Newest Real Estate Investment

Today we are going to discuss the newest real estate investment concept, PadSplit! This is something that will be growing more and more popular in the near future due to affordability. By creating a PadSplit property, investors will be able to double and even triple their income off of a property. How do you create affordable homes that are cash flowing? Let’s take a closer look!

What is a PadSplit?

A PadSplit is where you take a regular house that is a 3 bedroom/1 resident, and convert it to a property that has 6 to 8 bedrooms/6 to 8 residents. In doing so, individuals are renting the property by the bedroom as opposed to renting the whole house. To clarify, these bedrooms would be a suite and would have a private bathroom attached with only the kitchen being the shared space. Each bedroom can then be rented by the week, month, or year depending on individual needs. By creating a PadSplit property it creates an affordable property for investors because they are getting 2 to 3 times the rent that they would have before. Also, no need to worry about rooms not being rented. There are companies available that can help to ensure your property is full.

For example:

Regular investment property: 4 Bedroom with 1 stream of income totalling $2,300

PadSplit property: 6 Bedroom with 6 streams of income totaling $4,800

Affordability is key

Nowadays, more people are only able to afford $800 per month for housing. This includes young people, old people, singles, and others who are traveling for work. Families are typically the ones who want the full house, as opposed to those who are just searching for affordability. PadSplits are becoming a bigger part of the real estate community because there is such a need in the community to create affordable housing. By putting 6 to 8 units into a property, investors can then afford to buy properties where people want to live.

A growing need in our community.

There is going to be a greater need for PadSplits and smaller units in order to help people afford housing. With the ever increasing taxes, insurance, and rising rates, affordability means less. Also, there are a lot of people who need less and don’t want to take care of a whole house. That is where PadSplit can really make a big impact not only for investors, but for the public as well. It provides both affordability and the opportunity to interact with real people on a regular basis.

How do you finance a PadSplit?

PadSplits are a newer concept in real estate investing and because of that, they are new to the lending community as well. It is important that investors approach this strategically in order to get the funding they need to be successful. Keep in mind that there is a more limited market for PadSplits when you decide to sell the property down the road. However, it is just a matter of time before this concept becomes more common within our community. Here at The Cash Flow Company we are receiving a lot of inquiries regarding PadSplits and financing options. Let’s take a look at some of the options that are available for pad splits.

The most important thing that you need to do is to get it funded before splitting it up. Get the property locked into a 30 year loan before dividing it into multiple units.
There are also options under commercial for DSCR that could be used for PadSplits. These options are continuing to grow and there will be more available in the next few months.
If you are looking for a refinance and you already have a PadSplit it is important that you have 12 months of experience and can show the numbers from bank statements or PNL from your company. This would allow us to use the income from the property to refinance the property

Is a PadSplit right for you?

We are here to help answer your questions regarding PadSplits and run through the numbers with you to see if it’s right for you. If you do it right and make your payments, you will have the opportunity to make a lot of money! Contact us today to find out more and get in before everyone else does!

Watch our most recent video to find out more about PadSplit: Introducing the Newest Real Estate Investment.