All Forum Posts by: Adam Ramsey

I am selling a rental property to a local land trust. The sale is for $210,000 and their appraisal came back at $240,000. However, they have a restricted appraisal and I'm not sure if I can use that to verify that I am doing a "bargain sale" to a charity. Does anyone know what the IRS requires for appraisals if I am looking to use that $30,000 difference to offset capital gains and taxes in general?

Hey all,

I'm a Realtor and the brokerage I work for is primarily a property management company that services the county I live in. I get calls from buyers asking about rental amounts, property management services and general questions about the rental market after they already have a property under contract. Most of the time the Realtor they are working with has limited or inaccurate knowledge of local rental prices. I have a very easy sell to buyer clients if they are looking for a rental as I have intimate knowledge of that side of the market, can help them make informed decisions prior to getting a property under contract and an easy transition into our management services. We get plenty of referrals from local Realtors for property management clients and we want to keep that going but we are also trying to build our buyer client list too.

Locally, I need to be more active in meetups and have ideas on that side. For attracting out of town investors, what has worked best for everyone?

Thanks!

@Jack B.

I don't know the rules in Washington but where I'm at if you signed a lease and accepted a deposit it's theirs. Every state of course has different rules and if it's not official until they pay first and last I would keep showing it too. People back out all the time.

Either way, I wouldn't consider all of these applicants excellent. It sounds like there are issues with 4-6 and maybe #3 including one threatening to call the police. Whether or not it was a misunderstanding I would stay clear of that, only going to be issues down the road. They sound like ones who would call the city inspector on you in a heart beat. If they're hiding or delaying one of their applications that's a red flag too, there's a reason they're doing this...

I personally would go with either 1-3 with #3 being the last. If that one person has had issues it could cause problems down the road and I would take 3 tenants over 5 tenants any day. Less people to deal with, less people to cause damage/wear and tear, etc...

I would put a fire under #1 and #2. First to pay everything and sign a lease gets it.

@Spencer Dixon @Paul Haviland

Thanks for the input guys! I'm leaning towards a refi, maybe a cash out refi if it makes sense. Do either of you think the F35's coming to town will affect property values much? My property is near HWY 30 and E. Wash so it's a couple blocks outside of the circle of proposed affected areas. It will have increased noise but personally I think it's a little overblown but we'll see.

Hi Jimmy,

The one thing I would be worried about is having your name on the loan. That debt may throw your own debt to income ratio out of wack when trying to get other loans whether it be for another property or just anything you need to finance in general. I'm not sure how they would exactly figure out how much of the payment goes against you (maybe half) but I'd talk to a lender first to see how this could affect you when trying to finance anything else down the line.

Hey BP,

I'm in a conundrum on what would be my best foot forward. I currently own a duplex that I house hack and then a single family rental. I'm not planning on doing anything with the duplex because I live here. On the rental property I am debating on whether refinancing or selling it. Currently it rents at $1,620 and my mortgage is $1,040 but that will bump to $1,150 in a month after adjusting for property tax hikes. It's financed on a 30 year at 5.125%. It was flipped prior to me buying it and I just did a 25% down purchase turnkey rental which I'm now regretting. The cashflow is nice but I really wished I had attempted a BRRR rental so I could build my portfolio faster.

My next property will be a BRRR I just need to find it first. I plan on selling my rental and I will be able to clear approximately $60,000 from the sale after mortgage payoff, closing costs, etc... I also am raising my HELOC on my duplex and will have about $50-60K available there. I am in Madison, WI and plan on purchasing here where property values are anywhere from $150,000 on up for a single family home and approximately $180,000 and up for a multifamily. Most properties I'll go after will be worth more than that in the areas I'm interested in.

My question is do I sell the rental or just refinance it at lower rates and use more private funds on my next property. I plan on using private money for a good portion but it would be nice to have a good cushion on my end that isn't mostly a HELOC. I can refinance in the low 3's and do a 20 year mortgage and keep my payment around $1,150 or I can go to a 30 year and my payment will be around $1,000-1,050. The property is about 100 years old, needs a new garage in the next 5-10 years and has some quirks to it like a slightly slanted floor and low ceilings upstairs (about 6-7ft high). It's also in an area that may be impacted by F35 jets coming to town and creating a lot of noise possibly affecting property values (this is still being debated by the city and Air Force but it looks like it's coming). Due to these factors I'm thinking about getting out while the markets hot because I think these issues will hurt it if I have to sell in a softer market. I'll only be clearing about $10-15,000 in profit from the sale (not bad after 2 years of owning it) so my cap gains bill won't be much.

For a BRRR property I currently don't have anything in place but am planning on pursuing one very seriously in the next few months. Most properties I'll go after will be 2-3 bedroom 1,000 sq ft homes that will be worth roughly around $200K fixed up or multi families that will be worth around $250-300K fixed up.

Would you sell or keep it and refinance? Any thoughts or advice is greatly appreciated!

@Sivakumar Ganapathy

I work for a property management company and unfortunately mistakes do happen sometimes. However, it sounds like this is not the first time. Can I ask why you continued to work with them if you had  a long list of troubles with them? 

Once the lease is signed by all parties it is binding. Did the company sign the lease yet? If not, they can reach out to the tenant to do a new lease. If they already signed, I would recommend at least reaching out to the tenants and explain the mistake and hopefully they would do a new lease. If that doesn't work out try to get an agreeable compensation from them (easiest would be to have them assume the water bill for the year) and look into legal means if necessary.

Also, just curious, is $2k in water/sewer for the year normal in your area?

I've been toying with getting into AirBNB's. Has anyone had success securing a loan through a bank/CU for a purely AirBNB investment?

I know my W2 income is not enough to buy a standard single family home/condo investment unless there is a lease in place. 

Can I show a bank comparable AirBNB's? 

Any strategies or success stories?

I'm assuming I'd have to buy something with a tenant in it and covert it to an AirBNB or house hack and AirBNB the other half. 

Thanks @Mark Holencik

That makes sense. If I apply it to the card balance I won't have to claim anything then?

@April Molina

The management company I work for puts everything on the tenants: Water, Electric, Gas, Snow, Lawn, Water Softener Salt (if applicable) and Furnace Filters.

Some people we work with like to do the Salt/Furnace Filters so they have one excuse to go in the house every 3-6 months. 

In my area electric and gas will follow the tenant if they are not paid and not come back to the owner. Water will revert back to the owner on their taxes if the tenants leaves a balance. You of course can go after them but depending on the cost of going after them it might not make sense.

Around here with water, you can have the water utility alert you of unpaid bills after a certain amount of time and abnormally high usage. I would do this whether you include it or not. Then you can approach the tenants before the bill gets too big for them to handle. If your paying it, it will also help you avoid surprise large bills. I have a house hack duplex and I pay water for the upstairs unit. Their running toilet, which they thought was not big deal, resulted in a $400 water bill for me. Ended up being a $5 fix and if I had it set up with the water utility right it would of saved me a lot! It could also save a tenant a lot if they're paying and not put a strain on the rent they need to pay you.