All Forum Posts by: Alan Grobmeier

@Jason Parnell.  If you bought it at $130k and only owe $28k, it appears that your intention was to pay it off?  If that was the plan, what has changed?

Is there a specific reason you no longer find the property desireable?  If it's on 'cruise control' it would probably be more prudent to get your monies worth and keep it vs buying a POSSIBLE problem and then repeating the processes of fixing it up.  But that's me and I am basically lazy.

I bought a property in 2012.  I've had to put on a new roof (2013), put in a new air conditioning compressor (2014), replaced carpet with 100% tile (2016) and window coverings with shutters (2016).  Pretty much nothing else major can happen to it.  LOL.  Crossing fingers.

I could sell the property today and get a $70k profit.  But there are a couple of reasons I don't.  For one, NOTHING else that is a monster ticket item can go wrong.  I've already replaced it.  The second reason is I would need to find a better use of the $70k than where it is today.  

As @Thomas S.  stated above, you can cash flow with 100% financing.  But I am not sure that is prudent in a 'toppy' real estate market.  If you already have sufficient cash reserves, I'd take $70k cash.  That would be a 100k loan.  But you need a plan PRIOR to taking the money.  And the plan may be that there is no plan for today.  LOL.

@Steven C. Suarez.  In the voice of Astro the dog:  Rut row Rorge.  The BEST thing to do is to have a well defined and written exit strategy PRIOR to getting in business together.  It's kind of like when you sleep with an ugly chick.  ;-)  Well, not really.  But you know what I mean.  LOL

I bet this person is NOT your friend by the time this one is 'done'.   :-(

@Thomas S.

I don't have problems finding tenants.  I just want my 'pool' of applicants to be as LARGE as possible.  I have had up to 26 applications in one day for a property.  Other times I have literally rented places over a weekend after doing credit and background checks.  That means I get to pick my tenants, my tenants don't pick me.  

I take a non-refundable pet deposit in addition to a refundable deposit.  It (having pets) has now become a revenue source.  Due to size and breed restrictions I have, my risk is somewhere between non-existent to low.  I think you would have MORE risk renting to families with young children.

@Angelea Weihs.  Awhile back I was looking at condos in Olympia.  My mom is from Washington state, near my vernon.  We spent our Summer's driving from San Diego to Seattle and onward.  Washington was so pretty during that time of year.  Since I was a kid, I didn't realize the other 9 months 'sucked'.  Lol.  I was kind of looking for a summer place at the time, but moved onto something else.

Based on what I was looking at during that time, I doubt you could cover $2800 a month income on a $200k spend.  But I have been wrong at least once.  ;-)

In any event, you probably need to get away from the sea-tac area.  The minus is that as values drop, so do rents and appreciation.

Best of luck,

AG

CPA's are for tax advice.

Attorney's are for legal advice.

See a local real estate attorney.

Alan

@RJ Jackson

You need more down AND a 'rainy day' fund.  It looks to me that although you are trying to do this for tax purposes, it can easily bite you like an alligator.  If someone doesn't pay or you have to evict, that COULD put a lot of stress on your finances.  

Options:  Partnership with a like minded relatives, pay more down to get more cash flow.

Make sure you get a good property in a good school district.

AG

I allow cats and small dogs.  No aggressive breeds.  I have also 'house proofed' ALL my properties by having nothing but ceramic tile floors everywhere.  Pets can't really damage them.  But I live in AZ where it is hot.  That may NOT work for you, depending on your location.

Fees:  $250 non-refundable pet deposit per dog/cat.  I don't charge for birds.  

$25 a month pet fee.

As stated by one of the other posters, pet owners can be decent renters due to the lack of options.  If you don't 'gouge' them too much, they could stay for many years.

AG

@Mark H.

My waits have been NOTHING like what you described.  I would have been screaming if I didn't have tradespeople on site the following day, depending on the severity of the issue.

My experience has been much different that yours.

AG

@Julie Marquez

Those warranties are supposed to cover the interior stuff like sinks, refrigerators, ovens, general appliances.  They are USUALLY very limited in scope.  But you can buy/upgrade the policy to cover water filters and even swimming pool equipment.

If you have gutted the property, you probably don't need it.  If you are renting it out, give the policy to your renters with the instructions to call Old Republic prior to calling you.

Last, but not least, take the policy out and read it.  See what is covered.

AG

Believe it or not, it depends.  I had 9 rental properties in addition to a stressful full-time career where I traveled around the United States.  My biggest problem is that I did not have time to run every single problem to conclusion.  So, what I did was make systems and processes to allow myself the capability of 'stepping back' from repairs at my rentals.

Expensive:  Yes.  But zero frustration.  I don't want to know my tenants comings and goings.  Nor do I care.  I don't want to be at the property when the dishwasher (for example) is being fixed.  I put a LOT of responsibilities on my tenants.  :-)

Cover 'everything':  Not only no, but hell no.  You need to look at these policies as 'first steps' to getting things fixed and make sure that the items YOU want covered are in the policy.  Most will NOT, for example, cover roofs.  

If you have an air conditioner in Arizona blow up  in the summertime (like I have), you need to have a Plan B, C and probably D.  ;-)

Warranty Companies 'Suck':  Yup, some do.  Some are more responsive than others.  The thing to remember is that these companies, although sometimes national, work differently in different parts of the country.  SOMETIMES differently in the same METRO area!  As I said earlier, we have 9 rentals in 2 different Metros in 5 different cities.  And we use 3 different warranty companies.  Confusing?  Can be, but that is why God made Excel.  ;-)

In essence you are trading money for time and peace of mind.  That doesn't mean you STILL won't have problems, just hopefully fewer.

With that said, I would not own a property WITHOUT a home warranty.

My $.02

AG