All Forum Posts by: Anna Milligan

We have a house with a slab on grade and no basement.  It will be a rental for a while and we'll eventually sell it.  The washer-dryer hookup is located currently in the kitchen which is rather small.  We can take it out to the oversized garage but it would require: building an insulated room in the garage, sawing through the slab, installing new drain lines and running plumbing out to the garage, new flooring where the slab was sawn/removed/replaced.  The price tag would be $5k.  Advantages: more space in the kitchen, more appealing kitchen to renters (or buyers when we eventually sell), maybe could justify $50/mo more rent with the perceived larger kitchen.  Disadvantages: cost.

If we want to EVER do this, now is the time while the contractor has other stuff torn apart. 

If it is only a crunching numbers decision, it doesn't make sense to do this as a rental.  We may sell in 10 years though.  Would it make sense if this were a flip? 

Should we expect any tax advantage or disadvantage for 2016 if we purchased a buy-and-hold rental property that was never rented (never produced an income) until 2017? It was purchased by us as individuals, not through our LLC. We had no other significant changes in income or deductions.

Is there any advantage to the spending a significant amount of money to improve the property in 2016?

@Melroy D'Souza - YES!  We got it rented out mid-January.  We had her sign a 17 month lease so that we won't be hit with the holiday lull again next time! 

@John Horner - We currently don't have a mortgage at all. We paid cash for everything with the foolish notion that getting a mortgage after the place was fixed up would be easy. We're novices! The title of the property is in our names individually, not in our LLC name. I'd love to get your contact though. I'll message you!

We have had our first rental property for 6 months now. We paid cash and we're ready to get a mortgage on the place. We want a 30 year fixed - and we are not interested in a 5/1 ARM which everyone seems to try to sell to us. I have a start... I have talked to 4 people AT THE SAME BANK because this is the bank with crazy-low closing costs. One guy said that my name had to be on the title for 12 months before they would do anything, another guy said they would only lend 75% of purchase price until we've owned it for TWO years (we bought cheap and dumped a TON of $$ in it, so this is no help at all).  The last guy, who is crazy slow to respond to anything, says that we can do 30-yr-fixed loan for up to 75% appraised value but he is saying a 4.625% rate (which seems quite high) and I have to pay points!  I'm just really not pleased with the options.  I was locked onto this bank because of the draw of the low closing costs and now I'm thinking they just don't offer what we're looking for.  I had no idea it would be so difficult to find a mortgage 6 months after purchase! 

Who have you used for this type of mortgage product?  Suggestions?

Follow up: We finally have a tenant!  She is ready to move in immediately and will be signing the lease tonight.  We did not eliminate the application fee and we kept the rent where it was when we started searching.  In the end, we had three parties in the same weekend that were interested so we actually got to choose the tenant with the most desirable tenant credentials. We're so happy to FINALLY be cash-flowing!

Our insurance guy is telling us that we should have a requirement in our lease that the renter have renter’s insurance for $500k liability. He said most policies are at $300k, but it’s only an extra $10/yr to bump up to $500k.  He also said to include in the lease that the landlord must be listed as an “additional insured” on the renter’s policy. If the renter does not pay their insurance bill, then we will get notification. 

Has anyone done this?  I've heard of landlords requiring renters insurance, but I've never heard of requiring the Landlord to be an "additional insured" on the policy.  That seems wacky, but I'm new to this and I know nothing.

Thanks!

@Brent Coombs - Yes, it still is a positive cash flow at 4.75% fixed.  We are $85k into this one, so $80,625 is only 95% of our money back.

@JD Martin - Any suggestions for how I find banks to check out?  Credit unions? Mortgage brokers? Local banks? Big national banks?  Have you had any more success with this type of transaction with one type of bank over another?

@Eric P. - For sure!!!  That is the plan now thanks to some great advice from the Bigger Pockets community!

Ahh... yes @Sean Dawson.  Our tenant-finding struggle continues. 

I'd love some input on financing options.We bought our first BRRR using cash and we are ready to do a cash-out refi.I've talked to one bank who has given us two options.Option one is a 75% LTV, 30yr fixed, 4.75% and we can get $80,625 back out for a $420.58/mo payment.Option two is a 80%LTV, 5/1 ARM, 3.25% and we can get $86,000 back out for a $386.18 payment.

How do we decide what is best for us?In the short term, the 5/1 seems great, but with the new president and economic changes expected, I feel confident in interest rates increasing.We could be in major trouble in 5 years.On the other hand, we have the 30yr fixed option at a dramatically higher rate. My jaw dropped when he said that was the rate.He said that he had to add points for the fixed rate option because of “loan level pricing adjustments” - 0.25 for “credit score/loan to value,” 2.125 for “non owner occupied,” and 0.50 for cash-out. The rate of 4.75 is reflective of “building the adjustments into the rate” instead of coming to the table with ~$2300.

I'll also add that we want to buy another one or possibly two rentals in 2017.The mortgage guy I'm talking to is pushing the 5/1 ARM because he'd want us to roll multiple investments into a blanket mortgage product that he has within the first 5 years.Seems to make some sense, but I'm not 100% confident he has our best interest in mind.