All Forum Posts by: April VanCleve

Honestly we are leaning short term rental... 

Quote from @Nicholas L.:

@April VanCleve

just to think big picture for a second - it's fantastic that you've come so far.  i had two reactions to your post.  here they are. 

1. just to be blunt, 20K and reserves is not a lot.  so... after coming this far, i wouldn't do anything to stretch yourself.  if you need to keep saving, keep saving.  only you can decide when you're ready

and 

2. from your recent posts - did you end up passing on the house? or are you still thinking about it? I'm always skeptical that anything on the MLS is a "really good deal."

hope this helps

1. I know, it makes me uncomfortable too. We do have a large HELOC, kids large college fund and and lots in retirement accounts so I guess if crap really hit the fan we could always look to those to bail is out. I'd really rather not though.

2. Nope we are closing within the next two weeks! Appraisal just came back yesterday 14k higher than the purchase price with no repairs required (a conventional loan). It's our neighbors house so it wasn't on the MLS. We skipped the realtor and just went through an attorney. I know what you mean though. Sometimes I feel like if it's on the MLS, it must still be there for a reason... always good to put your number out there though! Who knows, maybe they'll take it.

Quote from @Michael K Gallagher:

big congrats @April VanCleve think it depends what your goals are.  a short or medium term rental is very much a business more than and investment, and is quite active unless you have it managed but even then you are managing a manager.  But their could be a case that it would be simpler due to proximity.

There's really no wrong or right way to do it, the best thing is that it seems to be flexible.  I'm a big fan of holding assets that you have an equity position in for the long therm.  There are many vehicles to get that equity and use it to make additional investments with out having to sell.  

Someone here mentioned moving into the new house to get a better mortgage rate or cashout terms and that is for sure worth looking into.  the live in flip cash free income after 2 years is some of the most powerful wealth building us normal people can do.

 Thank you! I agree, the move in option would have been awesome financially. The house is a little smaller than ours now though and we may be a little cramped. We had the loan estimate in hand but decided it was too big of a PIA to make it worth it. I wonder if we ever changed our mind if we could do a cash out refinance into some kind of low interest homeowners loan and use the extra to flip anyway...I don't like how you can only keep it for 5 years to get the capital gains savings though. 

Good to hear there isn't a right or wrong way to do it!   

Quote from @Jack Pyle:

April Congrats!  That is awesome.  If you can get into the investment property for limited down payment (10% rehab loan), you can save some of your money, renovate the property and then do a cash out refi to get some of your money back out.  As far as short term vs. long term that is a dilema.  I have personally done both.  You'll make more money on the Airbnb but it is a chore to manage.  Good idea on the pet friendly!  We changed to that this year and have definitely seen our bookings increase.  If you decide not to manage, then the managment fees are usually 20% of the income.  Long term rentals are easy to manage in my opinion if you are local to the property.  You're certainly asking all the right questions.  Great job!

 Thank you so much! It's good to hear I'm asking the right questions!  There's a fine line between being responsible about things and analysis paralysis... I'm trying to just take action. 

I love to clean and host so I'm hoping the fact we are literally next door will make the airbnb option easy! What's the best/fastest way to learn about that option?  It's the only one (aside from a little Robuilt on youtube) I haven't really dug into since the plan at first was a flip.

Quote from @Tony Hibler:

Hi April,

Is there an option for you to move into your neighbors home and rent out your current home as a long term rental?  The idea is buy your neighbors home, as primary residence to get the best mortgage rate, live in the home for two years while you are fixing it up...then when you sell it the gains would be tax free (IRS allows you to take the first 500K in capital gains from he sale of your primary residence if you have lived in the home for 2 of the last 5 years). Assuming you are cool performing a live in flip and your neighbors house is big enough for your family.

In the end you still get your rental and save on some taxes.  

Just a thought...

 We TOTALLY thought about this... had the loan estimate in hand but decided the house was too small and it was too big of a PIA. It would have definitely been the best financially. 

Finally! My husband and I are buying our very first investment property!! It took 15 years to get out of student loan debt, pay down all other debts, get our kiddo through the bulk of a good private school we really wanted her to go to, and then save. 

The original plan was to save 5 months of personal reserves and then save 40K for a down payment on a house flip property. (We live in Ohio so it's cheap.) We would sell the flip, use what equity we got from that, maybe do that one more time and then eventually buy a BRRRR.

Well, we made it to reserves and 20k but...our neighbor's house came up for sale and it was a really good deal. There are a few things that need to be done to it but nothing crazy. It's in great condition. Here are the options:

1. Short or mid-term rental: 

Pros: 5 minutes outside a college town (think parents & professionals that visit). National tractor pulls yearly. 25 minutes from a new Meta data center that is about to start construction. I live next door and love hosting and cleaning. I would need to rent it out 8 days a month to break even. Occupancy rate in our area according to air DNA is 44%. (I'm thinking I could get more if I am pet friendly.) Big yard, only one neighbor, deer from time to time. Plus we could use it when our parents or in laws come into town. 

Cons: The city is small and safe but several houses look like crap (until you get back to where we live.... I am the only neighbor this house has and the rest is woods and big yards.) It's near train tracks- trains do come by occasionally but not everyday. I am worried about the vacancy. We can make the monthly payment on our W-2 incomes but things will be tight because we are using everything we've got cash-wise to make it happen. We have plenty of reserves in a college fund, several retirement accounts and a large HELOC. We will have to start from scratch on reserves though.

2. House flip- since we are buying this at a good deal, we already have some equity in the home. If I added a half bath upstairs, or even just put fresh carpet and paint I could probably flip it pretty quickly for a decent profit. This would be following my original plan and get us some more reserves to continue renovating or buying another house with less financial stress. 

3. Long-term rental: we could rent it out and make $100-200 cash flow.

I don't know. What do you guys think? You guys are the experts! 

Lets say my first potential flip is from 1900's, has 4 layers of roof shingles, outdated electrical, needs a new kitchen, plaster down/drywall up throughout the house, flooring, and a terrible, terrible foundation. If we buy right, how much is too much for a first timer when it comes to risk alone? 

Quote from @Marcus Auerbach:

It's not an either or question. Most of us didi RE on the side for 5 to 10 years before quitting the W2. I am not sure if RE is a happy industry, the grass looks greener. I think happiness is overrated, being content is much more important and feeling accomplished. And I think you have a good amount of control whats happening in your own head, even if you are in an unhappy industry. BTW, now I am really curious what that is!?

Child support enforcement! 

Quote from @Joe Villeneuve:

Quote from @Account Closed:

Quote from @April VanCleve:

I know this may leave a bitter taste, but I have found a lot of fast, concise, well put together answers to most of my questions on Chat GPT/Open AI. No $10K program for me! Not to say an experts advice isn't solid - just saying the culmination of information across all experts and all spans of time in one place is pretty helpful. 

Your comment: "but I have found a lot of fast, concise, well put together answers to most of my questions on Chat GPT/Open AI."

But, How would you know if it's good advice?

Yup

How would I know the advice one person gives me is good advice if I am a newbie? It's just another source to vet info from (only it's from a ton of investors compiled information over all spans of time).

Quote from @Account Closed:

Quote from @April VanCleve:

I know this may leave a bitter taste, but I have found a lot of fast, concise, well put together answers to most of my questions on Chat GPT/Open AI. No $10K program for me! Not to say an experts advice isn't solid - just saying the culmination of information across all experts and all spans of time in one place is pretty helpful. 

Your comment: "but I have found a lot of fast, concise, well put together answers to most of my questions on Chat GPT/Open AI."

But, How would you know if it's good advice?

 Ask it a couple of ways, vet it against other information found online from credible sources if there's any doubt. Have you ever used it? It's pretty incredible!