All Forum Posts by: Holly Baldwin

My newbie question:

What kinds of rental upgrades, if any, could I (or should I) do to warrant charging more rent on my AZ 3 bed, 2 bath rental home? (this home wasn't purchased as an investment property originally). Although I have already refinanced and am charging full market rent, I still just break even every month....no positive cash flow.

Ex. backyard landscaping? stainless steel appliances? granite counter tops? New light fixtures?

Does any of this type of renovation allow for more rent being charged, or is it just strictly go off market rents? Maybe the upgrades just allow for more desirability, but not necessarily more rent?

Thanks!

Holly

This is a question I often hear on the Suze Orman show on CNBC. Her answer is always, "Why only one or the other? Why not do both!"

I believe an emergency cushion is an absolute must for both of your properties, but maybe you can set a certain percentage of your cash flow to go toward the emergency cushion and then the remaining percentage toward paying down the mortgage. :)

Welcome!

What part of Utah do you live in? I live in Layton. Good luck to you!

Hey Matt!

I am just 20 minutes north of you in Layton, UT! Welcome!

these are all great thoughts and I appreciate ALL of them so much! Thanks everyone!

@Michael Smith - that's a great way of looking at things.....and a great question to ask ourselves. Thanks for your input!

@Yiv L. - you are right about the 30 yr. mortgage being about the same since interest rates have risen since we refinanced earlier this year. I think at this point, we have taken that option off the table.

Thanks for these comments! They are truly helping us think in ways we haven't thought before. Its very much appreciated!

Thanks Adam for your thoughts. I really do appreciate you taking time to post on my behalf. I really like what you said....makes total sense. We certainly hadn't planned on buying it originally as an investment, so I guess we can't kick ourselves over the coals about it too much. It just is such a bummer that the cost of education can really get you down sometimes.

Thanks for sharing your thoughts!

Thank you Jesse, Ned, and Tracy for your input. I appreciate you taking the time to respond to my post.

Yes, Jesse, we are more interested in cash flowing properties. We hope to buy and hold and own several properties free and clear by the time we retire in 20 years or so....and then enjoy monthly passive income.

We don't want to sell this home if we can help it. Our plan was to get it paid off and enjoy the monthly cash flow. But because of our newbie mistakes, we feel like we won't enjoy the cash flow until it is paid off in 15 yrs.

Other than refinancing back to a 30 yr loan, can you guys think of any other way for us to keep it.....and keep the home from taking from our pockets so much?

Thanks so much for helping!

Hello BiggerPockets community! My husband and I are new investors (just by chance....long story!) and have one SFH rental in the west valley of Phoenix, AZ.

We need some advice from you more experienced investors.

This rental in AZ used to be our home back in 2000-2002. We had to move out of state in 2002, but the house hadn't sold the traditional way. We ended up doing a seller-finance deal not knowing we needed to set timeline saying when the new owners had to find their own financing and not knowing we should have set a higher interest rate (our first big mistakes). Long story short, the new owners owned the home for 10 years (us maintaining the mortgage note the whole time) and then both the husband and the wife ended up passing away.... one in 2008 and the other in a tragic accident in 2012. This is how we ended up the legal owners of the house again.

We live in another state and so we hired a property management company to manage the property. We still had 20 yrs left on our loan, but a higher interest rate, so we decided to streamline our loan just this year and it is now on a 15yr. (our second big mistake)

Problem is, we aren't cash flowing at all. The renters cover the mortgage note and our management fee all but $45. So we are paying $45 out of our pocket every month to have this house. Not to mention repairs, fees, etc. The lease won't be up til March 2014.

Now what do we do?

Do we sell now? After estimating our profits after real estate fees and such, we would make only $5k - $10k off the sale.

Do we hold onto it, waiting so many years to get cash flow?

Do we refinance it back to a 30 yr?

We no longer want to make newbie mistakes. We appreciate any advice you all are willing to give us!

Holly :)

Property Management companies can be really worth your while, although I am finding out that you really have to read the fine print and make sure you understand all the fees they charge.

For example, our prop. management company charges a $40 trip fee each time a repair man or agent has to go out to the property. Another example is the end of the year fees....they charge us $75 in November and again $75 in December for bookkeeping, yearly statement prep, etc.

Just read the fine print and know ALL their fees!

Thanks everyone!

Holly