All Forum Posts by: Bonnie Low

Sorry to answer a question with a question(s), but this needs a little more information. What are you basing your offer of $85k on? I'd start there. What are the comps for a similar home in the area? Is he underwater with the mortgage or does he just need more than you currently have a buyer for? 

First, HUGE respect for thinking like an investor at such a young age! As a mom of 3 boys, I love to see young people tackling their future with energy and vision. House hacking is always a great way to start. It might be tough in your environment just because rents are so high, so maybe look in a community just outside of where you currently are to try to find something a little more affordable. You just want to make sure you can cover your mortgage, and young people are being particularly hard hit by COVID unemployment so you want to make sure your roomies can continue paying their rent. 

Carpet and pets don't mix. But I would say that for rentals, in general. We had a rental with a clause that allowed for one pet. The owner stated she had a cat. She paid the deposit up front. A year later when we went to sell, the property management company did an evaluation and found she had 2 cats. That might not seem like a big difference, but in her 875 sq ft section of the duplex, it was. Double the cats, double the odors. We had hard wood floors and there was no damage, but there's just this lingering at odor from litter boxes that doesn't go away without a thorough cleaning and possibly re-painting. I'm glad we discovered this after only year 1. Deep cleaning and re-painting (which we would have done anyway) took care of it. But any longer and I think we would have had to do something more drastic and, who knows, she may have accumulated more cats. 

You shouldn't have to guesstimate. Call a local electrician to find out what it cost to rewire and establish multiple meters and also call the utility to find out the metering costs. Then call a GC to get an estimate on the same for new furnace. Your utility company many offer rebates for new gas appliances so it's worth looking into whether you can qualify for a rebate and they usually can refer you to contractors who use their rebate program regularly.

Sounds like an incredible deal. Congratulations! How did you find this deal and did the seller offer seller finance or did you ask?

Julian, find a Realtor that will work WITH you. It's clear the two of you aren't a good fit, but that's not your fault. Both of you should be able to communicate what you're looking for out of the relationship - that's what teamwork is based on. If you're pre-approved (that is, if you're not intending to buy with cash) it should be clear you're serious about making a purchase and that should be motivating. If it isn't, your Realtor may just be very busy with other clients he/she thinks will be more profitable to work with. Good for them, but that's not a good fit for you. I also would not take investment advice from a Realtor - most of whom are not investors themselves. Make sure you're working with one who has experience as an investor or representing investors. That may also be the reason it's not a good fit. There are really, really good Realtors out there. Keep looking and you'll find one. In a tight market, you might need to get off the MLS to open up more opportunity for you. Don't be afraid to go to a REIA meeting and network with some local wholesalers who may be able to bring you an off market deal. Many people badmouth wholesalers but, just like Realtors, Contractors and any other profession there are good and bad. We've been lucky to have only good experiences with wholesalers. Best of luck to you!

Is it possible to build an ADU on your property? Maybe build a small 1/1 ADU for you and your wife to move into and rent out the main house. That way the renters are covering the mortgage and you and your wife are living on the cheap. That would force appreciation and most of Austin is appreciating anyway from what I can tell. Eventually when you move on you'll have 2 doors to rent out if you decide to keep it or an improved property to sell.

Things can go sideways on a rehab SO quickly. We have done several flips, are able to be onsite as frequently as we want to be, we know enough about construction project management to be comfortable managing the phases and we STILL underestimate our rehab & holding costs. So it happens. This has caused us to increase the buffer we put in our budget every time for both length of time holding and rehab costs and ask ourselves if the numbers still make sense before we buy. Labor scarcity and rapidly increasing costs of both labor and materials in northern CA have caused us to be much more conservative with our numbers right now. I'm glad to see that despite this first project, you're moving forward anyway. You'll have wins so long as you keep going!

HELOC or cash out refi on the one you you owe free and clear to fund your down payment and improvements on the new one.

Is it possible to build an ADU on your property? Maybe build a small 1/1 ADU for you and your wife to move into and rent out the main house. That way the renters are covering the mortgage and you and your wife are living on the cheap. That would force appreciation and most of Austin is appreciating anyway from what I can tell. Eventually when you move on you'll have 2 doors to rent out if you decide to keep it or an improved property to sell.