All Forum Posts by: Brian Medansky

Hello all,

I need to replace a roof on my property on the border of Lakeview and Roscoe Village. It's a gable roof with regular asphalt shingles. I knew I'd need to replace the roof soon after buying it in 2018, and that time has come. 

Does anyone have any recommendations from previous experience?

@Ford Wagner If you are set on buying a property in a certain time frame, then a high yield savings account is likely going to be your best bet as you can easily predict when you'll have enough for your downpayment based on your savings rate. 

However what I, and I know of others that do this to, do is be more flexible on when, and I put my "investment money" in the market in broad-based index funds. Yes, the funds can, in theory, go to zero ( @Will Fraser not limitless downside, the lowest it can go is zero), but if that happens there are likely bigger issues. However, this can allow me to get a better return and have a downpayment ready sooner. 

Again, I'm more flexible on when I purchase, so if the market soars, then I can buy earlier. If the market tanks, then it takes me a little longer. I'm playing the long game, and as long as I keep saving, I'm not too worried. If I keep saving, I still win in the end. 

@Tom Shallcross I'm currently house-hacking and would likely look to move into a new one within the next year or so. I personally would go for the extra income as a 4-unit as I wouldn't be looking at it as a long-term living solution, but just an investment that I happened to live in for at least one year. 

I would also like to see what neighborhoods you're looking at. That might potentially change my answer, probably not, but possibly. 

@Sharee Paulino generally speaking a HELOC would be for an owner-occupied property, but if you talk to enough lenders, I'm sure you could find someone (again, I'd check local community banks or credit unions) who can find a way for you to pull some equity out either via refinance or with a HELOC.

Netting $3k/month is something I would do everything to hold onto, especially with a cap that high. I would definitely not sell that at all. If you're trying to refinance, maybe look at local banks and credit unions, as there no reason you shouldn't be able to refinance that. 

I would keep that cash flow and save it for future payments, but I would also look to pull equity out of the property every couple years via either a refi or a HELOC to expand your portfolio.

You really answered it yourself, what are you looking for? Are you looking for more cash flow now, or are you looking to use your cash for the most further investments? If you're looking for more cash flow, then obviously use the 20% down. However, if you are looking to more seriously grow your portfolio, then take the 0 down and then you can use the 20% down on a different property. To be honest, that might end up being a better deal anyway even in the short term if you can find a second good deal.

You can/should also look into potentially allowing/advertising/negotiating a shorter lease term so that the lease ends in the better renting season (April-July). 

But yes, as early as possible. 

While this may not be the best thing to do in the long run, what I would personally do is buy the 3-5 turnkeys, making sure to vet the companies extremely well. As you said, you don't have the time to do the management and eventually those properties will get paid off, and you'll have 5 paid off rentals that can help you buy even more. 

@Vincent Martinez This may just be me, but refinancing seems to be the win-win option, assuming that the rental still cash flows with the mortgage. You get a paid off primary residence which can provide peace of mind, you have a cash flowing rental where you have tenants paying it off, and you have more capital to invest. 

That's definitely a fear, however if you buy right where if you were to move out and it cash flowed a decent amount, then it really shouldn't matter too much. If rents were to be say 80% of today's market value, and you're breaking even, then you're probably fine. You can make money in any market cycle, you just need to buy right, and it takes more time in finding the right property.