All Forum Posts by: Carini Rochester

Talk to a realtor or have the property appraised. If the continuing maintenance and repairs are more than you can afford and make the property cash-flow negative, I would sell and hope that the repairs I made and the appreciation would earn me some profit.

Are you certain the after repair value will justify this $40,000 budget? Look at a HELOC on your own home to fund the repairs, then refinance into a new mortgage (at which time you pay off the HELOC.)

@Dave Foster

This is the expert you refer to. Insurance payout is not a taxable event. The value you lost in the fire is offset by the insurance payout and you have gained $0. (unfortunately I know this from experience.) I hope this all works out for you.

In addition to above, consider utility entrances. Water services. Sewer laterals. Natural gas connections. Electric services. These may all have to be mapped and approved by the agency, authority, having jurisdiction. Probably requires surveyor, and engineer. May require some idea of building footprints and uses being proposed.

At $1000/month additional cash flow, it will take 12 1/2 years to recoup that money. What else could you do with that extra $150,000? Are there good opportunities you would miss out on? The $75,000 would make a 20% down payment on a $350,000 property. $225,000 would make a down payment on a $1,000,000 property. So, the answer depends on your goals and what opportunities for investment you have. Sounds like a successful apartment project. Congratulations!

See if you can make this work with 25 or 30% down payment. That could leave you the emergency fund and money for a good used car. Putting 30% down instead of 50% leaves you $80,000. Put $10,000 down on a $20,000 used car, and you would still have a $70,000 fund. It seems like you are making money in you job, as it seems like you've saved $200,000 (50% of $400,000.) So, making a mortgage payment and a reasonable car payment might work out fine.

Site planning and municipal approval processes are time consuming and seem to surprise everyone who does it for the first time! Too bad you borrowed the money and started to incur interest expenses before you really needed to. Your engineer or surveyor or town planning personnel should be able to give some idea of the timeline to having approval and a building permit. With that information, make a decision. If you pay it back, how easy will it be to get that equity turned back into cash? This might not have been the best kind of credit to use as a construction loan. Talk to your lender and a couple of other lenders. See who has the best product for your needs. Hopefully you have that HELOC money earning interest for you in the mean time.

A very encouraging post! Thanks for sharing the Dion Talk Binder link. I had never heard of this. At annual rent increases, I do scour Zillow for market rents in the area, which I share with my tenants. I think it puts the increase into perspective and I get no pushback or arguments from my tenants. I'll watch a few videos and see what I can learn. Thanks again.

"has foundation issues and got them fixed . . ." Way too vague! What were the extent of the issues? What steps went into getting the issues fixed? Was a licensed engineer involved to design to repairs? Was a building permit issued? Was the work inspected? If the remedy was designed by a qualified professional, the work carried out be an experienced contractor, the work was permitted and inspected by the town, then the value reduction would be zero. If shortcuts were taken, and/or your inspector sees problems with the repairs, then it might be the worst case scenario that you would walk away from. I have been involved in many foundation repairs and we get the improved foundation up to as good or better than new.

Nice looking little duplex! What's your cost/sq. ft.? (for the building) What's the site and site work cost?