All Forum Posts by: Chris Noles

@Colleen F. Zoning is ok, and yes, I could add another meter. However, with all the costs we have for moving we may have to decide to only rent the top floor for a year or two before we can pay to finish the basement.

@Colleen F. MIL has already decided to move out no matter what.  The basement has 2 above ground/egress windows. There is enough space for 3 bedrooms and 1 or 2 baths with a small kitchenette/common area.  The $40k estimated finish would just require framing, drywall/build out for rooms and bathroom, flooring, sump pump and bathroom amenities. The electrical is ready. Yes, 1.5 to 2 times the rent or we think the whole basement would rent for $1100.00 or more plus utilities.

@Karen F. That is an interesting perspective when you look at it from that perspective - I would only be getting + or - $1400.00 per month for a $200,000 asset.  I do want to mention two things though: 1.) I won't likely get a much lower rate since this will be a rental and not my primary residence. I can't even refi at a lower rate right now.  2.) I could finish the entire basement for around $45K and rent each level of the house out as a separate apartment unit, but of course that means spending that extra money while we are still paying for rehab.  

@Sylvia B. MIL is moving out for sure so option 2 is off the table.  You are right - there may be other ways to make a bigger profit if we sell this place and get the equity, but it may also be more difficult to qualify for purchasing new properties and inventory may be very low plus I could finish the basement here. Thanks for sharing.  I will think hard about option 1 and option 3 after we move out of here at the end of this month.

Hi Kris!

Everyone has offered very helpful feedback here, and so far it does sound like option 3 is the most popular opinion.  To answer your question, my wife is Venezuelan (Yes, I am lucky!) and her mother immigrated here as a permanent resident. (the legal way).  MIL is 64 years old, she barely speaks English, she does not drive and she has never lived alone.  She has lived with us for the past 2 years, and we do think that it will do her some good to live by herself and work to pay rent, utilities, etc.  She is a very quiet lady, and she never causes any trouble.  Maybe it is because I don't speak great Spanish, ha!

Anyway, we just thought there could be a win-win situation if we became her landlord and she could stay in the same house she has been living in where she can walk to McDonald's to work, and we know she would take good care of the house, etc. Since this is probably not a good idea for many known and unknown reasons, we will nix the idea and she will likely rent a room from a friend for just $350.00 per month and we will either rent this house to another tenant or just sell it. Even if we were to only net $150/mo the tenant would be paying down our mortgage, but hopefully they will not be destroying all the upgrades in the process. ha!

Hopefully by explaining my situation the idea doesn't sound as crazy as it normally would.  Either way I win - *I* won't be living with her anymore in 3 weeks!

Hi Anna,

That is a very valid argument to consider option 3. If we could afford to finish the basement, we could easily have a downstairs tenant in a 3BR/1Bath apartment as well but we can only cashflow the top floor for now or sell to get the cash equity.  Thanks for your feedback.

This isn't a bad country song, but now that I have your attention I really do have a question. :)  I previously posted a question in the Deal Analysis forum asking for opinions about whether or not my current home will cashflow well.  My wife and I have found a new primary home, and we will be moving into it next month. My mother in law currently lives with us, but she will not be moving with us to our new home.  I love her to death, but trust me, this is a good thing!  She is still in good health, and she earns enough pay to pay about $400.00 per month in rent.  We are thinking if she is going to have to start paying someone rent, it might as well be us, right?  Well, that is of course if she has roommates who can pay us enough rent combined in order to help us cashflow properly.

The house is a 4 sided brick ranch home that was built in 1969. We just spend nearly $50K in rehab which included a new breaker box, remodeled both bathrooms, retiled kitchen floor, retiled screened in porch floor, replaced cast iron plumbing with PEX and put in a french drain.  unfortunately, we will be making payments on this personal loan for the next 7 years unless we pay it off early.  The home is on a full basement, but it is mostly unfinished.  No bedrooms, just 2 small offices (no closets or bathroom).  The living space upstairs is about 1700 sq. ft. with 3 bedrooms and 2 bathrooms with a 2 car garage.

The home could list for around $200K, and we owe $140K on the house. The interest rate is 4.25% so our monthly mortgage payment with tax and insurance is around $1,300.00 with 22 years remaining. 

The homeowners on both sides of our home have decided to rent their homes out, and the rents seem to be in the range of $1,400.00 to $1,550.00 per month in our area (Mableton, Georgia).

In the next 30 to 60 days, we will decide to do one of three things:

1.) payoff the mortgage and get the equity and mother-in-law will just go pay for a room for around $300.00/mo to another landlord.

2.) Mother in law will stay as a $400.00 per month tenant, but we will need 2 other tenants who can pay at least $500 to $550 per room to help us cashflow.

3.) Mother in law moves out to pay $300.00/mo to another landlord and another tenant will pay the full rent (hopefully around $1500.00/mo) 

We are new to investing, so if we go with option 1 we will not be landlords right away as we will have to invest somewhere else at another time.

Option 2 feels more like a multi-tenanted or house hack situation where we will have to collect from 3 different tenants.  If we go with this option, should we do a full service lease to include utilities (at least WIFI?) Of course we would not have separate meters to track how each tenant utilizes utilities so that could be challenging, but at least mother in law would be here to keep an eye on things and she will of course pay and be sure the home doesn't get trashed.

Option 3 may be easier to manage just one tenant and they could pay utilities, but we won't know what kind of tenants we may have.

In any case, I feel better about having a property management company help since my wife and I will be an hour a way and I don't want the calls at 3AM if something goes wrong in the house.  

We cannot refinance this house to lower our monthly payment since we are purchasing a new home, and this home will not be our primary. I have been told that since we already own this home, and the interest rate is not too bad for a rental property it might be a good way to easily work our first SFH deal and provide a place for mother in law to live.

What do you think?  It seems that home values are holding right now, but of course I am concerned about not selling for a good price right now while I can.  Long term (5 years or more) renting seems like the best option though.

Thanks for your feedback!

Hi Bill - Just to clarify, my $146K mortgage balance has an interest rate of 4.25%.  The $50k personal loan used for rehab is what I have the 12% interest rate on. I could decide to fold that into a refi on this home, or like you said I could sell then pay all of this off and start over.  

Hi Yoana,

Thanks for your suggestion. We have a walk-out basement, so If we were to finish out the basement we would rent that as a separate "apartment" as 3 bedroom/2 bath unit for about $1200/mo. I could have mother-in-law and 2 roommates on the top floor paying a total of $1700/mo rent and tenants on the bottom floor paying $1200/mo and collect around $2900/mo. on a home that I would only have a mortgage of around $1050/mo on!  I may be able to consolidate the personal loan balance from the rehab and include that in the refi at these historically low rates, so this is something I might consider now or possibly later on.  At least the numbers look good for renting out the home the way it is now, and I will plan to refi when I close on a new home. 

Hi Jingru,

Thanks for the response and for your opinion about the cashflow opportunity.  Here is what I know so far - I have already pre-qualified for purchasing a new home with the ability to keep this current home mortgage or refinancing it to a longer term and lower rate, but if I do that my mortgage lender says I will have to change the loan type on this current home to an investment loan if I do purchase a new one and make the new one my primary.

As for the personal loan, I believe I could also qualify for a larger loan amount even with 2 mortgages should I decide to finish the basement, but it would be at a the 12% interest rate and I really don't want to borrow anymore money until I collect rents for a while.

Hi! My wife and I are new to real estate investing. Since we are planning to purchase and move into a new home for our primary residence, we are trying to figure out if our current home will cashflow well. Our situation is complicated, so I am having a really hard time getting any calculators to give us a good assessment. Here is what we have going on - Our current home is a 1969 brick ranch home. 3BR/3 Bath. 2 small finished rooms in the basement (no bed or bath in the basement). We took out a $50K personal loan (not a HELOC) to remodel both bathrooms, replace kitchen tile floors, install new breaker box/electrical, install a new french drain, and replace some older copper pipes with PEX. We have a balance of $47,000 on this loan with a remaining term of 76 months at an interest rate of 12.87%. The home could sell for between $195K and $205K, and homes like this are selling fast in this area. We have 23 months remaining on our home mortgage, and our balance is $146,000 at an interest rate of 4.25%. Our property taxes are $2,208.00 annually, and our monthly mortgage payment with taxes and insurance is $1,221.62 monthly.

The mortgage broker that I am working with says we could keep and refi this house on a 30 year term at 3.75% when we close on a new house.  This would bring the mortgage payment down to about $1050.00 per month including taxes & insurance.  

We see other homes like ours rent for around $1,500 to $1,700 per month without finishing the basement to add more rooms.  The good news is that we have covered most of the major capex replacement in the last five years (HVAC, plumbing, electrical, etc.) 

We are trying to decide what might be the best thing to do considering the pandemic:

A.) Sell the home and get the $40K to $55K cash equity and invest somewhere else before home values drop again.

B.) Sell the home, get the equity and househack a new home.

C.) Buy a new home and rent the old home while getting some cashflow and slowly build capital gains.

D.) Buy a new home and seek out a multi-plex home or REIT investment.

Unfortunately, this particular area in Atlanta has been slow to recover since 2008, and home values have not appreciated like other areas of Atlanta. 

I know that we could finish the basement for another $45K, and that would add 3 more bedrooms and 2 bathrooms that could cashflow at around $1200/mo but we are concerned about dumping more money into this home while still trying to payoff the personal loan for other home improvements.

On a personal note, my mother in law is currently living here with us, and if we keep the home she can pay us rent and bring in other "golden girl" tenants.  On the other hand, we could just get a new home with an in law suite.

I am really struggling to figure out if keeping this home makes sense at all.

Thanks for any suggestions!