All Forum Posts by: Chris Guthrie

 Adding up the stuff we've put into the house and the purchase price it comes out to roughly $175,000. I've looked at the comps in my area and we should be able to sell for a profit. Not a huge one.

As I mentioned in the post I did buy the house to live in not and not as an investment. Only now after the fact have I been trying to research whether or not it would be alright as a rental. I sort of knew the answer would be bleak given that I went with a 15 year fixed but just wanted to ask here since I'm new.

Yah heard of the 50% rule I will do some more searching for it. 

My point was more along the lines that had I bought with a 30 year fixed at the like 3.2% something at the time we could have gotten (or maybe it was 3.7 - I don't recall) anyway the payment would have been around $750 or so. That would get it closer to 50% rule (if it rented for $1,500) and I didn't spend as much as I did but clearly I've put a lot of money into it as well so factoring that in again it's probably not doable.

Do you think that because of the local differences in real estate that perhaps picking a strategy that sounds interesting isn't a good plan but rather if I'm interested I should pick a strategy that works for my area?
Buy and hold seemed most appealing to me because I'm just looking for a place to shovel extra money towards that doesn't go back into my online businesses as I'd like to diversify.

Good point on improving the rental property over time. Since I've already done it I can't claim the costs etc

Thanks @Walt Payne 

We shall see - I don't think there is a lot of skill transfer. I can tell people how to improve their websites etc (that's about the closest skill that could help real estate agents for example) but I'm still new to doing real estate investing.

I bought a 1400 sq ft 3 br 2 bath HUD home in late 2012 for ~$130k after closing costs in Puyallup WA on a 15 year fixed mortgage at 2.875% interest. (Why 15 year? Wife listens to Dave Ramsey and the difference was only like $300 or something). The loan balance is $113k.

Payment breakdown:

For a living I run various internet businesses and I feel I already take a lot of risks in my day to day "job" I'd like to have less than 5 mortgages at any one time. I simply want to buy a single family house or two every year with surplus cash I generate and use debt snowball approach to pay down their mortgages (I don't mind growing slower if it reduces the risk of the cards falling down).

Have I Upgrade My House Too Much To Rent It Out?

Our plan was to use this as our first rental when we bought our next house, but because we're living in it now while we upgraded we surely did things that we shouldn't have done had we bought this house initially as an investment (or maybe you think I'm ok?)

I do pretty well with my online businesses so we paid cash to redo all of this stuff and I could probably pay my house off this year (but I'm not so eager to pay off such cheap 2.875% money). 

Here's What We Did / Paid Other People To Do 

(I don't recall exact prices unless I go back through receipts):

1. New IKEA kitchen with granite counter tops, nice undermount sink etc ~$10k
2. Replaced carpets with laminate floor ~$5k installed (I assumed hard woods would be too nice for house price and we have a dog + new twin babies)

3. Removed walls in living room to make it more open concept ~$2.5k (we did demo)

4. Replaced deck $1,500 (we did this)

5. Replaced molding $1,500 (I think)

6. Replaced all duct work when we moved in $1k (we did this)

7. Had to pay to have insulation from under the house removed $2k (it was vacant for 18 months so rats were in there etc)

8. Replaced all the doors (happening this month)

9. Redo main bathroom ~$8k - $9k (happening this month)

10. Redo master bathroom ~$8k - $9k (happening before year end)

11. Replaced all appliances ~$4k (there were none)

12. Removed popcorn ceiling $2k

13. Repaint etc

14. Added external AC unit $3k (we did some of the install e.g. ran the lines etc)

So by the time we decide to move everything in the house will basically have been redone to our liking.

Rents In My Area:

I did a search through Craigslist to see what houses were renting for and found a rough estimate of around $1,250 to $1,400 a month for 3 BR 2 Bath. Only one of the houses I found had granite (that's not the only quality indicator of course I'm just trying to make comparisons) but at the $1,400 on up mark the houses have around 1,800 to 2,000 square feet.

Do you think it's better to buy another property strictly as an investment and do the appropriate upgrades for the price? Or do you think an upgraded first time buyer home is worth it in terms of better rents and (presumably) higher quality tenants?

I've listened to as many podcast episodes as I could. If I'm going to do this I know I just gotta do it. Just trying to decide if the first time I go forward I do it with this property or if I do it with something else bought specifically as an investment.

Thanks in advance sorry if post is long still new here. I'll figure it out.

EDIT: Perhaps some people would advise pulling the cash out of the house that we have from the increased value. Interested in any advice.

 Billionaires are very serious.

Not leaving at all. I just want to invest extra income into real estate. My family lives on a lot less than what my businesses currently produce so I'm fortunate to have the problem of knowing what to do with the surplus cash.

Our last debt is our mortgage on our $130k house. (Just paid off $90k of wife's student loans - that was major financial mistake #2 in our life)

Got you to click didn't I?

Hey I'm Chris Guthrie but I'm not a billionaire (Sorry to disappoint you, I'm disappointed as well). I'm 30 years old and I'm fortunate enough to have been self employed for nearly a half decade primarily earning money through internet entrepreneur activities (e.g. software products, websites etc).

I'm escaping my Bigger Pockets long time podcast listener and forum lurker shell to participate in the community. My ultimate goal this year is to hug Josh Dorkin and Brandon Turner at the same time.

Looking forward to learning.