All Forum Posts by: Chris Wallace

Anyone reading this should be aware that the laws can change and dramatically alter your plan.  I think Austin TX just changed their law to rid themselves of short term rentals.  

http://www.npr.org/2017/02/09/514309905/in-austin-a-boom-in-short-term-rentals-brings-a-backlash

I am the sole member of an LLC that owns a B&M building and lot. I like the building, lot, location etc. I'm not really interested in selling.

Single tenant commercial NNN lease.

Rent $10,400 per month.

Last appraisal was in 2014 @ $1.8M

Tenant is in year 3/5 of current lease with a right to buy option until end of year 5.  

Auto renewal terms in place for up to two 5 year terms.  

Current rent increases 2% per year.

What I don't like is 80% of my net worth is in this one property.

I'm considering options to take a loan against the property to either invest in another property or maybe something else entirely.  One example of a loan would be 10 year fixed interest loan at 5%.  I could borrow 1M and payment would be $10,600/month roughly.  Add some for loan origination fees, etc.  In other words, the rent roll would effectively pay for the loan and be paid in full in 10 years.  Leaving me with the property lien free assuming everything goes as planned.  With the 1M in cash, I would need to invest in something else to make up for the loss of rent that I currently enjoy.

Math question, how much interest would I need to earn to make this strategy worthwhile?
Assumption here is the 5% as it's been a couple years since I have considered any loans.  I don't have any other debt.  Modest paid off home.  Paid off vehicles, etc.

Your advice is appreciated.

Chris

I've been lurking for 9 months or so.  A lot of good advice on this forum.  I'm currently seeking a local meeting to attend.  I would love to find a good mentor!

 I've been self-employed for the last 5+ years as a Technician selling my labor and parts. I enjoy what I do, but it's billed hourly and no matter how much I can charge for an hour of my labor, it will always be limited by the number of hours I work. Having said that, despite having other commitments, I have time to do more in a work week.

I lucked into my first property. It's a NNN commercial property in Raleigh near where I grew up. I had the pleasure of dealing with the tenant, attorneys, etc. and surviving a lease renewal. I raised the yearly rate over 20%. They were underpaying, obviously. I learned a lot, understanding that it's just the tip of the iceberg of what I really should know. I've read a few books and I have at least one more on stand by.

There are a couple of houses in my neighborhood that are looking vacated and getting run down. As much as I would like a bigger/nicer house, it's not worth the debt payments and higher operating costs to me. I'm considering working with my girlfriend and our teenagers to undertake a flip or possibly longer term SFH rental for additional income. I've lived in this house for nearly 17 years. I will likely be in this house another 5 years and then plan to move back to NC or possibly much farther South. Mexico, Caribbean, FL, who knows. Just somewhere warm!

Next step for me is to seek out other like minded investors and start attending any weekly or monthly meetings.  If anyone has a recommendation, I would appreciate the advice or information.

Thanks!

Chris