All Forum Posts by: Clayton Sneider

Christopher,

Thanks. I think I will keep everyone on the lease for now and remind them that they are all responsible for paying rent. When the guy finds a new roommate I will remove the women from the lease. As far as the security deposit, should I just refund it (if applicable) to the guy at the end of the lease and tell them all, that they will just have to work it out amongst themselves?

Of course if rent does not get paid, then I will break the lease in total or evict, whichever is necessary.

I am having a tenant issue that I could use advice on. I have a large house that I am renting to 3 adults and a couple of kids. There has been some sort of domestic dispute and the two women have told me that they do not feel safe living with the guy that is still there. The women have moved in with friends, and want to break the lease. The guy wants to stay. I don't think he will be able to pay rent on his own, but he could get another roommate. It's the middle of winter and I really don't want to re rent the place right now. How do I deal with two tenants moving out and one staying? Technically the woman are still responsible for paying rent, but if the guy is paying all the rent, then the women should be taken off the lease, no? Advice is appreciated.

If you wait, you could find yourself five years down the road, with prices slightly higher than they are now, kicking yourself for not buying in 2015 when prices were still reasonable, and interest rates were still low. Nobody can predict the future. If you can find cash flowing deals now, I think you should buy, if that is what you want to do. Even if prices drop a little bit, you will be fine as long as your rentals actually cash flow.

Hey Alex,

I am in Longmont too. I consider myself a newbie investor (just bought my second rental house). Although I am not a seasoned investor, give me a call if you want to chat.

Clayton

Welcome to CO! I am in Longmont and am in the buy and hold business, but would like to do a flip or two as well. Get in touch when you move out here.

Clayton.

Hey Paul,

I am relatively new to real estate (just buying my third house now), but I would love to chat with anybody here in Northern CO. I am in Longmont. 

Jon H, I agree with a lot of what you are saying like "Buying expensive doo-dads with financing just makes them even more expensive"

However, I think it is a stretch to say that most people's house is an expensive doo-dad just like a car or boat. There are some important distinctions. First, you have to live somewhere. So your options are 1) rent 2) buy with cash 3) buy with a loan. I think option 3 is generally the best, but not always. Second, real estate appreciates over time (most of the time). I don't mean the house, I mean the real estate that the house sits on. If you make payments on real estate for 30 years, you own a valuable asset. If you make payments on a car or a boat for 30 years you own a pile of rust.

I agree that buying a huge house you can't afford, and financing it, is not smart. But buying a house you can't afford with cash would also not be smart (if not impossible). Renting a house you can't afford is also not smart. But if you buy a house you can afford, financing it, and getting the mortgage interest deduction is the best way to go most of the time.

Essentially, smart use of leverage is, well...smart. Buying stupid crap you can't afford using financing is...stupid. I guess leverage is a powerful tool, that if wielded by somebody who understands it, can make them rich, and if wielded by somebody who doesn't, makes them poor.

 So, I think we are (mostly) in agreement.

To those that are saying the mortgage interest deduction is not a benefit because it is more expensive than not paying interest at all: What are you comparing it to? Paying all cash, and not using leverage? Are you saying that if I were to offer you a loan at 4% and then on top of that, give you some of the money back that you are paying in interest at the end of the year, that you wouldn't take that loan? Because the interest cost is more expensive than not borrowing the money at all? Only if you can't find a way to earn greater than 4% returns, I suppose.

Essentially what you are arguing is that buying real estate with cash is better than using leverage. I don't agree.

I think it is a gray area and people are defining asset and liability in different ways.

For me, the decision to buy my primary residence, instead of renting was the best financial decision I have made so far. I would call it a good "investment" for myself. The benefits my primary residence have provided to me include:

-Paying PITI~ $1500/mo when renting that same house would cost ~$2,200/mo

-The house has appreciated from $265K to $430K in about 8 years. Part of this was because of work that I put into the house.

-It has allowed me to do a cash out refi and purchase a rental property

-I rented out the basement several times, getting an additional $700/mo in income.

-My principle is getting paid down by about $400/mo

-I get a deduction of the mortgage interest. I don't understand how some people are saying this is not a benefit. I am borrowing money at ~4%, then getting some of the money that I am paying in interest back from the IRS, so that effectively I am borrowing money at less than 4%. Then I can take the cash that I would otherwise have put into buying the house, and invest it and get a higher return on my money. If I instead were to rent the house I live in, my landlord would get the tax deduction and not me. If I were to pay cash to buy my primary, then I would lose out on all the other investing opportunities that can make much better than 4% returns on my cash. So how is the tax deduction not a good thing?

-Plus other "non-financial benefits", like being able to paint any color we choose etc...

I can see situations where purchasing a home would be a bad decision, but that was not the case for me.

I advertised a house on Craigslist and clearly stated it was in Longmont CO. It also showed the location on the map on Craigslist.

I had a lady call me and we set up an appointment to look at it. I mentioned at least twice during the phone call where the property was located, because she kept asking. I show up at the house on time. She texted my asking to verify the address, so I again give her the address. She calls me 20 or 30 minutes late confused about where the property is. She is in Boulder, about 20 minutes away. I tell her again that the property is in Longmont. She asks me again, "so this is in Boulder right". Nope, Longmont. She still seems confused. I was thinking to myself "how can somebody be this stupid?"