All Forum Posts by: Connor Umfleet

One way to evaluate if it is a good financial decision is to see what you clear from your rentals and apply that money toward extra principal payments at your new Dundee house. I am assuming that the $6,000 a month mortgage is feasible.

I don't know if BP has an early payoff calculator for mortgages, so I used the one at bankrate.com, and the numbers you provided in your post. Approximate monthly funds to pay additional principal on the loan $3,065. You will have the New Dundee home paid off 100% in 12 years. That would save over $760,000 on the life of your loan and alleviates your concern of the higher interest without having to rely on refinancing. It is possible that rates may drop, and you can refinance at some point as well.

Of course, you also get the additional enjoyment of being happier in the new house. That I cannot qualify for you in dollars. :)
Here is how I arrived estimated extra monthly mortgage principal payment amount.

Vancouver house: $275 a month = $475 monthly take home after paying the mortgage and planning for maintenance expenses of $200 a month. (You might go several months without maintenance issues, but if a plumbing issue comes up, that could be an $800 bill, and maybe something else in the year.)

Dundee House: $1,165 a month. = $1,815 take home after paying the mortgage. You will have more expenses at your short-term rental than your long-term rental. You will still be paying all of the utilities ($350 to $400 a month). For other expenses, I will use my Airbnb I end up replacing sheets a couple of times a year, replacement dishes (one set every year or two due to breakage), extra cleaning fees not covered by the guests or Airbnb's host guarantee, regular supply of consumables (shampoo, toilet paper, paper towels, dish soap, laundry soap, etc. Let's say those items amount to $250 a month.

Any months you don't have a maintenance expense, stash away the money until you have a reserve account for your rentals of about $30,000. That way you will have money to address big ticket items in the future as they come up such as roof, repainting, etc.

New Dundee House $1,625 a month

$2,000 a month for short term rental, less $250 a month towards utilities, less $125 a month for replacing consumables, and miscellaneous expenses that come up.

There are lots of ways for you to see if this makes sense for you, and I hope this is a good starting point!

Cheers,

Melissa

Wow! I really appreciate your detailed response. This was more than I was expecting.

I am following what you are saying here. It sounds like as long as we can pay the $6k/month out of pocket, we can use the 3k earnings from the rentals as the additional principal to tackle the large 7% interest rate and reduce the overall payment amount substantially.

We also put 15% of our income into retirement, so our monthly take home amount comes at around 7k per month. Paying the 6k mortgage out of pocket to get the 3k additional principal would be tough. We'd be crossing our fingers for that lower interest rate/refinance :)

Which brings me to question 2. Is it better in the long run to continue to scale up our real estate portfolio or to pay down our current mortgages? Does the additional interest from adding a new loan outweigh the additional equity + cashflow you get? Paying off the Vancouver house may enable us to unlock more cashflow that we can use to purchase that 3rd house, although that would be many years down the road.

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Portland, Oregon

I'm hoping someone can give me advice on whether or not purchasing a 3rd home to do a guest suite rental would be a good idea, given our current situation.

My husband and I own two houses: One in Vancouver WA and one in Dundee OR. We currently live in the Dundee home and rent out the Vancouver house. Some details on these:

Vancouver WA

Purchase Price: 335k

Down Payment: 18k

Interest: 3.25%

First Payment: 9/15/2020; 30 Year Mortgage

Mortgage Payment: ~1,800.00

Current Balance 06/15/2023: 279k

Size: 1600Sq Ft

Monthly Rent: 2,275.00/Month Long Term Rental

We have rented this home out consistently since Nov 2021 for 2,275.00/month. We lived in it for 1.5 years prior to that.

Dundee OR

Purchase Price: 459k

Down Payment: 25k

Interest: 2.99%

First Payment: 9/15/2021; 30 Year Mortgage

Mortgage Payment: ~2,185.00

Current Balance 06/15/2023: 417k

Size: 1600Sq Ft

Monthly Rent Potential: 4,000.00/Month Short Term Rental

We live in this house and have made some great improvements to the house and backyard. It has a great space for hosting and we believe it would be a great short term rental, considering it's in the heart of Dundee nearby many vineyards and tasting rooms. Homes around the area with similar size and location have rented out for $300 on average, if not more. AirDNA says 400 per night with vacancy rate of 49%.

New Dundee OR

There is a house for sale in Dundee that I could be a envision living in and renting out the downstairs as a "Guest Suite" as a short term rental. The house has a staircase leading to a lower level with a kitchen, bedroom, large living area, bathroom and even a Sauna. Our idea is to live in the upper level and rent out the lower level (est. 2,000 per month). We would move out of the old Dundee home and rent it out as a short term rental where we estimate around $4,000 per month. In addition, my partner and I both have good paying jobs ($91k and $73k) and live a fairly moderate lifestyle. Here are some details of the house:

Purchase Price: 830k

Potential Down Payment: 50k

Potential Interest: 7.00%

First Payment: Sep 2023; 30 Year Mortgage

Mortgage Payment Estimate: ~6,000.00

Size: 3,300 Sq Ft; Lower level might be about 1,000 Sq Ft with a good size yard.

Monthly Rent Potential: 2,000.00/Month Short Term Rental (150 average per night, 49% vacancy rate)

The Question:

With all that said, is this a smart choice financially? We would be happier in the new house, and it seems to open us up to more income opportunity and ability to build equity more quickly. I just worry when I see the amount of interest that we will be taking on and wonder if that added interest will put us in a worse spot. Any advice would be appreciated. Let me know if any information is needed.

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Portland, Oregon

@Aaron K. Ah that makes sense. Perfect, appreciate the advice!

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@Aaron K. Thank you for the advice! I haven’t tried Redfin yet, I’ll take a look today. That’s a good tip about playing with the filters like that.

What is the reasoning for filtering by $0 HOA?

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Hi All!

I am 24 years old and I work as an accountant with a 70k salary with some money saved up. I was planning on renting a first apartment, but the idea purchasing a duplex and renting out half of it sounds like it will benefit me much more.

Could someone give me some tips on finding these properties? I’ve looked on some apps, but they seem tough to find. Is it better to go through a real estate agent? Or do most people just find listings on the web? Any other tips for a first timer at this stage are appreciated.

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All Forum Posts by: Connor Umfleet

Connor Umfleet has started 2 posts and replied 5 times.

Post: Advice on Buying a 3rd House for a Live In Guest Suite Short Term Rental

Post: Advice on Buying a 3rd House for a Live In Guest Suite Short Term Rental

Post: Tips on Finding a Duplex (1st timer)

Post: Tips on Finding a Duplex (1st timer)

Post: Tips on Finding a Duplex (1st timer)