All Forum Posts by: Dan B.

Call Mike Christy at Christy Floor Coverings for carpet/vinyl. Tell him I sent you

Congrats @Matthew Lindquist ! And welcome to BP 

It sounds like you have just been renting out 'property A' for a year. If that's the case, my guess is that you have insufficient rental (landlord) experience for them to count your rental income - though some will count it or a percentage of it. So they are requiring you to have enough other (non real estate) income to cover the cash-out refi. Most lenders want 2 years tax returns to show you are a profitable landlord. Before that they want you to have the personal income to cover all the debt. After that, things get easier if you have shown a profit.

@Account Closed I did talk to someone at Smartmove and my initial understanding was correct. The recommendation was to accept the group. The Decline recommendations were based on each individual. In any case, I did rent to them and they have been good tenants thus far (9 months).

I had 3 guys apply for a unit that I have listed for rent. They seemed well qualified, talked about their good credit, and income. I received all the paperwork and sent them the link for the credit/background check. Here's the summary that I got from TransUnion after all 3 guys finished. I think I know what my decision will be, but this is confusing to me (see the highlighted parts). 

One of the 3 has a current address mismatch, but all of them are recommended as DECLINE. However, if I read it correctly, the total recommendation is ACCEPT. Maybe none of them make enough alone, and they have a reasonably amount of other debt, but together they make more than 5x rent, all credit is great, and no criminal or eviction issues. They applied together, I only look at the applications as a whole as I would expect any landlord to do (both the good/income and the bad/debt/credit/crim. 

What am I missing?

I agree with @Steve Vaughan - don't bother painting the trim.  You can get wood stain repair sticks that are like a pencil for small repairs. To me it sounds like you are putting a lot more into a rental rehab than you need to. I live in a pretty nice middle class house/neighborhood and my trim isn't caulked... I could easily rent it for $1500+

I would have your painter guy do the hard stuff - ceilings, cabinets if you really need to. If the color isn't offensive and there aren't stains, why paint the ceilings (eg the bedroom you referenced)? And why are you painting the garage ceiling???! I wouldn't even do that on a flip unless it was stained badly.

Paint the cabinets if you really think you need to, but be really careful with painting the trim. Sometimes it works great, sometimes not. I had a (skilled/experienced) painter friend do it in a place I'm just finishing up and wish I would have just replaced it. The stained wood just didn't take the paint well in some places even with good prep work and a quality primer. Sure we could have sanded it all down, but labor gets expensive fast and you probably have to take it off and reinstall it anyway to do that. I will probably be replacing it all over the next few years now anyway. So, if you just want white trim, it's probably a lot cheaper to replace it (and the doors) - buy the pre-primed stuff, paint it and install. Plus you have brand new trim.

Also, if you have a decent handyman, have him paint the walls - he probably won't do as good of a job as the great painters, but it will be 1/2 the cost, and should be plenty good for a rental. It shouldn't take him more than a couple hours to paint a room on average, $25/hr + paint should be just under $100/room. 

I bet you can get your painting bill down around $2-3k, maybe $4k if you do the cabinets. You might get $25-50/mo less, but it takes a long time to recover $4k+ in cashflow. Maybe consider doing this work in phases if you have a vacancy after a few years.

I think it looks decent actually. @Jeremy Slater

What are your other expenses - Tax, Ins, maint, capex. You should be able to have the tenants take care of all utilities, lawn/snow. That leaves $400-500 for expenses/cashflow, with NO Money out of pocket. Sounds like it could be a winner. Also, could you finish the basement and make it a 4/2 with 1800+ sq/ft? How much would the rent go up if you did that? Refinance and cashflow of $150/mo for a year or two then sell to recapture your equity if you want, sounds like a nice way to acquire $30k. 

PS - If you have a day job - that is sounds like a lot to get done in 2 1/2 weeks. 

Where did you get that info? If you pulled it from zillow or the like, don't trust it. What does that even mean? Is it a duplex with 4 beds and 1.5bath per side? That is not the total - if that is the total beds/baths, then it's likely 2 bed, 1 bath per side but unless there is an active listing with details or you can get inside you don't know. I'm not sure where you're at, and if you live in the area you probably realize this, but close to downtown st Paul there are vastly different quality neighborhoods right next to each other. 

I agree with Travis, look for some partners or a lender to help fund something larger. Or you could become a private lender.

Hi @Stephanie Garcia 

We need more info, but here's my initial take. 

Does the one unit not have any heat/AC? Around here (MN), AC is going to run you $2k or so, and a furnace all of that again and then some. I assume you just need the units not all the ductwork? If you need all the ductwork done that is a huge project, I would budget $10-15k minimum because you'll most likely have to remove/repair a bunch of walls/ceiling.

I would avoid moving the sink to make the kitchen larger unless you are planning to live in that side and really want it. Unless it is unliveable, you'll be paying a lot for little to no gain on the rent side of things. If you are just going to move the sink a few inches it may be ok, but you're likely looking at at least some new cabinets and counters, maybe new flooring - it could easily end up being a $2k+ project.

How low are rents, and how sure are you of what the rents should be?

What expenses do you expect to pay vs the tenant, gas/elec, trash, water, etc?

Are you looking to live in one side?

From what I know of what's available in CA it seems like it has potential to be an ok deal, but need to answer some other questions first. I would recommend checking out the Rental Properties calculator under the Analyze tab to get a good idea of what you want to look at for analyzing this property. Also Brandon has done a number of webinars on this that you can find on youtube.