All Forum Posts by: Axel Meierhoefer

 Yes. Can you DM me so we can arrange a call?

@Kyle Johnson To give you good and actionable advice more details will have to be revealed.

@Jon K. pointed to some of the calculations you want to make to determine the current performance of the property.

You should be proud to already be a property owner at your age.

A rental property has a life of its own that last about as long as a human life. The hardest time is to raise it to a point where it can run on its own. You are still on these early stages but each time you decide I sell and start with something else, you have to go through these hardest early years again.

I am mentoring early stage real estate investors and if you like to have a conversation about your situation and options and referrals that can help you, feel free to DM me.

I suspect you have money you are not aware of and eligibilities you might not know about. Credit cards would probably be my last option.

I like to suggest the inspection route.

 You are very welcome. That's why I love it too

 You are welcome @Danielle Cage and make sure to ask what value/price basis they have. If your price is a bunch more than what they used you can assume that it will go up a lot more as soon as the assess again

 I just did a few minutes Google searching and found this. There are probably more: https://www.massbaycu.org/access/online-banking/

 First, I agree with what @Caleb Brown pointed to.

Also, you should not give up the current mortgage.

You said you have been paying for 4 years, so you probably got the mortgage at that rate in 2019.

I would go on Zillow, punch in the address of the house and look at the Zestimate value. It should be significantly more than what you bought the house for.

Now take your current mortgage balance as shown on your monthly statement and deduct it from the Zestimate value. (i.e if the Zillow says the house is worth $180K now, your balance is $80k, so you have $180K - $80k =$100K equity)

Now take 80% of that equity. In the example above that would be $100K*80%= $80K

You can apply for a HELOC at 80%, use that money and pay off the credit card debt or at least most of it.

Important final point, and I think that is what Caleb and Charles are pointing towards: Ask yourself if that balance on the credit card is a result of spending you had to make at that point in time (i.e. emergency) and with a frugal/practical mindset, or was there spending that as frivolous.

You might say: "it was a little bit of both". 

If you want to be successful long term you can't hope that the market will always save you with equity that develops in your property.

You need to eliminate those extravagances that are not necessary and rather build the reserves as described in the previous posts. If you do, you can develop a wonderful passive income portfolio.

If you don't your habits will ultimately result in the total loss of all the assets you have in your name.

Sorry for the harsh love but that is a reality you have to deal with. I hope you spent everything thoughtful and due to emergencies and you will now start putting what little cash flow might be left after mortgage payment and HELOC payment to create proper reserves for your property.

 I agree with what @Caleb Brown and @Alec Barnes have suggested. I actually recommend 8%, which is at the lower end of most larger companies when managing only one or a few properties for a client.

I am retired Air force and if this is the first rental property for your brother, I would point out to him that he has 2 things to consider, maybe 2.5

1. He probably used a VA loan to buy the house, so there is very little money of his stuck in the house (other than the current equity). Even if he purchased it with regulars FHA financing it is probably at a very low rate compared to current rates for investors, which are about 8% interest. This means he will have unusually high cash flow if you find him a dependable tenant at market rate. I have actually always like military tenants as they always pay (want to avoid that you have to go to the base and talk to their boss or garnish their wages).

2. As an investor, which you and your brother with this property are, you want to look at fair compensation on the one hand and source of funding on the other. So if you are willing to spend 2 hours/month on your brother's house and you and he agree that your time is worth $85/hour, it would cost $170/month to hire you for that job. If the rent is $1700/month and 10% is used for PM work, it would be fair compensation. I know that most of us don't calculate $85/hr for our fee when we self-manage or for family, but the value of your time and skills is probably at that level. The flip side of that coin is that your brother is not paying you. The awesome tenant you find for the house is paying for the PM, the maintenance reserve, the CAPEX reserve and the vacancy reserve and you will then send your brother what's left of the rent as the owner distribution. Bottom line, the tenants will pay off your brother's house and he will have a second income stream. That's a much healthier way to look at it than trying to give your brother a deal when both of you really have a business relationship when it comes to that house.

2.5 you are his brother. I am sure he knows that you will do everything and then some to treat him and his house well. Other property managers will do a good job but they will never be as caring as you are for your brother. That should actually gave you 20% of the rent for PM, but because you such a nice and caring uy you do it for 8-10% and still provide better service than anybody he can hire.

I strongly recommend you create a property management agreement for the house and I would also suggest your brother puts the house into a land trust and creates an LLC that he puts yuin charge to manage. When he comes back he can rent his house from the LLC, although I am pretty sure he will rather buy a new house with his last VA loan eligibility. That's a much better deal.

If all this is confusing, feel free to DM me and we can have a call.

 Not sure if she can help you in your location  but I suggest to reach out to @Samantha Fedor here on BP. She is in sales for a larger PM company operating in several states. Tell her I sent you :-)

There are a number of important items missing to really help you.

1. You said you and your business partner want to buy a house from his father. If that house was originally purchased in 2014 it would be helpful to get the current value, even if you use Zestimate.

2. If the house is in bad shape you should identify how much of an investment for renovation it will probably need (include some hourly rate for your work into it even if that is not actually paid and include work estimates for anything you can't do yourself). You want to end with a current value versus after repair value

3. The issue with the $18000 makes no sense to me. You can pick any price between $117K + $18K and the current value including closing costs, etc. You want to figure out that number. If you also want the money for the renovation to be included, you add that too.

4. With the values/numbers above the use case becomes important. Do you want to move into the property yourself, or your partner or do you plan to rent it out or resale it? Just as an example. If you wanted to rent it out after reno, I can connect you to one of my lenders who does 90% ARV mortgages that have a certain structure to me the first 5 years of the loan really cheap to payout of the rent and have extra money to lower the principle if you can or want. If you want to move in yourself, its a totally different ball game regarding interest rates and down payment, etc.

There are a few more things but these would really need to be answered to have a chance to help you

I am curious. Is your PITI based on current numbers or the post purchase calculation. In IL you get reassessments that can be brutal. I had a 40% increase in the property taxes in one of my IL properties last year.