Rookie investor here who just recently discovered bigger pockets and am all in. short backstory of where im at and how i got here. I cash out refinanced my primary in 2019 right at the start of lockdowns with the idea of buying a new home and rent my current. We (my wife and I) decided instead of buying a new home and renting our primary we would buy an investment property with the funds instead and just sit tight in our current home in the short term. The cash out refinance gave us roughly 60k. I found out from googling what a HELOC was so I took one out to get more funds to up my purchase power and jumped into a 3 family. Waived inspection because I'm super smart (sarcasm) but closed the deal and have a 3 Unit 4100 Square foot home for $330,000 conventional financing with 25% down. We have learned a ton and I want thousands of units one day but for now just trying what to do next with this one.
ok so the issue is that home was built in 1932 and the heating is an issue in the winter and the heating costs are really high for the tenants. In the coldest days in the winter the heat in the units never actually reaches what the thermostat is set to even set to say 65degrees. The heating units themselves are new high efficiency modern units and are working as as they should but the home just doesnt have enough insulation. Im in Massachusetss so I had Mass save (program to help with energy usage paid for by the utility companies) come through to do an energy assessment and identified there is little insulation in the entire building and that there is a lot of knob and tube wiring throughout the property. Mass save will cover 100% of the insulating work which is about 20k worth of insulating, which would solve the heating issue, but i have to remediate the knob and tube.
the first two estimates for the knob and tube remediation have come in at 70k and 85k. Now, I could get a 0% loan through the mass save program for 50k of that over 7 years and come up with the rest out of pocket, but that would eat into a good chunk of my cashflow. my thought is that its not worth it to put the 70-85k into the property and might be better to sell it since I could probably sell it now for about 100k more than i paid for it. I am basing that off local comps and the fact that a 3 unit building that is smaller than mine directly across the street from mine is under agreement for 440k. WHAT DO I DO?
-keep it and deal with calls in the coldest months of the year that it is cold?
-fork over money I dont really have and remedy the knob and tube?
-sell and keep whatever im left with for proceeds for now?
-1031 into something else?
-option a, b, c, that im not thinking of?
oh yea, I recently started my own business (2021 was my fist year in business, commercial door company, non real estate related venture) and gave up my w2 income and was already denied another refinance on my primary due to lack of self employment history. this was with the bank my business uses with and they want 2 years of self employment income on the books. end of 2022 will be 2 years so financing may be an issue if I want to 1031 now, but i havent really thought all of that out yet either.
Any tips or advice is appreciated!!
Dustin
