All Forum Posts by: Erick T.

Thank you Austin, 

House #2 is not yet rented but my PM has 3 applications now and they would like to move in this week. So I needed to make the decision whether to sell or rent now.  I agree with you that selling house #1 may be a better idea. Its a bigger house, 2 story, great location. The kind that families would want to own.

Option 2: I sell house 1, I can take about $75,000 equity at long term cap gain. I can then refinance house 2, take the $36,000 cash and rent it. I keep a property that returns 27% during the first year. I can pay off the $90,000 debt and I have $21,000 cash to move on to the next property. Problem with this is that the lease ends in March and selling a rented SFH is not ideal.

Option 3: I keep house 1 and sell house 2, take about $62,000 equity, refinance house 1 and take 30,000 out. i pay off the debt and I have a rental that brings in 9.6% return. Personally I dont like this option.

 

Hello everyone, 

Thank you for your replies and please keep posting. All perspective really help make a decision. I appreciate it a lot.

Say I decide to refinance:

- If the bank values house 1 at $140,000, which is conservative, I can take out $30,000. At that point my cash in would become $25,000. 

Cash after mortgage, taxes, insurance and PM would be $326. Cash flow around $200. CoC would be 9.6% after a year

Problem is the elephant in the room: a roof to replace in 3 years that would cost 10K. That is one big reason when I’m considering selling now because the selling market is really hot in my area and I could get 160K, maybe more for it. On the other hand, it is occupied till march and the market is not that hot during the winter.

- House 2 is a better investment. Cash flow prior to refinancing is $409

I can get $36,000 out of refinancing and the new cash flow would be $220

After refinancing Money invested would be about $9650. Coc 27,35%

My goal has been to leave at most 10K in every house.

Hello,

I own 2 SFH that were purchased less than a year ago. Both were BRRRR investments.

I currently have a $95K debt in my Heloc and it costs me $500 a month in interest. 

MY GOAL: PAY THAT BAD DEBT OFF BY THE END OF THE YEAR

I would appreciate your opinion as to whether I should hold and refinance the properties or sell, pay off the debt and restart. I am currently negotiating with a fatigued investor who has been self managing for 30 years and is sick of it, wants to sell the whole portfolio of 30 units.

Summary house 1: 2200sqft, 3BR 1.5Ba, great location, a block away from university. The house is beautiful and stands out. Its the kind of house that people want to rent or own. It was purchased october 18 so I could sell it in a month for long term cap gain.

Purchase price:102K

Rehab cost: 30K

Money invested: 55K

Rent is $1300 and cash flow: $350. Its been rented for 6 months. Tenants have been great and quiet. The house is professionally managed. 

One problem with the house: it will need a new roof in 3-4 years, which will cost about 10-15K. Current home value is 160K

Summary House 2: 1750sqft, 3BR 1BA, finished basement. The house is set for a 4th BA with an additional 4k. Everything is new, including the big ticket items. It was purchased in May so selling it would amount to a flip, with the massive tax liability that ensues.

Purchase price:$78K

Rehab cost:26K

Money invested: 45K

Rent is 1200$. Not yet rented but I have several applicants ready to take it yesterday.

Cash flow is $400. 

My final goal is to have 20 units that are professionally managed with great long term tenants that I selected over the years and I cuddle and treat well. A small and sweet portfolio that is low maintenance, makes money and makes everyone happy. My problem with these 2 properties is that Going through the learning curve, I put too much money in them, and I want to pay off my 90K debt in my Heloc by the end of the year.

I have 2 options: 

1. I could Refi both properties and pay the rest of the debt with my income

2. I could sell one property and 1031 exchange but I dont know if I can exchange the second as it has never been rented and would be considered a flip. 

What would you do if your priority right now is to cash out the equity and pay off the debt?

Thanks

Hello,

I have a few rentals but like most investors, my first one did not go as planned. I dumped to much money in it and now I face a dilemma: 1. Should I cash out; 2. not cash out; 3. Just sell the house.

Please feel free to share your opinions: 

Here are the numbers:

Purchase price $102,500

Down payment: $27,215.29

Rehab costs: $27,845.63

Now I need to paint the exterior of the house to increase the resell/appraisal value. It has chipped paint. It was built in 1930. Thats an extra $6600

That puts the total rehab cost at $ 34445,63

Total money invested: $61,660.92

Rent is $1300

Cash flow is $300 per month.

CoC is a pathetic 5.83%

Now I estimate that this house could appraise for $150,000 and I could actually sell it for more, maybe $160,000

But in order to cash flow $200 per month, I only want to refinance it at about $97,000 which would decrease my Coc return to the low 5%. 

This is the first investment property that I bought and I learned from it and did much better afterwards, but I kind of want to retrieve the $61660 that I dumped on it. 

What would you do in my shoes? Thanks

I will :-)

Not yet. I’m seeing them on monday for the details. 

How would you structure it and still take the money out upon refinancing? 

Would lend both the purchase price and the rehab costs and then still refinance in 6 months to cash out?

Here are the numbers:

ARV based on comparables is 130,000. Now I dont know if the bank will agree with that number

Purchase price 76,000

Projected rehabs 20,000

New lender max financing: 80% ARV = 104,000

Projected rent $1200 per month

Yes but if the bank finances purchase price and rehab costs up to 80% ARV, then I dont need to refi later I think. Anyone has ever done that before?

Its a local bank and I’ll meet with them on monday. I live in a small town where everyone ends up knowing everyone. So I do know the banker and based on our extended phone conversation:

- they lump mortgage and rehab cost up to 80% of the ARV

- they portfolio lender is maxed at 8 millions, not 6 loans like my current bank

- they dont do appraisal

- I close in 3 weeks and I’m switching next week and she said its plenty of time

- she only wants 3 year tax return and the rental agreements for my other properties. Thats it

I am writing here coz it seems too good to be true. I’m worried. There is no free lunch.