All Forum Posts by: Ernie Cruz

Hi Justin,

first off, I would like to say that I think paying off the mortgage is a great goal and one that I personally share.

My personal opinion is to keep the townhome and look into the possibility of purchasing another property for rental income. I based this recommendation on the fact that you would like to stay living in Doral -- there are not many places close by that are similar. 

I agree that right now is a difficult time to buy something in south Florida, but I would urge you to not only try locally anyways (you never know if you come across something unexpected!) but also something that is maybe and hour or an hour and a half drive from Doral. 

Maybe you could also consider getting a HELOC, though trying to pay that off would conflict with your goal of paying off your mortgage in 10 years.

Just throwing around some ideas. Good luck!

Welcome Gio!

I just bought my first home in Miami using a Regions Mortgage Loan. Cristina Sanchez was my loan officer -- maybe you know her.

Have fun here in Bigger Pockets! Hoping to cross paths soon.

Hey Alphonso,

I would run some more numbers to see if this is actually a good deal. Here are some things I would research:

1. How much will repairing the gravel road cost? How much to maintain?
2. How much does tearing down the old trailers cost?
3. How much does it cost to insure the park?
4. How much are the property taxes?
5. Are the septic tanks and meters in working condition?
6. How is the owner going to transfer the deed to your name? (Are there fees involved?)

Hey Cody,

I am just starting out like you and I've gone through this scenario a million times in my head.

Firstly, I think your financial preferences play an important part in this decision. For example, are you debt friendly or debt averse? Do you like keeping your savings as an emergency fund or are you ok with not having one until your future rentals are up and cash flowing?

IMO you're best bet is keeping the house you already have and finding a good deal that you can afford. You can leverage your savings, obtain a HELOC, or save like crazy for the next year so that you wouldn't have to borrow and/or be without savings. I would not feel comfortable leaving a house that only needs 10 years to be paid off for another 30 year mortgage. I am, however, debt averse so I have my bias. You can also explore house hacking options. Is there a room you could rent out or a space in your backyard you could build an efficiency in?

Whatever you decide, I definitely have to complement you on the completeness and detail of your question. it seems like you're final decision will be very calculated and informed. Good Luck!

What is a due on sale clause and how can an LLC protect you from it? Or are you avoiding the mortgage holders because you moved your properties to the LLC?

Thank you all for your responses! I agree with not over rehabbing and also with not letting appliances get too dated (for efficiency more than cosmetic reasons). 

Would you say that the size of the unit has an impact on the need for newer/efficient appliances? (1/1 apartment vs. 3/1 duplex)

In what cases could replacing the appliances warrant higher rent?

So I was having a conversation with my wife last night about a potential rental property and we came to a fork in the road: If you were going to purchase a unit to rent, and the property needed some light cosmetic work, how far would you go in remodeling the property?

Would you fix up some drywall, maybe replace a corner of carpet or a few floor tiles and repaint, etc. or would you go above and beyond and go as far as replacing the existing appliances and washer/dryer too?

On the one hand you could replace the appliances that are a little old yet still function so that if it breaks while you have a tenant, you won't be rushed to buy one and miss out on the opportunity to shop around for the best deal. 

On the other hand, all of the analysis you put into evaluating the property may already include saving up for things like repairs or cap ex (I know cap ex is meant for big ticket items, but just saying).

What would you do?

Thank you for sharing this, Jeff. The absorption rate jumped high in March!

I agree with the previous posts. Start trying to post every couple of days in these forums (questions, answers, etc.). Begin analyzing deals or researching your local wholesaling companies/groups. Eventually you will get a feel for who is knowledgeable about wholesaling and who is active in your area. It will take some hustle on your part to actually find someone you can reach out to, but when that time comes you will already be on the move.

Hey Mike, I noticed that in your estimate for expenses you didn't include capital expenses or property management. I understand your perspective of this as an investment, but you also don't want negative cash flow (you would lose money on the property!). 

I'm not sure if you're planning on managing these properties on your own, but eventually if you'd want to expand your portfolio, you'd want to hire someone to manage all of these units. If this is the only property you'd like to have, then maybe you could also consider if you'd like to manage the property even late into retirement.

Secondly, capital expenses will help you replace any appliances or big money items like AC units, water heaters, appliances, etc. in the future. Accounting for this would help protect your investment from surprises.