All Forum Posts by: Greg Henderson

If it is a service animal, It is not a pet and you can't charge a pet deposit. 

"In 2004, a Joint Statement of the Department of Housing and Urban Development and the Department of Justice, stated that charging an extra fee or requiring an additional deposit from a disabled tenant as a condition of granting a reasonable accommodation violates the Fair Housing Act. If the service animal causes damage to the premises, the landlord may seek recovery of those damages from the disabled tenant or out of the security deposit. But, charging fees or an additional deposit in anticipation of potential damage is not allowed."

Just have them fill out a reasonable accommodation request through petscreening.com. Neither party had to pay and it was simple to set up. It will require them to send in the appropriate docs, and you don't get wrangled into a lawsuit. Also, I would tell them 1 year lease and to expect a rent increase to market rent on renewal. Its a business after all. 

By the numbers the answer is simple. If you've lived in it 2 of the last 5 years, you can sell it tax free. Take that 200k in tax free earnings to invest in better opportunity. As I see it, you will cash flow maybe $350 a month or 4200 a year as long as the HVAC doesn't go out? That's a terrible return on the equity. If you try to get a HELOC to tap into the equity, you will be under water. On top of that, its a condo. I've heard horror stories from condo owners in the great recession losing massive amounts of equity. That's an easy sell to me.

This certainly isn't legal advice and I'm sure others that live in a different market will advise against it. How strict is code enforcement? Talk to local investors that are doing what you want to do. No one actually enforces the zoning laws here unless its a blight. Adequate parking is #1. They will blow you up if people are parking on the grass or street. Don't put a second mail box up. Use RUBS (Ratio Utility Billing System) for utilities. Also, Its perfectly legal to "rent by the room."

Quote from @Eliott Elias:

 discontinuing this cycle of crack homes

 It's not a crack house. It's a crack home.

I focus on a small area and create the best product on the market. Doing this brings the best tenants for the class of property. It just keeps building on itself. Better tenants, better rents, better neighborhood, better tenants, better rents,.... My long term goal is to buy the majority of houses on one street so I can rename it after my company.

Quote from @Mike Sangapore:

Quote from @Greg Henderson:

Do you have a plan to pull your money back out? Depending on the market, It can be difficult to get cash out financing at that price point. 

I would likely do a cash out or HELOC within a year or so if I end up purchasing. But yes, I agree but it wouldn't be too much of an issue if I were to leave the cash in the property for 2-3 years.

You should approach your bank with what you want to do and see if its something they want to refinance. Logically it doesn't make sense, but a lot of lenders will not touch a property under 100k ARV. Its better to approach the issue on the front end instead of getting side lined when you try to refi. I've got a good relationship with 3 local banks, a dozen properties, perfect credit, and a large savings runway. I'm having a lot of issues with cash out financing after a cash purchase.

Do you have a plan to pull your money back out? Depending on the market, It can be difficult to get cash out financing at that price point. 

There isn't enough information to know how much risk this is for you. That changes everything. Assuming this isn't a huge financial risk for you, the question I'm seeing is are you able to make more than 500 a month, the difference of 200 and -300, with $40,000 in cash. An interest only commercial line of credit would be a cheaper option. Check with local small banks. 

It depends on what you're comfortable with. The right path depends on you and your goals. I pulled a HELOC on my primary for the down payment on several homes that needed work. I've been able to recycle that seed money because after the rehab and refinance, I'm left with more. With equity growth, its 5x what I started with. Its a ton of work though. Don't listen to some podcasts and think its free money. If you're not interested in a lot of work while facing daily problems you've never dealt with, I'd advise against it. It's high stress but high reward. I average $478 a unit, but I self manage and do my own maintenance.

Read about return on equity (ROE). It appears you're making a lot in cashflow, but its very little considering its paid for. Selling your house would be a better option than just keeping it as a paid for rental from a strictly number point of view if your goal is growth. If you've lived in it as your primary 2 of the last 5 years, the sale is tax free. If not, look into a 1031 exchange to defer taxes. You can then leverage the 300k to buy a small portfolio.

If you want to keep the house and grow aggressively, another option is you pull 150k equity on a HELOC @ 6.5%. Interest only It's $812 a month. You could use the 150k as 20% down on 750k in real estate. In my market, you could buy 6 houses that are cash flowing 200-350 each after capex, maint, and vacancy. That number drops if you're not interested in self managing of course and goes up if you value add. After everything is stabilized, I would then leverage the house to 90% through the HELOC and take another 150k. It sounds risky to leverage your paid for home, but you're actually spreading the risk across multiple properties. If 1 of 1 of your properties is trashed by a bad tenant, you lose all 850 a month cash flow + pay out the rehab + PITI. If 1 of 13 units gets trashed, the other 12 are still churning dollars. As the market appreciates, your equity is increasing 2-3% a year in 13 properties vs 1. Your tenants are paying down the principle in 13 houses vs 1. While buying and growing, you will pay nothing in taxes from all of the depreciation. It all boils down to your goals and whether you want to invest "passively" at lower returns or hustle to increase returns. Figure out how much work you want and how quickly you're looking to grow, if at all. The answer will be different for everyone at different stages of their journey.

Look for a 7mm+ LVP with cork attached. I've installed a similar product in 3 units that are on a raised foundation and the sound dampening is impressive. It is very heavy and walking on it feels like tile. Zero flex. I don't have an actual brand recommendation though. All of it looks and acts the same. I buy whats on sale. Floorstoyourhome.com has decent products, and a lot of it is free shipping. I've bought around 10,000 sq ft from them in the past few years. Just be ready if you order. The shipper literally dropped 5,000 sq ft of flooring on the street in front of the property. Said he couldn't back into the driveway.  

Quote from @John Underwood:

I would call mynown guy and get a second opinion. My guy would replace the parts that were broken. Most systems are a split system and you can replace half at most.

Now if this is a 15 year old R22 system then yes I would replace the whole thing.

 Exactly this.

If only the evaporator pan is cracked, the condenser outside should be fine. Why they cant pull the evap and fix the cracked pan would be my question. I'd call around and find someone that would fix vs replace it. Unless its a very old unit, it would be more cost effective in the long run to go ahead and replace the air handler and evap. There is no good reason to replace something that works.