All Forum Posts by: Gregory L.

I should add I think it'll cash flow only 850 a month after vacancy and reserves and expenses. We have a HELOC of 80k outstanding so I think the cash on cash return is only going to be 2%. That seems pretty low.

Hi BP Community!

My wife and I own a single-family home in a top school district. The house is a smaller colonial with 3 beds and 1.5 baths. While the interior is nice, the first-floor kitchen and bath are original from the 1940s. We bought it for $399k, and it's now worth about $650k with $250k equity. We've invested around $50,000 in improvements (central air and hardscaping) and our mortgage is a 30-year fixed at 2.5%, with a PITI of $2400.

We think it could rent for $3,750 - $4,000 per month based on local comps. Our instincts are to eventually rent it and use the income for payment assistance on a new home mortgage. However, with high rates, the next mortgage would be very expensive, and a vacancy would be intensely expensive with two mortgages. It might take at least two years before we can make a substantial down payment on a second home.

We’re considering whether to do mid-grade updates and rent it soon if we can find a good next property though acquisition and ongoing costs are a problem. Or we gradually perform high-quality updates for a live-in flip, then roll the equity into a new home.

Regarding rental income, we aim to boost income, lower our effective tax rate by generating more low tax-drag income with rental income (since there’s not much we can do to lower out W2 tax bills) and have retirement cash flow.

To compare the financial impact over 10-20 years, we want to analyze renting versus flipping. We’re looking for Excel models to compare these options and calculate potential net worth in both scenarios. I am proficient in investing and confident in earning 7-10% returns in the market over the next decade or two. Any guidance would be greatly appreciated!

Also, qualitative ideas would be welcome just conceptually what we should do.

THANK YOU!

Thanks! I had to re-post in another post. 

Hi BP Community!

My wife and I own a single-family home in a top school district. The house is a smaller colonial with 3 beds and 1.5 baths. While the interior is nice, the first-floor kitchen and bath are original from the 1940s. We bought it for $399k, and it's now worth about $650k with $250k equity. We've invested around $50,000 in improvements (central air and hardscaping) and our mortgage is a 30-year fixed at 2.5%, with a PITI of $2400.

We think it could rent for $3,750 - $4,000 per month based on local comps. Our instincts are to eventually rent it and use the income for payment assistance on a new home mortgage. However, with high rates, the next mortgage would be very expensive, and a vacancy would be intensely expensive with two mortgages. It might take at least two years before we can make a substantial down payment on a second home. 

We’re considering whether to do mid-grade updates and rent it soon if we can find a good next property though acquisition and ongoing costs are a problem. Or we gradually perform high-quality updates for a live-in flip, then roll the equity into a new home.

Regarding rental income, we aim to boost income, lower our effective tax rate by generating more low tax-drag income with rental income (since there’s not much we can do to lower out W2 tax bills) and have retirement cash flow.

To compare the financial impact over 10-20 years, we want to analyze renting versus flipping. We’re looking for Excel models to compare these options and calculate potential net worth in both scenarios. I am proficient in investing and confident in earning 7-10% returns in the market over the next decade or two. Any guidance would be greatly appreciated!

Also, qualitative ideas would be welcome just conceptually what we should do. 

THANK YOU!