All Forum Posts by: Hans H.

We paid a lawyer $200 to draw up a lease.  And another $200 to look it over every year and update it if need be.  We found Zillow's lease to be lacking for our area.  With the lawyer we are confident our lease is state and municipality specific.  

     I would highly recommend Cozy!  No more going over on the 1st every month to collect rent, I get a notification on the last day of the month that payments are processing, 2-3 business days later the money is in the bank.  

Hello all,

My wife and I are currently househacking an up/down duplex, which we purchased last Nov.  We also rent out our previous residence.  Our long term goal is to acquire enough rentals so we can retire early.  How early that will end up being is still vague, we are only a few months into this.  We are seeking advice on selling or keeping our old house.  

Our old home, which we now rent out, is a 2bd/1ba near the downtown area of our small city.  I bought it as a bachelor pad 6 years ago, and now have around 25k in equity.  2/3rds of that has come from appreciation and the remainder from paying down principal.  Like I said in the previous paragraph, we are looking at buying more rentals in the future, so you may be asking why we would want to sell this one.  The issue is although it is a two bedroom, the 2nd bedroom is actually a former tuckunder garage, it has a door leading to the outside, no bathroom in the immediate vicinity(the bathroom is located next to the master bedroom upstairs), and is the only access to the utility room.  This, at least in my opinion, makes it a poor rental.  

    We also have an issue of needing a new furnace in the next few years.  The house is currently heated by district heating, which the utility is shutting off July 2020 due to cost.  My wife wants to sell the house this summer/fall, as the furnace problem won't be nearly as big of an issue for most people compared to selling it closer to the shutoff date.  That being said, we have a great tenant in there right now, who's lease is up August 1.  Originally he was going to be moving to school in the fall, and I would have had no problem putting the house on the market at that point.  However, he's staying another year and told us he'd like to sign on for another year lease, which I have no problem with.  

As it stands right now, the house cash flows us right at $200/month. I'm hesitant to let go of that, but selling would free up a decent amount of equity (in our market, I know 25k isn't much in most areas) to make a decent down payment on another multi-family, which is what we ultimately want to do with our REI careers.

So BP, should we sell now, sell next year, or just hold on to it?  Or is there another option I'm not tinking of?

Thank you for any and all responses!  

My wife and I closed on our duplex in November and have been living in it since January.  I would've liked to have lived in the basement unit and rent out the much nicer main floor but my wife refused to live in the basement, so although our mortgage isn't quite paid for every month we are really starting to see the effects of househacking! I would highly recommend it so far!  

Depending on the lender, a small collection may not come up on your credit report, and therefore may not affect your score. We had a cell phone bill of $75 that we thought was paid off when we switched from T-Mobile to Verizon. It ended up going to collections and dropped our credit score from 730 down to somewhere in the 650 range. We found out when we were shopping for mortgages last spring that certain lenders don't factor in small collections under a certain dollar amount (which I've since forgotten. We went through QuickenLoans for our FHA loan and they did not take the collection into consideration, meaning we got much more favorable terms.

     In addition, I sent what is called a "goodwill letter" to the collections agency with the payment, essentially asking them to remove the derogatory mark.  That helped immensely with improving my credit score.

Sorry I should be more clear.  We asked for the email.  We use TransUnion Smart move.  We get their email address, request an application from them, and they fill it out and pay the background check fee.

When we listed our rental, the first placed I used was the Facebook Marketplace.   We got a ton of responses, the vast majority would reply "I'm interested", I would reply with a link to our application and I never heard from most of them again.  We did have a few people apply but none of them qualified.  We did post on Craigslist and the Zillow Rental Manager, and our tenant eventually found us through Zillow.  I would do it again, it doesn't cost anything other than time spent replying to potential tenants, but I won't expect a ton of people to actually apply

I'm a complete newbie at this so forgive me if I'm wrong. From my brief googled understanding of Probate, if someone dies and dictates in their will that their real estate is to be sold, then the probate is filed in the courthouse. Then I can come in, write down the names and contact info of the relatives or executors, and sell that to a realtor? Please correct me if I'm wrong.

I've only seen the property online on a broker's website. I haven't actually been there to look at it. The building has a brick and stucco exterior, only the interior is only gutted. I can do a lot of the work myself, I enjoy doing construction and have some experience in it. What I think would be a dealbreaker for me is how much, if any of the electrical and HVAC and plumbing is still in place. Obviously I would contract that out, as I'm not qualified to do that kind of stuff. I can do pretty much everything else; drywall, flooring, trim, kitchen and bathrooms, landscaping, etc.

One question I have is how do I determine the cap rate? I've heard of it but don't know how to calculate it.

Based on my numbers I got from the internet real quick:

4 units@$625/monthx12=30k
30k/2=15k=my NOI.
15k x10(cap rate) =150k.

Obviously the price will vary but given a cap rate of 10 the fair market value would be $150k?

So 150k-30k to buy the property=120k for repairs/4 units=30k/unit.

Also I looked on the city's website and the building is zoned R4, with no apparent issues like condemnation or anything. There are no pending assesments. One thing I found interesting was that the taxpayer is in Texas, but the rental liscense holder for the property is only a couple miles away.

I think I covered everything posted above, but if I didn't point it out. Thanks! You guys are a great help.

Is the taxable market value of a property(in this instance a fourplex) the actual marketable value? I found a fourplex with freeze damage, gutted down to the studs for a little over $30k. The total taxable market value as stated by the county is $215k, by the city-$233k.

If that is the marketable value, then this could be a fantastic deal and if I had the money I'd snatch it up.

Thanks!

My general plan(and it is general lol) is to buy some kind of cheap property, I've been looking into anything from Single Family homes to 4plexes. I plan to buy it cheap, fix it up, and, if a SF, flip it, if a duplex or larger, hold it. The only problem I'm having right now is I don't have a fulltime job, so getting any kind of loan is going to be hard. I have looked at FHA loans of various kinds but it seems like a lot of red tape and i don't want to get tangled in that early on.