All Forum Posts by: James Rodgers

We are looking to start our real estate investment career with a house hack. We own our current house, but want to move into hopefully a 4-unit property. My current plan is a combination of BRRRR and house hacking for this first property. What I would like feedback on in this thread is what to do with my current property.

I’ll try to just put all the numbers out on the table. We bought at $102k, 3B 1.5BA built in 1957. Minimum monthly payment is $645. Have lived here 1.5 years and the principal owed is now $97,983. We’ve put a lot of sweat equity into the house including landscaping, drywall work and new windows. Our neighborhood is changing for the better. Bottom line, I feel like it would appraise for at least 110,000 now.

I want about $3000 cash from this house for a 3.5% down payment on an FHA loan for the house hack. I plan on using a private lender to finance rehab.

I started out thinking we’ll sell our house and start this investing journey. But then I realized our closing costs and agent fees might wipe out most of the cash I want to move forward with.

So now I'm thinking about either taking out a second mortage, maybe HELOC, or refinancing to have some cash for the house hack down payment, and renting out the current house. Based on the market, I think it would rent for $1050/mo. I might could get $1100.

Here’s the numbers I’m using, and please give your opinion here if anything could or should go up or down:

vacancy (5%) - $52

repairs/maintenance (5%)- $52

CapX (I used spreadsheet from B. Turner’s Book on Rental Property Investing) – about $200

PM (10% though I will manage) - $104

With these numbers, I’m negative $3 cash flow. I’ll be managing the property, so I’ll actually clear $100, but my end goal IS to scale up and one day need to outsource PM…

I need to note that my goal as an investor moving forward will be a minimum of $200/unit, and the WHY behind my investing is to supplement 100% of my income one day (I’m working on getting more specific with my goals). So you can see that this particular property doesn’t really line up with that.. But I have it nonetheless, and want to make the best decision here at the very beginning.

My gut feel is to rent, get experience, equity build up and small cash flow, and be intentional to adhere to cash flow goals moving forward. How does that sound? Anyone see any other routes to benefit from my current property? Does either refinancing or getting an equity loan make more sense in this scenario?

One last question: If I rent, I think I will put carpet down over these pretty, original hardwood floors, and take it up again if/when I want to sell the house. Good idea?

Thank you everybody for reading my super rookie simple questions! Hopefully my next post will be about the MFR we're about to move into!

James

RJ, 

I love it! Thanks! I will definitely keep BP updated on the journey! 

James

Brian, thank you for the input! That's kindof what I felt, the more focus the better. I will read your thread as soon as my kids are asleep tonight! :) 

Thanks for the warm welcome.

Jeff, Travis and Michelle, thank you for your valuable input. 

Jeff, does that happen, "fraud"? I would think that the responsibility is theirs after the due diligence period. 

Travis, I will run that by them! Thanks!

Michelle, I was thinking it would be more like them just cutting me a check every month, but I'll definitely look into that, I don't want to take any risks legally. Thank you!

Hi Everyone,

Happy Thanksgiving ! 

I have close friends in Montgomery, AL who are about 60 and 100% own their 4 bed 3 bath house. They have expressed interest in moving after living there for close to 30 years. It is close to a couple small Universities and decent retail/food areas, so I could see it appealing to many different tenant types. However, I personally know that it has serious foundation issues. For as long as I've visited this house there have constantly been new cracks, no matter how many they fix. I know that at one point they had contractor work done on the foundation, $10k worth or more. Basically, I don't forsee that aspect ever improving. 

My question: does it seem more profitable to do a BUNCH of aesthetic fixes and sell? Or rent for probably 1200/month? I can see pros in cons in each scenario, and if they rent out I might be the property manager.

Thanks!

James 

Thanks Nick!

Hi Renee, 

I am just now entering the real estate investing world, but I am actually a home owner in Irondale and love my neighborhood. Most of Irondale, I might agree, but my little block is awesome. I whole-heartedly agree about Tarrant, however.

I have very little experience north of downtown but am interested, too. 

Hi everyone, 

This is my introductory discussion. I am excited and thankful to have found the arena that BP appears to be. I am a married, 27-year-old father of 2 little girls, living in Birmingham, AL. I currently work as an engineer but have recently nailed down an end goal of our family living off of income from rental properties. The purpose behind this is to spend tons of time with my kids, and also freedom to spend my time serving the poor. So, that's me in a nutshell.

Long term I would like to own apartment complexes, but in the coming years I see myself focusing on buy and hold residential properties with a lot of value-add opportunity (I believe Birmingham is rich in these). 

Here is my question: I am hearing that being extremely focused is really helpful. Is it ok to search for great deals among multifamily and single family properties and act upon whichever I find, possibly buying both types over the years? Or am I going to benefit most from making a decision between the two and spending all of my time only on one type?

Thanks so much!

James