All Forum Posts by: Jaron Walling

Find a stable job, attend college, or work part-time and do both. Live below your means, find roommates, or live with family for free. Find little ways sacrifice. Stack cash & build credit. 

After that start working on everything @David Ojo mentioned. You can't "jump" into REI until you do the other things. You're young and have plenty of time to get it right. Cheers.

 Dang, I hope he bought it! Seems like a no home run opportunity after reading your post. 

@Zack Whiting Straight off the rip I would draft up leases for these properties and get everyone on a MTM lease. If they have a problem with it they can move out. It's time to treat these properties like a business. PM starts when someone moves in. You're past that part but small changes make a big difference if ____ happens. 

Second, run the numbers and compare your rentals to the market. What is market rate rent, what are they paying, and start the conversation about increasing rent (probably next year) if necessary. Real friends and family will understand this. If you're $400 BELOW market value it's killing you slowly you just don't know it yet. Trust me. We're renting to family and they're hundreds below market rate rent. We only recently bumped rent $50 per month. Our cash-flow has dissipated to zero, and it took 4 years. Property taxes creep up, exterior repairs , and a brand new HVAC last year wiped out $11k of reserves. Without small rental increases the boat can sink unless you can come out of pocket. Tenants pay for the repairs. Successful investor don't come out of pocket very often.  

Reserves. You need them. If you don't have $10k cash on the sidelines you're taking on risk. This circles back to having a lease, increasing rent fairly, and saving every dime of cash-flow. Think about an HVAC, storm damage, paying for housing if a tree falls on the roof, dealing with stupid insurance companies, etc. Stuff happens. Reserves keep the business alive. 

How much equity do you have? Have you considered selling and capitalizing on another opportunity. Not all rental properties are winners. Some warrant holding for years and others are duds. Keep that in mind if you plan to scale and buy more properties. 

@Tyler Richardson "New Service and some electrical, Roof, Exterior paint, minimal interior" - Get more quotes because this is not $80k worth of work. 

You paid $100k for the property so what's the current market value? Looks like you bought a great deal. Hopefully there's some margin already. If you have good credit, and two years of tax returns you have options to access equity. 

Kitchens, baths, paint, flooring, roof, and then everything else. 

Crazy good advice on this thread. 

Investors can't predict the FED, economic outlook, and future rates cuts (100% correct) so it's sort of a bet you think rates won't come down (free refinance opportunity). 

It seems like more investors think rates will come in down in the next 2 years. This makes buying down points less valuable. My vote is on rates coming down slowly. Way slower than they spiked upward. 

@Timothy Newsome That's great. It's time to run the numbers to determine the cash-flow.

Define your minimum cash-flow to hold this property. 

Make sure to factor in insurance (slight change as rental), property tax (in our market is 2x a primary res), vacancy (3-5% in most markets), capex (old roof?), maintenance (5%), and PM (10-12%) if you choose to not self manage. 

This calculation should tell you what makes the most sense. Follow your numbers not emotion. Cheers.  

@Timothy Newsome Lots to unpack but the big question is what was the original intent for the property? Did you plan to rent this or live-in flip with the intent to sell? Seems like the latter. 

How long have you live in the property? If it's 2/5 previous years you stand to save more on taxes than you would renting the property. What is the cash-flow?? The cash-flow is probably not worth the hassle if tenants are hard on the property. 

We were in similar situation 2 years ago. We choose to sell and put down 25% on our next primary. We lost a 3% interest rate but sold future maintenance and repair headaches. Maybe that's not the case for you but it's something to consider; the life expectancy for the systems in your house. Our new house is also in a neighborhood with FASTER APPRECIATION, better schools, etc. How can you deploy $250-270k on the next deal because that's realistically your equity position after the remodel. That's a fantastic place to be. You could sell one house and buy two with that money. 

@Varun Chawla I'd love for other experienced investors to chime in on this post because I'm interested in the numbers. 

I'd also be shocked if there's any cash-flow after the refinance. Our strategy has always been BRRRR, and we live in a historically cash-flow** market.

**Nearly impossible to find right now

 Smart move. It was a red flag in my book. I would have done the same.