All Forum Posts by: Jaron Walling

@Bobbie Russell "Needs about $50,000 in rehab" - How are you funding the rehab? If you're funding it cash it that's a great thing. If you're leveraging the purchase (20% DP) and the rehab that's a big difference in risk in my opinion. More skin in the game = more safety. Over leveraging right now is not advisable considering inventory is up and prices have leveled off in most markets. Florida has had declines in prices over the last 6 months. Orlando is pretty resilient but it's still Florida. Something to consider when it's time refinance out of HELOC $$$. 

What's the interest rate and how long have you owned the primary? If you're not selling to take advantage of the $250/500k capital gains exclusion I'm pulling a HELOC to access the funds. Loosing a super low rate is like shooting yourself in the foot.

 As soon as you close, get the keys, move in. When I purchased my first property I did numerous projects my self. From my understanding none of it required a permit or a license. I hired out the roof and some minor electrical, but it wasn't a full rewire, panel, or total gut. The total renovation ended up around $18k. It took 7 months but I saved thousands. BP an YT videos can give you a free education. 

Don't be afraid to get dirty. Yesterday I worked for 3hrs in 90 degree weather mowing and cutting down over grown trees for our new investment property. I'm going to save $3,000 in landscaping costs. I paid myself $1,500 because I'm half way done. 

@Luke Mertz Unless you're pulling permits, doing complete plumbing and electrical rehab, or upgrading the panel you DO NOT need a license. You have the right to work on YOUR OWN property. The moment you work on someone else's property you should have a license. A lot of people will turn you down if you don't have one.

Would I do any of the above personally? No. Beyond installing faucets, vanities, toilets, or doing basic electrical repairs I'm not doing any of it. It's getting hiring out to contractors we have worked with before, ideally with a license, and general liability insurance. 

 That's insane. Sunk cost fallacy at it's finest.  

 Thanks man.

@Matthew Kimmons Interest-only payments occur during the draw period. Meaning, you can choose to pay only the interest on the outstanding balance, rather than making payments that also reduce principal. However, this is usually a specific timeframe within the loan's lifespan. 

Like you mentioned already a HELOC a "bridge" to get from point A (distressed property) to point B (renovated asset). The shorter you on the "bridge" the less it's costing you long term. You can't control the rates just like you can't control the economy/FED. Either way the risk and reward to there for investors that leverage a HELOC effectively.

Ideally you're buying property below market value, bringing some cash to the table, and combining it with HELOC funds. That way you're entirely in cash when you go to cash-out refinance paying off the loan. Most investors keep lines of credit open as long as they can. It's a rainy day, jump on a good deal, money.

@Gina Nocero If I'm in your shoes I'm putting the late notice on the door yesterday, and processing with the eviction process spelled out in your lease. Contact a local attorney ASAP. I'd also save all communication you have had with this tenant. Get the lease agreement out (assuming she signed it) and prepare everything for the attorney. 

DO NOT EXCEPT partial rent payments. DO NOT drag this out. Everything you do should have written deadlines with consequences if no action is taken. If the lack of communication continues, lies, story telling, etc. get prepared for an eviction. 

PS; The only other solution is cash-for-keys. A lot of people find success with it, but it's very situational. If you entertain the idea get everything in writing and again set hard deadlines for when the tenant will be moved out. Half now, half when you drop the keys. This solution can be a win-win for both parties. Evictions cost money, it's a LOSE-LOSE for both parties. Best of luck. 

@Jorge Vazquez LTR, BRRRR, or starter home flip opportunities for the win this year.

Indiana has big events, conferences, and growth, but it's not a top destination city in my opinion. The strategy is sexy and trendy but with a family and 9-5 jobs buying a STR hasn't crossed our minds. If we did it would be OOS in a mountain town with more tourism.

It's a valid idea further south (prettier area of the state), nice lake houses, or close to one of the big state parks, but in those locations the purchase prices are easily $400-800k. If vacation demand drops or gets inconsistent you're in trouble. 

@Eric Fernando If you don't have much experience with renovations I would work backwards. You need to determine your budget, prioritize repairs, and spend accordingly. 

You're talking about installing a cast iron tub. Literally nobody installs them and if they do it's incredibly expensive. It makes no sense for a rental. 

"Which Tub brands and shower panels are good? or which ones should I avoid?" - Any experienced contactor should advise you on which products make sense. Stick with the name brands like Delta, or Sterling. Get a standard size 60 x 32-in and make sure the walls get waterproofed correctly. Tile is more expensive but holds up for years. Again, depends on your SOW and budget. 

Keep your cabinets white or gray for rental properties. Fun/trendy colors just cause painting headaches in the future. 

LVP flooring comes in many different styles and quality. You need 100% water proof flooring in my opinion. Find a product that states that on the box. If you want a stronger wear layer budget more $$$ for flooring. It's more expensive, but it will last much longer than the cheap stuff (usually $1.30-1.99 range). Luxury flooring will be $3.99 or more per sqft. Contactors can find deals on flooring but it won't be the highest quality, in my opinion. Shop around, buy what you want, and pay someone to install it. 

Other than in bedrooms most people are getting away from carpet. It's nice for a flip because it keeps noise levels down, but for rentals we avoid it. 

@Greg Spencer Exactly man. Unless you have more renovation experience I'd forget the HELOC. Besides, it's not costing you any money. I'd look for a value-add, house-hack, or live-flip type opportunity, and sell the current primary. You're making sacrifices and stepping up the ladder. It's not a dream home purchase.

Before my wife and I got married I was constantly doing live-in flips. Instead of renting my old house (3% rate, would have good CF) we sold it and took advantage of everything mentioned above. It was a fun stepping stone.