All Forum Posts by: Jeremy H.

Washington & Oregon - two liberal states that are not landlord friendly

For those reasons, I'm out 

I have a couple friends that bought condos around PCB in the last few years - it hasn't been a pretty sight. The initial condo had a huge assessment that was based on square footage (something to do with the foundation) - so they ended up selling to try to get out of the assessment. 

That condo was at the Shores of Panama. I don't know whatever happened to the court case, but I do remember it was in the 60-80million range of renovations apparently needed to the structure. 

They sold that condo after a year - mixed reviews on AirBnB and VRBO and bought at Regency Towers. The condo at Regency Towers has been listed since May 2024 - started at 500k and down to 450k now with apparently zero interest. They bought the condo at Regency Towers for 475k in 2024. I believe they are losing money pretty badly at Regency Towers. A quick look at AirBnB and VRBO shows completely open availability through the entire year (including June/July/Aug/Sept). This is not a great sign. 

For me personally, I can't get the STR numbers to work. Between the extra AirBnB fees, special assessments, silly parking they have going on, it doesn't look good for me in the PCB area.

I have been a one man team for 4 years now...I literally mean exactly that as far as everything goes. 

My advice would be to just get a new wife

This is an interesting idea - I've actually thought about it a lot lately. 

The main thing is me is that the capital is tied up. What else could that 30, 40, 50k+ downpayment/rehab cost etc do for you if it wasn't tied up in the property? 

We've seen some unique things in the covid era 2020-2024 like high appreciation (that is not the norm), the low interest rates we had (prior to 2022), and the past year the stock market has done incredibly well (up 20% over the last year). Add in the social media gurus and I think expectations for RE investing can get skewed very quickly. 

What is a good deal anyway? The $2000/month cashflow that the guru preaches that retired him to the Bahamas after only 2 properties? $500/month? Do the tax benefits make it a good deal? What exactly is a good deal? According to Brandon Turner is was about $100-200/door. That would absolutely be scoffed at by most people. It can be hard to say what exactly a good/bad deal is...

I also think it can be very easy to get caught up buying RE - when that may not be the best option. I'm guilty of it myself. I made a several good deals, then kind of forced one. Overpaid slightly, tied up a good bit of capital that no doubt would have been better in the stock market (this past year anyway), and "cashflow" a couple hundred dollars a month. Well we listed it for sale - got a few offers, but nothing good enough to really pursue. So I'm renting it back out for another year. Hind sight is 20/20. 

It can also be hard to predict how your own personal strategy may change over time. How your own financial situation may change over time (for better or worse). If you do an "ok" deal and tie up that capital, you may not be able to do the next "great" deal that comes along. At this point, I LOVE having cash on hand. It just leaves the table open for all kinds of options. 

What is the budget for the remodel? 

The 0% credit cards and balance transfers is good to use for fixtures and stuff with hard fixed costs. Easy to use yourself too 

HELOC works (there may be some places that do a HELOCs on rental properties)

I personally have used a 401k Loan on a few occasions - You're essentially borrowing money from your 401k and paying yourself back (interest goes back into your 401k as opposed to a bank) and if you don't pay your 401k back the loan would simply become a withdraw (maybe some tax penalties, but you could probably finagle a workaround). So low cost, low risk in my opinion which is why is it generally my first choice 

After those I would go HML/PML - this is likely going to be your highest cost loan

I think you are overcomplicating this big time 

Simply swap out the "bad" heater and the new one - tell the tenants you're making an improvement and they will need to sign up for gas service. 

Then move on

No need to explain every little thing to the tenants

Welcome JB! 

I live and invest in the Lafayette area myself - I own several in the area - broussard, freetown, broadmoor etc 

There's a decent market here, I think it's somewhat competitive but there is some availability as well

Off-market is the way to go 100%

Purchasing a starter home is a great way to get started - I turned my first home into a rental before I even looked into real estate investing. I just got something small and well within my means - refinanced when rates got low and now it's a decent little cash flowing rental 

This is above my pay grade - but I think there's some good lessons that come out of it. It honestly may be time to slow down. Look at what you have. Make sure you have financial reserves for repairs/maintenance/CapEx

I would personally sell the SFRs - slow market right now, keep that in mind with your selling price expectations. Also these things cost money to sell - agent fees (5-6%), whatever your buyer is going to ask for at closing or try to hit you at during inspections (likely several thousand) plus taxes. It all adds up quick. You have to ensure you are buying at a good discount to make those expenses up if you may have to sell in the next few years. 

Only thing I'd plan to keep would be the larger multi-family - sell the small stuff, all of it and get yourself in a better capital position. 

I think you are too optimistic as well - the more I look at this the worse it gets. And you're mentioning losing 25-30% appreciation annually BUT at the same time you have 2 houses for sale w/ "no bites yet". Those two statements don't make sense together. If you're getting that much appreciation, you're in a hot area and anything decent is going to sell fast. I'm thinking that's not the case. 

The apartment has repairs that presumably can't be made since there's no money to fix them. 

My advice: Sell ALL of the small stuff ASAP

 I like Bruce's idea - I own an old house, built in the late 30s. They had carpeted the bedrooms and common areas, and the living room was still original wood...well I decided to pull up the old carpet and lo and behold - original wood in pristine condition. Sanded, sealed w/ a clear poly and it looks fantastic. Much cheaper than replacing flooring. 

Wood can be patched, sanded, filled etc too - may be easier to repair than aluminum. Lots of caulk, flex seal and whatever other filler you want to use. Then lay down some paint and you may be in good shape. 

I don't think siding will really affect your appraisal - it seems to be more of a "does the house have functional siding or not" type deal

 The depreciation is big - are you able to use it though? You both have W2 jobs - so you're likely not a Real Estate Professionals - so these losses will be passed on until they can be deducted from other passive income in the future. On top of that, I believe you'd be considered a "high earner" - there are limitations there as well. I believe you can deduct the other business expenses (home office, supplies, repairs, maintenance etc) - but the bulk of it (depreciation) is likely passed on to later years.

So first house 2021 - I'll assume 250k purchase price and you put roughly 20% or 50k down. 

What does the house rent for? 

Mortgage payments - call it 44k. Expenses call it 16k. So 60k per year in rough expenses. How did you come to your cashflow number? 

How did you calculate your expenses? I can see depreciation - about 7-8k/year. Property management - maybe 3-4k/year. Mortgage interest 12k or so? I'm trying to figure how you got to 45k? That is a huge number for one house.