All Forum Posts by: Jonathan Kretschmer

Depending on where your studio is located in the city, and what condition it is in, $3,000/mo sounds high regardless. I know 1/1 can go for $2,500 in outer parts of the city not directly near FiDi. I signed an extension recently on my 2/1.5 with no increase, I didn't want to risk losing a tenant who pays on time in this environment. Rentometer has $3,000/mo for a studio in the Marina area (I chose a random expensive area of the city) as too high. Is this kind of rent what you were getting a year ago?

Someone please correct me if I'm wrong, but...

Whether the property has one, two, or ten liens does not affect whether there is a gain or loss when the property is sold. 

And it's the gain or loss when you sell that determines tax liability.

Gain or loss is (generally) determined by subtracting your cost basis (what you paid for the home) by the sale price (what you receive for selling the home). Since this is an investment property you can not use the 2 years out of the past 5 capital gains exemption for principal residences.

It sounds like paying a CPA might be worth your while.

Forget the larger banks - I tried calling BofA for exactly this, a cashout HELOC, on an out of state property that is completely free and clear and they said they don't do HELOCs on investment properties, hard stop. Your best bet would probably be finding a small local community bank. I'm in the process of looking now, although I may be forced to do a conventional refi.

My apologies!  Of course

You have a choice, sell it or hold it. If holding it causes you to lose money month after month, but appreciates nicely when you sell a few years from now, you could end up making money. However, this is more commonly known as speculating. Gambling is another term for it. Most buy and hold-ers don’t do this. Your other option is to sell, get out for a bit of a profit, and re-invest into other options (single family, multifamily, apt buildings, etc). This is more appropriate for a buy and hold strategy. You can look into using a 1031 exchange to defer tax on your capital gains. I highly recommend the first 100 or so Bigger Pockets podcasts for ideas on possibilities for buy and hold, as well as getting a feel for what different people are doing. There are big investors and small investors all giving their stories and it’s helpful for perspective.

I know nothing about the mentorship program you’re talking about. However, with that said: Go with your gut.

Been there, definitely. I would say, what are your goals for the property? If you are buy and hold focused with a 10-20yr horizon, a few initial repairs to get up and running, particularly in the first few months, would not surprise me. I bought a house that was just like you describe, repair after repair for what seemed like forever. In fact, after about six months things settled down and got more predictable. Also, remember, it’s ideally the tenant who is paying for the repairs, out of their rents, and hopefully you budgeted for plenty of repairs in the first few years. If not, this is your lesson. I’d let it ride for at least a year to see how things pan out, and sell if it’s truly a money pit. Consider it a learning experience and move on at that point. However, it may just be that the property had some issues that weren’t able to be identified until someone lived there, and now you’re going through the painful transition to making it a truly profitable, long term rental.

Thanks for your feedback, Manolo. It was not my intention to suggest that contractors should not be paid justly for their time. I was simply looking for some perspecitve from people who have more experience. Your breakdown of time spent was helpful. Also, for what it is worth, this GC has been in business for many years in this community.

Much appreciated Russell.

Originally posted by @Patrick Squires:

What sounds expensive to me is using a GC for house calls! Jk

I don’t know. If you trust him and he got it done... and like you said the whole thing was done through a GC. I guess it depends how often you have issues and what not.

What did the GC say when you talked to him about them taking care of things when your out of state? Possibly he is testing you too!

This is actually a great point, and has made me reconsider my knee-jerk reaction to the sky-high price. I didn't consider all the value I was potentially getting, and what that may be worth to me. Thanks for your response.