All Forum Posts by: Jordan Burnett

Agreed, AirBnBs are a great strategy for Alpharetta. My current residence requires 12 month leases and thus can't be used for STR otherwise I would be on that bandwagon.

In general, you can probably get somewhere between 6-8% ROE in other asset classes (syndicated multifamily being one of them). The only thing I would say with the rental calculator that BP uses is to make sure that all of the expenses and assumptions are accurate. Sometimes their estimates on expenses are higher than actuals. As you have lived in the house and are very familiar with it, you should know in detail what the expected annual expenses will be (as well as any large Capital Expenditures you may have soon like a roof, HVAC, or water heater replacement). 

If your expenses are accurate and it's still negative cashflow then you have a decision to make regarding the equity capture/appreciation. Negative cashflow rentals are usually "not good" but can be very profitable when you consider the appreciation and equity buildup. In high cost of living areas, many investors don't care about a rental cash-flowing because they know the bulk of their gains will be upon sale from appreciation. This just means that in general your actual returns will be paper returns until the sale is realized and if the market turns on you it can result in those paper "returns" vanishing. 

I would say, in general, Alpharetta is more of an appreciation market (HCOL area similar to Californa/Seattle/etc.) than it is a cashflow market (midwest, southwest/southeast GA or northeast GA, etc.). So, make sure your assumptions about price appreciation are accurate.

Currently it's forecasted that home price appreciation will cool a bit in 2022 to 5.3% which is still very good.

To get an estimate on that you would need to run a return on equity (ROE) calculation which is why I asked how much equity you have if you were to sell now.

That will allow you to see what the return on your investment property will be. You can then use other tools like www.portfoliovisualizer.com to compare what a return on equity in the stock market or other asset classes would be. 

And how much equity do you have currently if you were to sell?  

What is your current monthly payment for the townhouse (all-in including PITI and HOA)?

Well, if you don't want to sell to me ;), I'd recommend renting it out for as long as allowable up to avoiding capital gains and then selling when you get to that point. 

How long has this home been your primary residence? And what was your original purchase price/basis? If you lived in it for at least two years, you can sell for +$250K (single) or +$500K (married) without paying any capital gains on the transaction. 

Additionally, you can still rent it out for 3 more years after living in it as a primary residence (2 years primary + 3 years as a rental).

Have you already verified that your HOA actually allows rentals? Are there any restrictions?

You should definitely sell now. Particularly to me, as I live in Alpharetta. :)

I went through this recently but did not require my distributions to qualify as income from a DTI perspective. From what my mortgage broker told me, the distributions need to be regular (similar to income), ideally consistent for 24+ months, and you have to explain that the investment is real-estate related and utilizing depreciation. However, as they were just the broker, I would verify with the actual mortgage originator/lender since they are the one that ultimately matters when it comes to verifying your DTI ratio.

I have no personal experience, but I would suggest you join a private investment club (https://www.privateinvestorclu...) or 506Group. There are several folks who have posted about their experience with the primary operator and that particular group.