All Forum Posts by: Joseph Walsh

Um, no.  I would just tell them, These repairs are based on the inspection.  I haven't even gotten an appraisal yet.  (unless for some reason, you already have had an appraisal, and they know about it).

hey, congrats.  Another option to consider.  Despite the fact that you'll be living right next door.  You could hire a property management company for the unit for a year, to "learn the ropes" and also give you backup if you decide to remove the tenant.  You wouldn't even need to let the next tenant know you are the owner.  "I just maintain the property for the owner" ....etc.  As a parent I have found that most kids who tend to bully have parents that tend to try an bully, so expect difficulty.  but like you said, that's another thread.  For me it was an education worth 10x the cost to hire someone.

but like other's have said, informing them the rent will be going up to market might take care of it for you.

Good luck.

FYI, an FHA loan's PMI is only for the life of the loan with <10% down. Otherwise it's 13 years. Also, as you will be living there, I would seriously consider getting the current tenant out, so you can do you're own screening of the people you'll be sharing your kid's back yard with. They may be wonderful people, and encourage them to apply, but then you can vet them yourself with your own criteria. Plus you don't carry over any bad habits, and get to establish the tenant landlord relationship from square one (which is easier than "retraining" a tenant)

Finally, put the offer in now if  you like it, just make it contingent on financing and inspection, so you don't lose it figuring out the loan.

Good luck.

Let us know if you get the house!

The only flag I see is that you are buying a property that has an ARV of less than you're total money in, why are you paying more than it is worth?

Welcome, 

I happen to of asked these same questions over the past few years....

Yes, you would be better off putting it in the stock market.  30k down, plus $200 a month over 15  years at 10% is a little over 200k, so it's  a wash.  However, for 15 years, you haven't had to deal with a tenant, the risks associated with having a tenant/house you don' t live in, etc.  Plus the investment is liquid, and you can even forego the $200 monthly contribution if you must, with the house, you're on the hook for 15 years.  And if you need to liquidate it, you're AT LEAST 30 days out if you are able to sell it on day one.

However, you do lose out on potential appreciation on a $150k asset, so there is that.  All things considered, your basic analysis isn't flawed, however you can do much better than "break even" in most cases.  Break even is about the same as S&P500 and a lot more work/risk.

The 2% "rule" is a general guideline that, in most cases, if a property meets that, you most likely will turn a monthly profit that makes the property worth a closer look.  Again, it's really just a guideline.  Look at the numbers, it's just a guideline, and your criteria come into play.

Good luck.

It's amazing how plans change once opportunities present themselves, or your exposed to something you weren't originally looking for. I was sure I wanted to BRRRR SFH in local A and B markets for long term appreciation, and medium cash flow. Now I am looking at student rentals, primarly for cash flow, in another state. I can do this because of equity in my current home (I learned!)

This property seems like it's worth considering.   You could, in theory, leverage the equity in 6 months, and use that cash out to continue on plan, plus you have a potential rental, and future home.  The equity might even put you in a better position for cash or seller financed options.

Regrets:  My first home (currently a rental):  bought to live it, not as investment.  bought with little built in equity, added equity, didn't sell at peak.  Now I can't sell it, and I rent for a slight loss until it values up enough to dump.  

3 things: 

 - I didn't buy with equity in mind.

 - didn't cash in when I should of

 - you can't change location, it's pretty marginal. and wasn;'t picked with long term in mind (which really makes point 2 even worse)

This property you mention actually would be able to eliminate all 3 of those regrets.  It has equity, you could leverage it nearly immediately, and sounds like a great location.

Good luck.

Hey, this is brilliant.  That said, wouldn't it, in general be the same concept as executive rentals?

Sounds like you have an "out" to walk away from the deal, if you wanted to.  I'd make them aware of that.

Be sure to look at the initial rental agreement.  There may be language as to the nature of the rental situation post lease expiration.  Then look at your local laws, and give them the appropriate notices.  They are trouble makers.  Also, expect some damage on the way out.  You might even want to consider the "bribe" to get them out method (look, if you're out by the 15th, and there's no damage on inspection, I'll give you an additional $400 for moving expenses...whatever), then get a good tenant with a solid rental agreement in place.   "Training" a new tenant is a lot easier than "retraining" an existing/problem one, and retraining takes a certain personality/skill set that most people don't have, I don't.   You likely are going to need an attorney, OR, maybe using a PM company for a year could be worth it, they are experts you can learn from.