All Forum Posts by: JP F.

 Russ,

Thanks! The thing is, aren't those other costs sunk at this point? I already poured the money and time into it and I can't get those back, so I'm only really looking at going forward. So I was thinking "how much would I have to invest to keep the house at this point? How much do I reasonably expect to gain if I invest?" That's the logic that underpins the ROI numbers I considered after considering Fay's input. I'd have to forego $17k profit from selling the place (so that's effectively a cost) and I'd have to toss in $17k more to replace the beat-up roof. What I stand to gain is about $8k per year. That ignores the cost of borrowing the $17k, but I believe the continually-building equity (about $3000/year at this point in the mortgage) ought to counterbalance that.

Do you think I'm missing any important pieces? 

Yes, it really is a shame I didn't get a home equity loan before moving! Working with my bank has been a complete nightmare - they took three months to process my loan assumption (long story) and ignored countless emails and voice mails until I lawyered up and threatened to sue them. Once I threatened legal action, they processed the assumption in one afternoon, but by then I had moved to Canada and it was too late. I had plenty of funds saved up for the roof, but I had to use those funds to pay off the second mortgage on the building since that loan was not assume-able. If I didn't get the other borrower off the second mortgage, I'd have been forced to sell the house, anyway. So I paid off the second mortgage and planned to assume the first and then replace the second with a new loan in my name only - it would have been perfect if my bank hadn't been so awful.

Anyway, I appreciate the suggestion of a 401(k) loan. That's a great idea. Using the ROI math suggested by Fay, I stand to see a net gain on a sale of the building (after 6% realtor fees) of $17,000 (coincidentally), so it looks like I could forego that profit and toss in another $17,000 for the roof to begin to yield positive cash flow of $7,930 per year. That works out to an ROI of 23%, which is awfully good. The borrowing is not free, but it's less than the $260/month I'm gaining in equity.

So it sure sounds like I better do what I can to keep the building.

Thanks for the help!

 I'm not sure how I could split it up - there's one garage, one shared basement, and a shared back entry. One unit is certainly nice enough to be owner-occupied, but the other has been a renal unit for some time now and would need some investment to make it attractive to an owner, I think.

I'm not sure what you mean about estimated ROI in this context. I guess the way I look at it, I could make an investment of $17,000 to get about $5000/year plus accumulated equity, or I could sell the building and clear perhaps $20,000 before taxes.

Folks,

I own a duplex in the US and I just moved out of it to Toronto for a 10 month work assignment. I'd like to keep my duplex as an investment property and stay up here for the time being, but I'm having a hard time figuring out if the duplex is really worth it. I spent so much of time and money fixing it up that it might cloud my judgement. I'd really appreciate some level-headed advice!

Currently, the building's mortgage, taxes, and insurance run $1350/month. The building is generating a total of $2220/month, after deducting the fees of a good management company. I think I'm charging a bit less than I could rent-wise. General maintenance ought to run me about $2500/year, which is more than 1% of the building's value, but I figure it was built in 1900 and I ought to be be conservative about that.  

Here's the problem: the building really needs an expensive new roof. Like, this year. The middle estimate came in at $17,000. For lots on convoluted reasons, I presently have no cash for this necessary repair. My LTV is about 80%, so I don't think I can use the building as collateral on a loan, especially now that I don't live there and can't get a home equity loan (according to my bank - I didn't expect that problem). I have no obvious source of equity. I do have excellent credit, at least.

So I could get the money for a roof, but it would be a real stretch. I'd have to borrow it as an unsecured loan at a very high rate, take it from my 401(k), or otherwise really stretch to make it work. But I could do it. 

Question: would YOU stretch to make it work? At first glance, it seems like it makes a nice cash flow. My mortgage rate is really cheap. But I don't really know. 

Thanks for any advice y'all pros might have.

~JP