All Forum Posts by: Brant Richardson

Haha, it doen't count as a rsponse if I call and ask to be put on your buyers list?

That is great that you stuck with it and got one under contract. It takes some thicker than average skin to deal with all those phone calls. Care to share the details of the deal?

If you are pulling out your equity and increasing your debt then you are increasing your debt to income ratio, one of the main parameters lenders look at. Sometimes its worth it, like if you are planning to use that money for another investment which will make substantially higher returns than the interest you pay.

The main reason for buying a property that needs a ton of rehab is so you can get it for under value and end up with some sweat equity or increased cap rate. If your purchase price plus rehab comes out to market value with typical cap rate then you are better off buying a place that does not need rehab at full market price. That way it can be rented out right away. If the cap rate ends up "strong", as in over the typical in the area, then you have added value by doing the rehab.

I don't have experience with vacation rentals or multiunits so my opinion isn't worth much in this area. My thought is that if the 4 plex was cash flow positive as a normal 12 month lease, then you would be very safe to experiment with ABNB. You could start off with just 1 or 2 units as vacation rentals and ramp up if it went well or go back to leases if it wasn't.

I usually think of ABNB vacation rentals as something for major tourist destinations like Las Vegas, ski resorts, beach towns etc, but that doesn't mean it wont work elsewhere.

This would still be considered negative cash flow because you have to feed the investment every month. It certainly feels better knowing equity accrual is exceeding your negative cash flow though. I would consider this an appreciation play and would hold it only if I felt strongly that there was going to be appreciation in the area. In which case you could wait to sell it for a year or two while you get experience in your new career and get the credit score back up to its former glory.

If you talk to small banks or credit unions you might find somebody who will work with you. You need to come in and give a well thought out presentation on a solidly cash flow positive property you want to purchase.

I calculate cash flow as rent 532 minus known expenses (P&I 300-350, taxes 100?, insurance 50?) minus expected expenses (10% of rent for maintenance 53, 10% for vacancy 53, property management?) . $53/mo for maintenance might not even be enough, my 10% rule kind of breaks down with a low rent. If you have one major expense like a new roof you would go through a lot of months worth of savings.

The 50% rule would predict negative cash flow. 532/2 minus P&I.

The plumbing issue is a bummer but I still think you would be better off getting out of that house. This would improve your debt to income ratio.That credit score of 810 was awesome, build it back up I would try talking to a smaller bank or credit union about a loan. Maybe a duplex that you occupied half of would work.

What's the problem with the 4 plex that keeps one unit vacant? Who is managing it? Professional management charges 10% of rent and is tax deductible, your vacancy is costing you 25% of rent.

In short, yes, you want a good agent on your side. Finding and buying a good property will be a team effort. You need access to the MLS and a good agent will have years of knowledge and relationships which will help.

Even if you are experienced, you need an agent, unless you are one. It sounds like you probably have more to learn before you can pick a good agent though.

As Jenkins said, you should attend a real estate investing meeting in your area and talk to other investors there. Find out who they are working with and there will be agents at the meeting as well.

Check out the "learn" tab and read the whole beginners guide.

I made this decision years ago. As others have said, contribute however much your employer matches. I feel I can get better returns outside of my 401k. The important part of this strategy is self discipline. Will you really invest that money if you have access to it or will you feel cash rich and start buying non investments? If you are dead set on doing everything in your power to build a portfolio of rental properties then you need that cash for acquisitions.

You just took an excellent first step. You found and actually posted on Bigger Pockets.

You posted a lot of information which needs more detail and asked a lot of questions.

75k for a property that rents for $523. This is a bad investment. I don't know what you had in it before but you probably just financed it into a cash flow negative property. Sell it before it hemorrhages more from you.

Do you have a property manager for your 4 plex in Colorado? If you do, fire them. If not, get a property manager. Either way, you need a property manager. Start a new thread asking about PM's in you town.

Good job getting your license. Learn to be an awesome agent. In the process you will learn your market inside out, recognize a great deal and have the opportunity to swoop in early.

Your properties being in different states has no bearing on your financing, its your track record. You have a cash flow negative property, a 4 plex that's only 3/4 rented and a new career. Cash? Credit score? Debt to income ratio?

Next steps - sell bad investment. Show you are an affective land lord and turn your 4 plex around. Make money as an agent and learn your market. save every possible penny. Build your credit score. Make your debt to income better by paying down debts and getting rid of the first property.

Your best first step was coming here. Bigger Pockets is an awesome resource full of professionals willing to give their advice for free.

I'm assuming this is for a rental unit. In which case the winner is laminate because it takes more abuse and still looks good. You can do both too. Carpet in the bedrooms where there is less traffic and it is really nice to step on first thing in the morning.