All Forum Posts by: Kenny Smith

Hey BP community!

Something a lot of homeowners, and even investors, occasionally forget about. PMI...

If you put less than 20% down for your home when you bought it, you're likely paying PMI or private mortgage insurance. This PMI is essentially insurance to help protect the lender if you were ever to default on your loan. Seeing you took out a loan with a higher Loan to Value, you are a riskier borrower, hence the PMI requirement.

However, with the market appreciation going crazy over the last few years, it is very probable you have natural appreciation in your property. If that equity meets or exceeds 20%, you likely will be eligible to get that PMI removed off of your monthly mortgage! PMI cost can varies depending on the price of your home, but a few hundred bucks saved a month is still a huge bonus!

If you think you have this equity, contact your lender ASAP and tell them you'd like to get your PMI removed. They will send out a 3rd party appraiser for as low as $150-$200. If the appraisal comes back showing your sufficient equity, they will take that PMI off.

Lenders typically won’t reach to let you know about this, so it’s important you take action yourself!  If you're here in Denver, shoot me a DM if you’d like a complimentary home value report to see if you qualify! 

Thanks for reading.

Hey BP!

Quick tip on older plumbing.  If your home was built before 1980, it is possible you have cast iron drain lines.  If so, these can corrode overtime, especially if you are using the wrong drain cleaner.  Be sure to never use a pipe cleaner that contains sulfuric acid or other chemicals.  These chemicals will cause corrosion to your cast iron lines and eventual leaks.

Instead, try using a drain cleaner that uses lipase enzymes to break down the clog instead of chemicals.  I've used the Green Gobbler in the past, and seems to work great!  

Thanks for reading.

@Ryan Klamer

Thank you!!  We were very happy to find it when we did.  It truly changed our lives, and set us on the path we are now.  There's always deals to be had, just have to know where to look!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $505,000
Cash invested: $64,000

This was a 5 bed, 2 bath, single family home. We knew we wanted to get into another house hack where we could section off the upstairs from the downstairs. This one needed some work such as putting in a 2nd kitchen downstairs, and walling off a side entrance, but it turned out great! We lived in the top floor and airbnb'ed the basement. 3 bed, 1 bath upstairs, and 2 bed, 1 bath downstairs with a full kitchen.

What made you interested in investing in this type of deal?

The setup for house hacking was just what we were looking for. Plus it was only 3 minutes away from our other property.

How did you find this deal and how did you negotiate it?

MLS, and was able to get it $15k under asking price even in a hot market!

How did you finance this deal?

5% down, conventional loan

How did you add value to the deal?

We were able to do several renovations by adding in a kitchen downstairs, converting it into a non conforming duplex, adding central a/c, complete update of the landscaping, fencing, and many other small renovations to add value and forced appreciation into the property.

What was the outcome?

$2600 cashflow a month
$80k equity since 2021

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $430,000
Cash invested: $52,000

5 bed, 2 bath Single Family home, 2400 sq ft. This home was very unique in that it was perfectly set up for a house hack. We knew we were looking for a single family home in which we could convert into a non-conforming duplex. This was a perfect set up as it had a side entrance into a finished basement with 2 bedrooms, bathroom, and full kitchen. We were able to live in the top floor while we airbnb'ed the basement for a year.

What made you interested in investing in this type of deal?

This property was perfectly set up for a nonconforming duplex and house hack.

How did you find this deal and how did you negotiate it?

MLS, and we went $20k over asking to get it under contract. The market was very hot at this time, and houses were going well over asking in most cases.

How did you finance this deal?

5% down Conventional Loan

How did you add value to the deal?

We were able to do several renovations such as complete overhaul of the landscaping, central a/c, light fixtures, patio, and other minor renovations to improve the equity in the property.

What was the outcome?

$2800 monthly cash flow
$131k in equity growth since 2020

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $430,000
Cash invested: $52,000

5 bed, 2 bath Single Family home, 2400 sq ft. This home was very unique in that it was perfectly set up for a house hack. We knew we were looking for a single family home in which we could convert into a non-conforming duplex. This was a perfect set up as it had a side entrance into a finished basement with 2 bedrooms, bathroom, and full kitchen. We were able to live in the top floor while we airbnb'ed the basement for a year. It worked so well, we decided we had to do it again exactly a year later!

What made you interested in investing in this type of deal?

This property was perfectly set up for a nonconforming duplex and house hack.

How did you find this deal and how did you negotiate it?

MLS, and we went $20k over asking to get it under contract. The market was very hot at this time, and houses were going well over asking in most cases.

How did you finance this deal?

5% down Conventional Loan

How did you add value to the deal?

We were able to do several renovations such as complete overhaul of the landscaping, central a/c, light fixtures, patio, and other minor renovations to improve the equity in the property.

What was the outcome?

$2800 monthly cash flow
$131k in equity growth since 2020

Investment Info:

Condo buy & hold investment.

Purchase price: $180,000
Cash invested: $20,000

One bedroom condo that began as my primary residence, then to an LTR, and will be converting here shortly to a medium term rental. It is in an excellent location with 5 hospitals within a 10 minute drive, close to downtown Denver, and lots of bars and restaurants. It will be an excellent option for any travel nurse! Not to mention, in the matter of 5 short years, I have built $104k in equity. Great $20k investment!

What made you interested in investing in this type of deal?

At the time, it was what I could afford. I bought it mainly because they were planning to put a brand new development of several bars and restaurants right next to it. I knew there was great opportunity with forced and natural appreciation of the market.

How did you find this deal and how did you negotiate it?

MLS, and went $5k over asking price to lock it down. At the time, $5k was enough on a place like this.

How did you finance this deal?

5% down conventional loan

How did you add value to the deal?

Renovation of flooring, ceiling, light fixtures, paint, and other misc upgrades.

What was the outcome?

$900 monthly cash flow
$104k equity built in 5 years

...what in the world is going on with the Denver housing market?

1. Inventory is very low - for all of the homeowners that bought or refinanced during COVID that have a sub 3.5% interest rate don't want to sell when rates are at 7%. Why? If they are trading up, why trade a 3% rate for a 7%. We may continue to see inventory issues until sellers feel there isn't a huge gap in rate exchanges when trading up.

2. Luxury housing has slowed - the entry level home in Denver still stands at roughly $500k-$600k. During COVID, folks were able to afford a little bit more seeing rates were so low and their monthly mortgage was kept down. Now, they are getting priced out of those more expensive homes because of affordability with rates. Now, there the entry level home price point of $500k-$600k has seen a huge uptick. A nice home priced right and in a good location, is still selling quick!

3. Rates will ulimately decide where the market goes - having already mentioned the importance of rates to sellers..rates of course, have a huge effect for buyers as well. Some buyers are considering waiting until rates to drop to get into their home. Seeing a large numbers of buyers are considering this strategy, if rates do drop and many get into the market at the same time, this will likely cause home prices to go back up.

Bottom line - we need more inventory. Inventory would put us in more of a balanced market for both buyers and sellers.

Thanks for reading!

 Thanks Randy.  So to clarify, I would be taking money out of the 401k or SDIRA and would be buying more real estate myself.  But I want to do that without any fees taken out..not sure if that is possible.

I am told the 401k plan I have now does not allow for that..that is why I want to roll it into an SDIRA, because from my understanding, you can use that money to buy real estate without penalties.

Hey BP Community!

I am planning on moving my prior company's 401k to a self directed IRA so I can take advantage of borrowing money against it to buy more Real Estate.

Anyone have a great company they'd recommend to hold this SDIRA account with?

Many thanks!