All Forum Posts by: Kent Julian

@Tim Bollier - where and when?

Thank you @Mitch Messer -- I definitely will NOT do this myself. I'd love a warm introduction. 

I'll keep this short.

First, we recently moved and have had a renter in our former home for 6 months so that we could try to sell it this spring. After living in the house for 6 months, the tenet is now interested in a lease purchase. He'd probably lease for another year and then buy the house. I'm definitely interested because it seems like it would make selling of the house so much easier. So, I'd love any thoughts on selling via lease purchase since I've never done it.

Second, when selling, I'm interested in doing owner financing. The house has a lot of equity in it (over $200k), but I don't need all of it. If I could get a down payment of 20% (about $53-$55k), that would pay of my loan, AND I'd have a new stream of cash flow (over $1000 pure profit) without having to manage a property. I'd also love any thoughts on selling financing since I've never done this either.

Thanks @Alex Babayev -- I was hoping for a lunch thing. However, I'll see if I can swing by soon. I currently have 4 single-family rentals and am looking to grow.

Alex... what time on Tuesdays? 

Thanks @Cassi Justiz -- lots of wisdom in your words!

We recently moved to a new home and are contemplating whether to rent or sell our previous home. The great news is that either option is a win, but I'm curious to see what Bigger Pocket members think is the bigger win. Let me share a few details to give you a better feel for the situation.

THE DETAILS:

FIRST, I'm a buy-and-hold, very part-time investor. I LOVE my work (I am a professional speaker) and make a good income. Therefore, I am a passive real estate investor. I love it and look for deals all the time, but I'm pretty picky. So over the last 8 years, I've purchased 3 single-family rental homes that all cash flow at 1% or better. They are in solid neighborhoods with great schools (that's my #1 strategy) in the north-Atlanta metro. Also, I love the property management company I use -- we have an excellent relationship.

SECOND, our previous home (the one we are debating renting or selling) fits the above rental strategy very well. It's in a solid neighborhood with great schools (that's why we lived there for 17 years).

THIRD, as a side note, we are also in the position to pick up another rental property within the next year or so. 

DEEPER DETAILS:

Now, here's where it gets interesting...

FIRST, we have a renter in this house for the next 6 months. This allows us to put it on the market, if we want to, in May when homes tend to sell better. The renter is willing to go month-to-month starting in May. 

SECOND, we have an amazing mortgage on this home. It's like free money at 2.75%.

THIRD, we only have 5 years left on the mortgage. It will experience positive cash flow now; but in just a few short years... wow! And part of my strategy is to have as many of my rentals paid off as possible in the next 15-18 years. I'd love to have 10 paid-for single-family homes by then.

FOURTH, it's a really good house for a rental. It's constructed very well. For instance, all the floor beams are 12 inches apart instead of 18 inches, which means even though it's a 30-year old house, there are no squeaks in the floor. And it's a nice, fairly open floor plan for a 30 year old house. Finally, all the improvements we did to the house over the years were with "renting it out later" in mind. Nice repairs, but nothing extravagant.

FIFTH, we purchased the house in 2001 for $193,000. We put the house on the market for a month in October just to test selling it. We started the listing at $299,00 and moved it all the way to $275,000 just to see the interest level. There were no offers. Then again, nothing within a 2-mile radius during that month in that price range sold. It's a very slow time in the market. In fact, earlier in the spring, we would have priced it between $299,000 and $315,000 because lots of houses like ours were moving in that range.

FINALLY, the great news is we can rent the house for the next 3 years if we'd like and still end up selling it without having to pay capital gains. It will cash flow the entire time. So we're in the driver's seat.

DECISION - WHAT WOULD YOU DO?

IF YOU DO THE NUMBERS, this house has NOT been a good investment in regards to appreciation. If we sell for $275,000 in June 2019, that would be a 1.99% annual return on our investment. If we sold for $315,000, it would be a bit better at 2.76% annual return, but nothing to brag about. And it's not close to the 3 rentals I've purchased in the last 8 years. Right now, on paper, they have annual appreciation returns of between 5.45% to 12.92%.

While it hasn't appreciated too well, IT'S A GREAT NEIGHBORHOOD FOR A RENTAL. It's a B to B+ neighborhood, and my guess is at least 85% of the homes are owned. Additionally, the schools for this neighborhood are excellent. The high school is one of the top 3 in the district, and the district is one of the best in the country, so families WANT to be in this high school cluster. One more thing...I know several of the rental homes in this neighborhood. They rent fast, they stay rented, and the rents are strong (higher than my other properties). The property management company I use strongly confirms this as well.

I could go on and on, and I know I'm in a win-win situation here, so I'm curious what you would do or if you have any insights to share. I look forward to learning from each of you!

Thank you @Account Closed - exactly what I was looking for!

@Account Closed Not sure. I'll put some of my own money down, but with HELOC, it will be like a cash purchase. I'm buying below market...

My primary desire is to find people who have done this.

@Harjeet Bhatti and @Account Closed - my HELOC doesn't cost me anything until I use it. The reason I want to use it is it allows me to act quickly instead of having to pre-qualify over and over again (every 60-90 days). I use the HELOC to purchase the property and then refinance in my LLC once it's purchased.