All Forum Posts by: William White

Thank you all for the replies. This was my suspicion, I will be avoiding the home warranty process. 

Yea, I was in a bind because I had tenants that had no working ac because both of the condensers were for their larger unit. I installed window units, but it wasn't doing a great job vs. the New Orleans summer. I had 3 people take a look at it, all 3 of them took like 2+ weeks just to do a diagnostic because of how busy summer and HVAC problems are here. A month and a half later and no quote under like $18k I decided to pursue replacing just the condensers. 

Do you think my experience would have been significantly different if I had had a home warranty?

Hey y'all, I know the home warranty question has been hashed out a thousand times and I have read a lot of the threads about. I think for most situations I would agree with a lot of y'all that as an investor and a landlord that a home warranty is probably not the route that I would go personally, however, I have what I feel like is a unique situation with this one property and wanted to get y'alls input on the potential value of a home warranty. 

I currently have a fourplex in uptown New Orleans. It is in pretty good shape for a 100 year old property and is doing pretty well. It however has 5 minisplit HVAC systems that are all 10-15 years old. Recently the condensers failed on two of the 5 units at the same time. I had two different HVAC companies quote me at ~$20,000 to replace both condensers and all 4 evaporators since they are aging systems and did not want to just replace the condensers (they also didn't work with the brand that I had and it seemed like they were unable to do the work to try and source new condensers). I eventually found somebody who was able to source and replace the condensers, but that still cost me ~$6,000. 

Given the age and cost associated with these minisplit systems, do y'all think it would be a good idea to get a home warranty for this specific property? Replacement of all 5 systems would be like $40k+. At $600/year for the warranty I figure these systems would have to last almost 70 years for this warranty to not pay for itself. *** I realize that the home warranty is going to try and repair these units forever and will resist replacing them, but at some point they would have to replace moist of the components since they cannot just be perpetually repaired ***

I was considering American Home Shield since they seem to accept appliances in any condition and without previous records of maintenance, etc...

Any thoughts would be greatly appreciated. Sorry to beat the Home warranty dead horse again. Thank you

Thank you in advance for any help with this. I am currently looking at some multifamily investments in my hometown. This would be my first REI and I am trying to do this right the first time. I am not necessarily asking if this one deal in particular is any good (especially since I am not going to be including enough details about the property or my situation to allow for any meaningful deal analysis to occur).Instead I am asking for advice on how I am looking at my numbers.

I am likely pursuing an FHA loan at this time for the low cost of entry. The first spreadsheet is if I just keep the FHA loan for 30 years and never refinance (I think at some point you can stop paying mortgage insurance on FHA loans, maybe when you hit 20%. So by year 7 or 8 the monthly cashflow may actually improve by ~$500)

The second spreadsheet is if I decide to refinance at year 2 with whatever down payment (~$55k) is needed to get my total equity to 20%. Monthly expenses will be incorrect on this graph for the first two years because of the mortgage insurance that is omitted. Also not sure if my mortgage payments will drop from $2,655 to $2,082 with the refinance (I got this number by just calculating a new 30 year mortgage, at the same 2.625% interest rate with 20% down instead of 3.5%)

I threw in capex numbers sporadically to approximate the ~$675/month calculated in expenses (~$80k over 10 years)

Does these seem like reasonable spreadsheets? Anything obvious I am missing?

BP would not allow me to upload the excel sheets. If you would like me to share these spreadsheets, just DM me. 

Thank you for taking a look at these. 

Thank you for the replies everyone. I have phone interviews setup with REI nation and rent to retirement on Wednesday. Will update as I continue to get further along in this process. Also, talking to a realtor and lender in New Orleans to explore the house hacking option. Though at the moment, I am leaning towards my original thoughts that this isn't going to be the best option for me (high entry cost, physician loan's are different for multifamily vs. SFH, competitive New Orleans market).

@Liam Mullins no worries on posting on my thread. Thank you for your input. Definitely update me either personally or on this thread as you learn more about rei nation and other avenues for passive income. 

@Stephen E. great point about the additional leverage afforded by TK vs. syndication. If I can get 4 or 5 TK properties under my belt I could likely leverage a few of them to afford some larger RE purchases when I am ready. I appreciate the offer for coffee as well. I may reach out to you after the thanksgiving holidays.

@James Wise Thank you for your input. There is so much information on how to turn all this stuff in to a full time or part-time job. Definitely less resources on how to invest in it completely passively. If I could take 10-20% of every month's paycheck and direct it towards TK properties and syndications it seems like I could produce some pretty solid passive income in just 5-10 years. I think TK properties sound like a more appealing place to start for me, but I am only just starting to scratch the surface on syndications, so maybe I will change my mind. 

@Jerel Ehlert wow, thank you for that detailed response. haha, and yes my tax bill was definitely a bit staggering the first time I looked at it. I have done a lot of reading about the different real estate strategies, but I have a long way to go on the legal and tax side of things. Excited to learn more about this kind of stuff. Thank you for the advice. I may reach out to you in the future with some questions if that is alright.

Yes, good point. I am definitely planning on incorporating myself for single and multifamily where I am the owner of the property. Is this as important to do for investing in syndications? 

@Taylor L. thank you for the reply. Is there a reason for the privacy with your physician investors? I am trying to think why I would not want people knowing that I invested in a syndication. Am I missing something big, haha? 

@Mustafa S. I also do not own my house yet. Have a good price on a rental and I am not entirely sure how long I will be staying in the New Orleans area, so I wanted to keep myself very mobile. I will likely invest in some TKs or syndications before I actually buy my first home to live in. I really wish I had house hacked as a resident. I could have had 4 years rent free and then had a duplex or triplex to rent out in the New Orleans area now. Hindsight is 20/20 though. If any interns or residents early in their training end up reading this thread, that is definitely a route to consider. 

@Brian Burke thank you for the book recommendation. I actually just bought your book last week and started listening to it yesterday. Weird coincidence on the timing of your post. I look forward to getting in to the meat of the book. 

@Brian Hosier Thank you for mentioning Rent To Retirement. I had looked in to them briefly and was hoping to do a deeper dive later. As far as REI nation vs. RentToRetirement, they seem very similar. Any obvious differences between the two?