All Forum Posts by: Konstantin Ginzburg

There is no way for anyone to be able to answer those questions for you since the answer purely depends on your personal goals and what options you have access too.

Equity vs Line of Credit / Mortgage lender vs Credit Union:

I would shop around from all these options and then choose the financing options that works best for you and offers the best terms. That could come from any of the sources listed and purely will come down to the individual institutions you are shopping from. Keep note of various items such as interest rates, amortization lengths, fixed vs adjustable rates.

Flix and Flip vs House Hack:

This is also purely based on what your personal goals are. A fix and flip (when done correctly) will give you access to quick capital, so a quick infusion of cash. If you house hack a duplex, you will likely come out ahead further but on a longer time period. A house hack would let you lower your living expenses while building equity in a property over a number of years. Although the house hack would be my preference; the choice comes down to your current goals. Quick cash vs long term equity (there is no wrong answer). 

If you have enough equity in the properties already, then using a cash out refinance could be the strategy you are looking for to pull capital/equity out of the 3 homes you have now. One thing that you really need to keep in mind though is that a cash out refinance would cause your new mortgage to be set at the current market rates. Considering how much interest rates have gone up in the previous year, this will likely lead to much higher mortgage payments for all of your properties. Because of this, I might be hesitant to use this strategy unless you have a property selected that is a home run. Any return on investment from this 4th property would need to be high enough to offset the additional cost of capital from increased interest rates to justify it from an investment perspective. 

It depends on your local market. What are the comparable rentals in your market providing as amenities? Do these appliances allow you to have a more competitive rental unit to offer that lets you stand apart? Personally, I would be providing both of these in my rental units. The garbage disposal is a generally low cost appliance and an affordable dishwasher is also not difficult to find from second hand stores or on facebook market. 

Based on the numbers you have provided; this still seems like a fairly solid deal so although you may see ways to improve future deals; I don't see anything glaring wrong with this deal.

Based on the numbers you provided; I am guessing your mortgage is around $800 per month (depending on local property taxes and insurance). If you are bringing in $1400 per month in rent; that means you are able to set aside $140 each for vacancy estimates and maintenance costs and $70 for capital expenditures. With all this factored in, I am guessing you are still achieving a positive cash flow of $200-$300. While this may be a lower capitalization and cash on cash return compared with the previous few years; these are still very solid numbers for the current high cost of capital market. 

What you should do next honestly comes down to what your goals are and you have many options. You could just hold the property for a few years and allow time and appreciation to work their magic on both the property value and the rent you can collect. This is a more conservative strategy but still a good one that allows you to maintain cash flow without incurring additional debt. If you prefer to regain your capital; then you could request a post renovation appraisal and see what the new after repair value of the property is and do a cash out refinance from that. One thing to keep in mind is whether you have an immediate need for that capital or not (do you have another investment to use that capital for?). 

Congrats on your first property! It sounds like you made a solid acquisition and were able to learn a lot purely from the process of making this purchase. 

@Kay Bailey

Welcome to the BiggerPockets. This is an excellent place to network and learn from like minded individuals. The forum is very responsive and any question you have will be answered relatively quickly. I am currently house hacking as well in the New Orleans market and I own rentals in other sections of Louisiana. I would be happy to connect and share anything I have learned to this point. I do have plans to eventually expand into the Florida market in the coming years and have considered Alabama as well. Best of luck on your journey. 

We have used the same criteria you have described such as income ratio, background checks, and criminal backgrounds. Any prior evictions is an automatic denial for us. We also ask for prior rental history and call previous landlords as well. 

As long as you are correctly filed as an LLC; then you have full liability protections. The amount of owners within an LLC does not change the protections you are offered. You might be confusing the protections of an LLC with that of a Sole Proprietorship; that is a different classification of legal entity that is established for one person but does not separate the owner's personal liability from that of the business. You can also still refinance within an LLC but the LLC finances would then be used to determine financing as opposed to your personal holdings (depending on the lender). If your LLC does not have the financial track record to allow for this financing, then you would indeed need to transfer it back to your name in order to do that.

@Dan N.

The LLC is meant as an additional layer of liability protection. The LLC is a business entity that is separate from you as an individual. This will ensure that anyone who attempts to sue; will only have access to the assets of the LLC (in this case, the property in the LLC); as opposed to having access to your personal assets. This is not meant as a substitute to liability coverage; but an additional layer of protection. The properties I currently own, have both liability coverage as well as the liability protections of an LLC associated with them.

@Steve Melniczak It is difficult to answer this question since what you should do involves many personal factors and what your goals are. If you have that much equity in the property now and your goal is to expand; then you could either do a cash out refinance to recoup some equity and use it for an additional property or sell the property and 1031 exchange into a larger property to expand in that manner. Both of those will mean higher mortgage payments so the trade off to more cash in hand would be less monthly cash flow after the fact. If you are satisfied with your cash flow at the moment and are not looking to take on the debt of additional leveraged debt, then you have the option to simply hold your current position and enjoy the established cash flow. 

@Shiv B.

As most others have stated on this forum, you should not allow a tenant to forcefully use the security deposit as last month's rent. I would proceed with a notice to vacate and begin official eviction proceedings. The security deposit is meant to pay for repairs and cleaning that may be needed to turnover the unit for the next tenant. If a tenant leaves a unit in great standing, then I typically return them the full amount but there is no guarantee of tenants doing so. There can often be damage that needs to be repaired or major cleaning that needs to be done. By accepting the security deposit as rent, you would be absolving the tenant of their financial duty to pay for any damage they may have done to the unit once they move out. Especially if your lease states so, I would move ahead with a notice. Since you are managing the rental from a distance, hopefully you have "boots on the ground" near your property that will be able to do the leg work for you, such as court filings.