All Forum Posts by: Kristina Heimstaedt

The concept behind the refinance portion is that because you have repaired the property, you have now added value. If you think the property is more or less worth 10k now and you can add 1k in rehab and then value the property at a total of 12k, the bank's new assessed value will be from the 12k value. The concept is to pull money out with the purpose of putting it in your pocket to repeat the process. I'm not 100% sure how this might work on a trailer, so I might do more research there. It's a great system especially if you can do the right remodel (not over remodel) and the bank will support your efforts. 

Best of Luck!!!

100% up to you. I have a client who refuses to rationalize buying his own home because he hates property taxes so much. He figures that at least if his property is a rental, the income covers the property taxes there. 

I think this is where you add your "why". 9 times out of 10, your investing purchases do not impact your personal residence unless you're house hacking. There's really no wrong way to go about things. It's all going to be dependent on what you want. 

If I were in your shoes, I might look at both properties that I would utilize as a personal residence and income property. If you see great income properties, go for it. If you see great personal residences, go for those. There's really no wrong way to go about things.

Bart Hedgcock had a perfect response. My market is similar. On average over the last several years, rent has gone up by 5% year over year. We typically increase rent 2-5% every year to account for the average increases in property taxes as well as keeping up with market to some extent. This typically results in happy tenants who are slightly below market pending they stay. Bottom line is know your market and see if you can't land somewhere between market and accounting for your expenses. It's a pretty easy point to negotiate with tenants if these are your arguments.

At least in California, when you look at properties larger than 4 units, they're classified as commercial loans meaning that a bank qualifies the property more than the borrower. This does not negate that you will need a down payment. However, if the numbers demonstrate that you have found a performing asset, the bank should be able to provide more equity. For the initial down payment though, you might ask the seller if they would carry back a note or partner with someone else. I'd talk to the bank first before dragging other notes into the property first.

Calculatedriskblog.com and learn everything there is to know about financing.

@Steven Lee I'd suggest reaching out to a lender to get information from the horse's mouth. That being said, refinancing adjusts your existing loan. HELOC would be a line of credit against your personal residence. Essentially it's like turning your personal residence into a credit card where you don't need to utilize the entire line like you would with a loan. It's more or less supposed to be there if you want/need it. Just make sure you talk with your lender about any particular limitations they might have in order for you to access the HELOC.

Although I agree with everyone overall about selling, I might re run the numbers. It seems like you have a lot going out the door for your house only being 10 years old. Vacancy, Repairs, Cap Ex and Property Management? Vacancy and repairs, sure. Not sure what Cap Ex you would have on a 10 year old house. Although I think it's great to always account for property management just in case, if it's your only investment property, you should be able to get enough advice on here in case you were to have any hiccups. Also, as far as my knowledge goes, Texas is a very landlord friendly state in comparison to California. 

I also must give you credit for sticking with the low end for rental income and being conservative with all of your numbers. Not sure about Texas, but in my part of California, a lot of it is about timing. That $500 difference would make or break the situation. 

Conservatively, sell. Double check and be 100% though.

When you're starting out, I think it's important to learn about leverage. There's nothing scarier than to think that your spending your last red cent on a property in the hopes that there are no costly hiccups along the way. 

I'd also take the time to really study whose investing habits you are most interested in aligning yourself. By doing that, I think it helps you get past the analysis paralysis and waiting for someone else to tell you that it's ok to invest in a particular property. 

The last is to really understand what you want your life to look like and why you're interested in investing. I think most of us here are seeking some amount of control over our financial destinies, but many people have slightly different lifestyles that they want to achieve through their real estate investments. 

Lastly, start analyzing deals and see if you can't find a mentor/work with someone to collaborate with on your results. We analyze deals one way, but I know developers as well as other buy and hold investors who don't assess an opportunity the way we would. Also by talking to different types of investors, it can really help you to become wise very quickly and learn what does or does not work for you and why. It might be because of your lifestyle you're trying to achieve. It might be the different people it allows you to work with. 

You're young and in California. Save your money. Educate yourself further and really consider your why.

I would either contact an attorney or a collections agency. Go get em!!

@Account Closed's cash is king isn't an option.