All Forum Posts by: Kristina Heimstaedt

@Joe Splitrock that was my exact concern. However, it's not my side of the industry so I'd say that I'm hopeful, but have low expectations. I'm sure it also depends on where you're purchasing property. 

@Brent Coombs I agree that I would have concerns about expenses. In California, typically the biggest concern is property taxes for us. 

@Edward Heavrin $400/month is good. I would work/develop a chart of big ticket items such as the roof, water heater, HVAC system, etc and calculate how much each of those items should cost per year and factor those items into your expenses as well. For example, if your roof is $30k and it has a 30 year life span, you're looking at about $75/month dedicated towards a new roof some day. To me, those random, big ticket items that aren't foreseen are challenging. It's important to understand not only your investment in the property, but also the products related to your property. I think it also helps you to be mentally prepared and to be responsible for those items and to run your investment tight and like a business. 

@Ian Voakes you're right in that maybe I'm an optimist to assume that people will do smart things with their money. I have that conversation every day with clients when making purchases. 

I completely agree that purchasing a boat using your HELOC is about as bad as a sub prime mortgage if not worse. My theory is more that if you can use your HELOC which has a hypothetical interest rate of 5% to purchase an income property that produces an ROI of 7%, how pissed would you be if you didn't have a HELOC nor the cash to make things work? I would never advise someone to use that same HELOC to make a purchase with an ROI of 4% because as far as I'm concerned, that puts you in the red.

However, I think it is a complete failure that more people aren't well educated or don't seek education related to finances. I understand that it is difficult to navigate when things change constantly. Let's face it though, we're here to make money and achieve financial independence. Being educated in how to leverage properly is typically part of that equation. I had the conversation today that my job as an agent is more about providing my clients with knowledge and an education for them to make the right decision for themselves. For most people who don't come from a lot of money, to me, it's important that people know what tools are at their disposal to achieve their goals whatever those might be. I think people should not only educate themselves, but I hope that they will also be wise and not repeat history. But it's not my money.

HELOC!!! Who doesn't like cash when they need it?

That being said, I'm not against @Ian Voakes's idea of a line of credit on a business because you turned it into an LLC. I like the layer of protection you get from an LLC. @Account Closed maybe you could do both the HELOC and a line of credit on an LLC...? experts....? Can you tell I'm a fan of being able to get cash when you want it?

@Alex Huang We aren't quite so free in our language/marketing. However, I'm a fan of empowering a tenant. 

I typically pick 2-5 colors that I know will work in a space and let the new tenant choose which of those colors they like best. I controlled the potentially crazy options. The tenant got to pick. Best of all, when it comes to re-rent the apartment down the road, you don't need to help the prospective tenant visualize what the space could look like with their preferred color. For as much as most people think they have perspective, stagers wouldn't be employable if most people really did have perspective. This system has worked wonderfully for me and results in a great start to a working relationship. Give it a shot. I think you'd be surprised at the success.

I might take @Jean McAfee's question and tweak it. I'd personally be more inclined to leave it open ended and say "If I were to call your prior/current landlord and ask about you and your relationship as a tenant, what do you figure your landlord would say". 

Gives you a good opportunity to gauge the tenant in terms of how realistic they are about themselves depending on your reading of the past landlord. Anyone who says that their prior landlord was challenging or had x, y, z issues might be a red flag for me. If that was the response, I would ask why. I had a tenant whose prior landlord did not return the security deposit in its entirety. When said tenant moved out of my rental, he got the entire deposit minus a cleaning fee and a little for filling in holes from hanging photos. However, I had someone else that I nearly evicted and she came with a story of a terrible landlord who was throwing her out. 

Overall, thank you Jean because I now have a new question to use as a barometer for new tenants!!!

I'm going to go against the grain and ask what does your third tenant say? I've been in a similar situation with a tenant who was walking on the roof of another (oddly laid out property and clearly dangerous). I saw some evidence to support it including beer cans etc. Rather than going to the root right away, I talked to the other tenant to confirm that there was something going on. The more weight I can have with my argument/conversation with the problem, the better. I understand that this isn't exactly comparable, but I value consensus and try to empower tenants as much as possible. 

However, if you're not going to go that direction, I love @Marcia Maynard's response and the fact that they're still there 10 years later sounds like the biggest win of all. Hooray for no vacancy!!!

Talk to an accountant or CPA before you go ahead and sell with the idea that you don't get hit with a capital gains tax. Nothing worse than getting audited or hit with an unforeseen tax bill.

It sounds like you are house hacking well though. You aren't living for free, but your living expenses have been severely decreased. That's the goal of house hacking. Don't beat yourself up about the situation. Besides, you did what a lot of people don't do: get started. Give yourself a pat on the back for that one.

Before you consider jumping in with both feet on a sale, consider what you would do when you sell. What's your goal of selling? It sounds like it's to run from an imperfect house hack. I think figuring out where you want to go and creating a pathway to get there is really undervalued. As a newbie, I think it is very easy to get focussed on the systems of these sage investors because more often than not they can manage the volume as a result of their systems. Before you can create a system though, you need to know how to operate the system before you can handle volume in any capacity. Getting one call about a toilet is a lot better than getting 100 calls about toilets especially when you don't have a plumber (or aka team). 

I think the real beauty of real estate is that everyone follows their own path. To me this means that there is a system of checks and balances that presents itself in your bank account. Is your current arrangement perfect? No, but learn what you're good at and figure out how you can capitalize on your skill set. In the meantime, if you're not happy in your current arrangement because you think you could be profiting more, find a property where you could achieve that and approach the seller with a subject to offer. Subject to referring to you selling your current residence. You're comfortable, but you want to be more comfortable. Don't put yourself in a stressful position and go shopping for a new house until you find something that you think could work. 

Sorry for a long winded response, but hopefully it helps.

I don't know, but I'm glad you started this thread. 

Supply, demand and price. If it's not rented, drop the price. Department stores do it, landlords do it, it's the process of operating a business. Sometimes you can pull off a discount for x number of months, bottom line is price will get people in the door. Everything else reads as a gimmick and negotiating price is a universal language that is very easy to explain to a tenant. Trying to explain the gimmick is more challenging.