All Forum Posts by: Kevin Z.

@Joe Jor Thanks for the top. Once I got locked out I never went back thinking I was out forever!

@Mike S. I found that after a few uses, Rentometer was no longer free. Am I missing a workaround?

@Eric D. Thanks for the advice and for the article! Salem is a great city-I lived there for a couple years. Do you invest there?

@Mike Dymski Thanks for your input!

After putting the numbers into the BP calculator, I ended up with about $650 cash flow per month, and by self managing I am saving an additional $600.

I agree about selling the SFR. It's unfortunate-I still actually keep my boat there all summer as it's close to lakes where I take my dad fishing, but I don't see any way that the convenience is worth paying the capital gains from selling. I also feel as though I will be missing out on increasing wealth from mortgage pay down. I reluctantly agree-take the money from the sale and re-invest.

@Shahriar Khan Interesting way of looking at it (in terms of comfort level). I am pretty comfortable being EXTREMELY uncomfortable. Honestly in this case I'd be more comfortable keeping both for the reasons above-just want to make sure that isn't a bad move financially.

@Cody L.  3 family is empty because when I went to do some electrical work to install a dishwasher, I found knob and tube wiring. Worse, I discovered that the previous owner had blown in insulation. I decided to gut the entire building and change floor plans, add washer/dryer to each unit, remove all the horsehair plaster, add closet space, and upgrade EVERYTHING. Should be back up and running again in a couple months. While it may not have been the best thing for my bottom line, I know it was the right thing to do for people's safety and so that I could offer not just an apartment, but an AWESOME place to live. At the end of the day, that is way more important to me than saving some money and halfway wondering what was inside those walls. I'm so glad I did it. I found other things in the house that appeared very unsafe as well. Now I know exactly what is there and what isn't. I take pride in every thing I do, and my new endeavor as landlord will be no different.

@Michael Doherty The only way I could imagine it is worth saving the $400 is if you are well-verses in EVERYTHING. Electrical, plumbing, roofing, carpentry, housing codes, fire codes. Unfortunately you very well may get an inspector who is a dud, and perhaps you did last time, but that doesnt mean that you will be a better home insoector than a hired lrofessional To turn around and think all inspections are a waste of money would be like saying that because you once hired a plumber who did a lousy job, now you will do all of your own plumbing work. Ask around and try to find a great inspector. Totally worth the money in my book.

I consider myself a numbers guy, but I'm not sure what numbers to use to help me decide whether to buy or sell. I'll try to be as specific as possible. I'll answer any questions if it helps you...to help me!

I own a SFR and a 3-family. I am very limited with capital right now due to a long rehab project on my 3-family. I only have a couple of months of reserves for each property. Here are the basics of each:

SFR

Value-$325K. Rent covers mortgage +$400 each month. Awesome tenants who take stellar care of the property. It was my home until 2 years ago. I am hearing the clock ticking on my chance to pay no tax if I sell. I could make about $80K-$90K if I sold. Mortgage is 2 years into a 30-year mortgage and pays down about $365/month. I could get about $25K-$30K out if I chose to get a HELOC.

3-Family

Value $700K. Currently empty. Should rent for mortgage + $1700/month. Could convert to condos and make about $100K. Mortgage is 2 years into a 30-year mortgage and pays off $480/month. 

My Goals

My goal is to BRRRR and enjoy a little cash flow with the advantage of not having to save a ton of capital (I'm *only* a teacher by day). I live in Massachusetts where things are pricey (multi is in MA, SFR is in NH). I want to get over my fear and look in different markets and no longer self-manage.

My question, other than, "what would you do?" is one of how to do the math. I feel in some ways as though I have a bit of what I want, namely some cash flow, so selling feels a bit like it would defeat the purpose. On the other hand I don't have the capital I need to grow. 

If I look at the $765/month that I make on the SFR between $400 cash flow and $365 mortgage pay down and divide that into the $80K I could make from selling, that shows me that it would take 8.5 years for the renting to equal the amount I could get from selling. Not to mention the taxes on a $325K sale that will not be forgiven if I wait more than 1 more year.

If I were to sell the 3-family as condos and keep $100K, or $75K after taxes, that would equal almost 3 years of rental income plus mortgage paydown on the multi. 

I realize that I am excluding tax advantages like depreciation, but my head is ready to explode as it is!

I'm feeling inclined to sell the SFR and keep the multi. But maybe there's a better way to analyze the numbers that I'm not getting. So, would you sell one or both to gain capital, or would you save up the cash before looking to invest in a cheaper market?

THANK YOU!

Kevin

Hi all, Wondering what is an appropriate way to handle tenants during construction. I am hitting the 3rd floor and have tenants on the 1st and 2nd floor. I had planned on giving $100 off the rent but after 2 days of demo and one more to go, I realize that it’s going to take more than that. I am considering a greater discount off the $1500 rent, trying to work out a per diem amount for the “bad days”, or putting tenants up in a hotel. I appreciate any and all thoughts. Thanks!

Thanks Robin,

I am coming in with almost no dough, just a SFR with some equity. The next deal will certainly require outside capital or creative financing, once I make sure this place is up and running.

What makes you want to acquire 6 at a time? Magical number, or you have an eye on a specific deal?

I started listening to the BP podcast in October of 2016. At that time I was feeling a little house poor after having gotten divorced and footing all of the bills with half of the income. I figured I would sell and move, but I couldn't find anything that would be an upgrade in terms of shortening my commute to work without a serious downgrade in the quality of housing. My brother had success renting out his home and I was surprised to learn from a local realtor that I could probably rent out my home for PITI+$335, and I have great tenants in there who are taking great care of the property. I will be using that $335 to continue to do projects on the house. When the current tenants live I will consider selling (now that BP has shown me what a really great deal looks like) or at the least I will hope to be able to raise the rental rate.

I purchased a 2-family for $417,000 and after about $25,000, it has been converted into a 3-family. I occupy one of the units and intend to fix it up. Currently the other 2 units rent for $2,900. So I live for free and receive about $450/month over PITI. Soon I will look for my next deal, and I will hope to get $1,700 for the unit I am occupying, so that will give me a total of $2,150 above PITI.

Thank you to BP for giving me the courage to try this. It has already changed my life by allowing me to move much closer to work. It also gives me a good bit of financial relief each month. I am hoping that by year's end I will be able to score my next project. I think it will be something requiring extensive rehab, but I will see what becomes available. 

THANKS BP!

Do I need an LLC in this case?

• I own a SFR that I am going to begin renting out (60K equity)
• I just bought a 2-unit multi that I will owner occupy (80K equity)
• over $1M other assets

Update-I talked to a lawyer who indicated that this would not be legal in any way. She used the word sleazy. 

I was hesitant to call a lawyer because I figured it would cost hundreds of dollars just to hear the "no" that I assumed, but surprisingly enough the call was free. 

Thank you to all who responded!