All Forum Posts by: Jordan Low

I am confused on the process of obtaining a second property and am hoping some of you wonderful people could help make sure I am thinking about this correctly

I bought a 3B 2.5BR single family house about 2 years ago and have been living in it. I have experience renting out one room.

My goal is to purchase a second single family house. So my first house would be a rental. I would live in the second house.

For easy numbers let’s say house 1, the current house I living costs $300k and I put down 20%. House is worth between $350k-$375k thanks to a strong Seattle housing market. Once I finish a few upgrades it should be worth a little more.

My plan would be to find a second house around $300k and put down 20%.

Because I am poor I would need to count on the rental income of the first house or I will qualify for a very small loan since my debt to income would be too high. I spoke with my current lender and they said that they only count 75% of the income I have taken in from rent. I understand this 75%. But I have only rented out one room of the house, which is obviously much less than if I rented out the whole house.

Current mortgage payment on the first house is ~$1500/month and conservatively I can rent out the whole house for $1900/month. But since I have only rented out one room at $600/month, the bank will only look at $600/month x 75% or $450/month. What a scam! Am I really supposed to rent out the whole house for max rent just to show a history? This is absurd to me, but I will live in a tent for a year if I have too.

My questions are:

How do I get the bank to take into consideration the FULL rent I would receive if rented out the whole house, not just a room? I understand if they can only count 75% of an estimated rent.

Is there anything I am just completely not understanding or have missed?

What strategies have you used to purchase a second property?

Am I going about this the right way?

I thought the first house was supposed to be the hardest!! Advice and sage wisdom is greatly appreciated.

Thanks,

Jordan

1 Vote

Greetings,

In my 3 bed 2.5 SFR I have one bathroom that was remodeled. Picture is below.

I am going to be remodeling the master bathroom soon. It has the same layout as the bathroom posted above. My question is do I have to have a similar theme for these bathrooms? Would it hurt value to have the master a different theme and look? I am currently living in this house, but at the end of the day I want to maximize resale/renting value.

The master looks like this except I ripped out the gross shower doors and put a curtain, also replaced the vanity/sink just so it was livable for me.

I wanted to go more a more modern contemporary theme sort of like the picture below... I would also want a standing shower instead of a tub. Would getting rid of the tub cause any concerns? This would mean the master bathroom would have no tub, but another bathroom would. All in all though I just want something nice and timeless that adds value.

Cliffs:

I want to maximize value for resale/future rental.
Do I need to have a consistent theme throughout the house?
I am really bad with style. What are some good timeless bathroom schemes?
For master bathroom, removal of tub for standing shower a good idea? There is a tub in another bathroom

Please let me know if you have any other questions. Hopefully I didn't miss a thread with this problem already answered.

Thanks!

Jordan

1 Vote

Originally posted by @Valerie Hiscoe:

Hi Jordan

Grey is a very popular colour to go with for house paints lately and I always love when @Nicole Pettis makes suggestions because she includes great pictures. You can see from her second picture that sometimes the new grays are paired with pearl or off-white colours which somehow make them a little more exclusive. You'll probably be able to find specifically recommended combos at the paint store.

I've had some experience with landscaping professionally so my feedback on curb appeal etc are coming from those design principles.

The underlying principle of all curb appeal landscaping is that anything and everything you do should first be to highlight the front door, second to balance the house and yard, and three to work with the style of home. So....

Ideally put in a wider front door but at least trim out around it so that it's the same width as the window above it. It should be either the lightest, brightest, or darkest in your colour scheme. Gloss black maybe or hunters green. Some tones of red are popular too. Take out the hedge as Nicole suggested because it creates a visual blockage to the front door, but you also need to widen the sidewalk to make your entranceway more important. If nothing else, widen it (just on left side) with rocks, bricks, or whatever to look as uniform as possible and wide enough for two people, not single file. Frame the right edge with a groundcover or some annuals (annuals are easonal flowers - inexpensive to get a whole flat of all the same). To help balance the house, (because there's more mass on the right than the left) add the equivalent of those shrubs back in on the left of the sidewalk to give the left side more weight. The Japanese maple might be nice but it's present position blocks the straightaway to the entrance and will be a visual hindrance to the welcome of the door. The sidewalk should be widened the whole distance and the stairs should be in good repair. A sturdy railing could be a suitable embellishment (nothing frail like cast iron filigree) add lighting, new house numbers and a nice mailbox.

Keeping in mind the importance of the front door, it's curious why people always seem to want to highlight their garage door but it should really just blend in with the house and not get a lot more trim than a window. ie Don't spend more money on it than necessary. Spend some of it on getting that great front entry lighting instead. I'd also add motion activated lighting on the far right pointing at both the driveway and down the side yard, as well as the left side of the house covering the front yard.

I'm not sure if those windows are energy efficient or you'll be changing them but aesthetically they could use more 'oomph'. They need more weight vertically rather than horizontally which shutters would thwart, so I'd just add trim all around maybe making the pieces under the frames the widest.

Lastly, remove anything blocking the light through those downstairs windows and keep anything you put there very low growing.

A friend of mine buys this style of house and increases the value substantially by adding suites in the area downstairs. Are these 'mortgage helper' suites popular in your area?

Valerie - Thanks so much for this very detailed response. I am have no idea how you have such vision for these things! The area downstairs is a basement with a half bath, it also has the washer/dryer hookups. By suite did you mean like a mother in law unit? I have been toying with the idea but I have no idea on how to get that going. If you could connect me with your friend who does these suites that would be awesome. Would love to ask him a few questions.

Thanks again for sharing this great information with me.

0 Votes

Originally posted by @Nicole Pettis:

@Jordan Low

For the garage door, I don't think it really matters. I would just stay with white. Windows are always nice, but not necessary.

Then for curb appeal, I would get rid of those big green shrubs on the right. They are an eye sore and are hiding that magnificent Japanese maple. I would also suggest getting rid of a few of the smaller bushes around the sidewalk.

Paint Scheme:

I like the idea of Tony Taupe:

Or Copely Gray - Benjamin Moore.

And I would definitely add shutters to make it feel more homey and give it a little character.

I would get samples of the paint colors and put them on the house before you make a final decision, you don't want to pay for all that paint and labor to not like the paint color. Also you might come across some other ones in the same families that you like better.

Hope this helps!

Nicole - Thanks a bunch for this advice. Never even thought of removing that green shrub but it makes sense now that you mention it. This is very helpful! :)

1 Vote

All - I was wondering if you could give me some advice on what style garage door I should go with. The garage door as seen in the picture was hit and I am planning on getting a new one from Lowes.

There are so many types and I am pretty bad with style. I really just want to get the most return on investment possible. Should I just go with one with no windows? Carriage style? One of those more modern wooden ones?

What else can I do to improve the curb appeal of the house? I want to paint it and have a more sleek paint scheme. But like I said I am bad with style. Are there any good color schemes you guys live and die by? Maybe even add some shutters? Any ideas are welcome.

Thanks!

Jordan

0 Votes

Originally posted by @Zena McCoy:

Hello BP community,

I discovered this site a few months ago, I love the podcast, however, this will be my first post. There seems to be a lot of very experienced investors on this platform. So I thought I would ask for your advice. I currently own a duplex in the Magnolia area of Seattle. I have no plans of selling it, I hope to develop it one day but I am in no rush since it makes a nice rental with positive cash flow. What I would like to do soon is buy another investment property probably in Tacoma. I am thinking my best option would be to get a Heloc on the duplex. I owe about $260,000 on it but it is valued at around $650,000. However, when I went to apply for a HELOC at my local credit union for $100,000 they denied me saying my "debt to income was too high". My income the past 2 years has been low since I have been only working part time so I can take care of my 1yr old daughter. My question is what advice can you give me on obtaining a HELOC with my low income but descent equity?

Any advice would be much appreciated. Thank you in advance.

-Zena

Zena,

I recently got a HELOC from Becu. I owned the place for less than a year and was able to pull out almost all the money I put down. Also there were no fees which was really nice. They go up to 90% LTV and the whole process was less than a month. I honestly don't know too much on how they evaluated my income and debt ratio, but I was surprised I got what I asked for. And with no fees I had nothing to lose to go in and start the process.

Jordan

0 Votes

@Brian Eastman

Thanks this finally makes sense in my brain now.

@Jay Orlauski

Thanks Jay I did not know about this. I am going to take a look into it.

0 Votes

In Feb 2015 I purchased a single family residence where I reside and rent out a room.

In a couple years, once I have saved up enough money for a down payment I want to purchase another single family residence. I will rent out my first house, and live in and renovate the second one.

Currently I have been saving all my money in my stock account. I realized I could be missing out on a lot of money by not taking advantage of my tax deferred accounts.

My current thinking is to max out my 401k for two years and then turn the 401k into a self directed IRA and use it for a down payment.

As you can probably tell I am weak on this issue. Is there a way to use my Roth IRA and a 401k as a down payment for a second property which I will live in for a couple years?

Thanks for helping out a IRA noob,

Jordan

0 Votes

Aspirin can help during a heart attack. It will help because it is an anticoagulant and reduces inflammation.

Why not just carry around one of the travel aspirins that come in a little tear offs? They are in plastic and you can keep one in your back pocket.

0 Votes

All Forum Posts by: Jordan Low

Jordan Low has started 5 posts and replied 12 times.

Post: Good idea to build house with attached ADU for rental investment?

Post: First house the hardest?? Obtaining second property question

Post: Bathroom remodel, consistent theme?

Post: New Garage Door and Improving Curb Appeal

Post: New Garage Door and Improving Curb Appeal

Post: New Garage Door and Improving Curb Appeal

Post: HELOC advice

Post: How can I use a tax deferred retirement vehicle as a downpayment

Post: How can I use a tax deferred retirement vehicle as a downpayment

Post: Aspirin. Can it really save lives?