All Forum Posts by: Layla Rahm

Thank you crystal. We are looking at buying around the university. My husband wants to be close to work and I like that area. It's south of the university that we are looking, and I know lots of investors buying up the multi units and renovating in the same area south.  

Which areas are you referring to that are close to the university and you can make a decent appreciation in a few years. Hyde park? South loop?

Thank you all very much much for your comments. 

I also believe the buying route is the best but lack of inventory is the problem. As I said a place that I could live in, in that area is about 2500-3000. again a place that I could live in is about $200k although not as spectacular as the place for $3k but it's nice and new. The same place I can rent out for $1500-$1800. So thank you for confirming that buying makes for sense than renting. 

Now the fact that I can pay $200k cash for the place again makes more sense to me than saving it and borrowing the money. I have more cash just sitting in the bank. I don't really want to buy more investment properties in the next couple of years. Especially not in Chicago. 

The place for $200k. If I put 20% down then in the first 2 years I would be paying $36k in finance charges. Then why not use the cash and save the 36k? And I buy the place cash and sell it in 3 years for the same price then I would save $60-100k in rent. 

What do you think? Also can't I just do a cash out refinance if I ever need the cash later?

Brandon - I realize the numbers seem flawed. The reason it's like this is because the units we are looking at to rent are truly $2500-3k. There is nothing to buy the size we need in the area as the rentals. We also can't find anything similar for $1500 to rent in this area. 

But if we go up a couple of streets then there are a couple properties for 200k that we can purchase the same size as the ones for 3k. A few similar places rented in this area for $1500. That's why I know it would rent for at least that much later.  If there were rentals available now for $1500 in this area we would rent but there are none.

My husband and I need to move to Chicago for 2-3 years. Our dilemma is whether we should buy something for around $200k, or rent for the 2-3 years, rent being $2500-3000. I realize that buying may make more sense, but in the area we are looking to buy which is right by the University of Chicago, the homes that we are looking at purchasing are all around 200k, but they may not go up in value at all in 2-3 years. We would however be open to renting the place out after we move. And I know we would get at least $1500-1800/month if we rented the homes we are looking at buying. We also currently we own 5 other rental properties in Atlanta, which are being managed by my father, so having another rental property is attractive. But Chicago is somewhere where we would move away, and never come back.

We are also not sure if we should pay cash for the 200k, and later do a cash out refinance if we need the cash, or if we should get a mortgage for some of it initially. We don't need the 200k in the next few years so buying cash would not be an issue.

thank you for any advice or guidance. 

Hello. We have been approached by a couple who are visiting Atlanta for 3 years for work as diplomats of a country and they want to rent our home for 3 years. It's a nice home with a pretty high rent. The lease would be in the name of the consulate of the country. Are there are cons to renting to them? I know when I lived in DC I remember diplomats were exempt from all laws and basically did whatever they wanted. I don't want to be stuck in a situation where the tenant can do anything they want, and I can't take them to court. For example, if the consulate stops paying rent, or if there is damage. They have said they would pay a security deposit and they said they want a 3 year lease. They also said the consulate will pay 6 months up front if we want. Has anyone dealt with this?

any advice is greatly appreciated.

Thank you everyone for your comments. I have to admit though, I am more confused than before I posted this. There are a few conflicting comments, and numbers and I don't know what to go by. One person has mentioned the numbers are roughly earning 20% equity, while another has it at 5%. One person says forget renovations, its a sunk cost. Another says I need to count it as capital expenditures. 

I also  looked for the buy/hold calculator and the single family model and this is all I found: 

http://www.biggerpockets.com/files/user/westerling/file/151-financial-spreadsheet---single-family

thank you @Bill Jacobsen ! Right now the two mortgages I owe are 325k together. So based on what you said about the $396k, it would be $20,000 on the equity of $71,000 so about 28%, right? But where does the money I spent in renovations ($60k) get factored into these numbers?

Hi Everyone. I just found this website and super excited! I sort of fell into real estate investing without ever intending to. I am in my middle 30s, with a baby, and husband.

I purchased a condo in DC that I bought pre-construction in 2006 when I had just graduated law school. I ended up moving back to Atlanta before it was finished, and while it was being built, the area of DC went from being a street of prostitutes to the best area of DC to live in. I rented it for a year and when I sold it I made over 100k and someone told me about 1031 exchanges so I did that and bought 2 foreclosures in Atlanta with the proceeds, both of which are now rentals. That was in 2008. One of the properties I'm about to sell, closing in a couple of weeks, and I'll make a good amount of money from it. I'm selling it because it is an older home and while it has positive cash flow I'm afraid of the problems it could face in a couple years. And the other is a quad I own that has really great tenants and great positive cash flow. I ended up purchasing another foreclosure in 2008 as well, that I fixed up completely, and is now a rental in a beautiful part of town, also with positive cash flow. 

We just moved out of Atlanta and so my parents are helping me manage my properties in Atlanta. I love real estate but sometimes the stress can be overwhelming. My husband likes to joke that he married me and my properties :) We'll eventually be moving permanently to southern CA.

I am looking forward to learning from everyone here! I'm particularly looking forward to learning about when to sell, when to hold, and when to buy, especially since our permanent home will not be in Atlanta. And I'm also looking forward to learning about how I can figure out if my properties are actually good investments or not. 

@Rick Baggenstoss  thank you for that very helpful advice. Can you please explain to me how you came to these two numbers: "equity is improving by $16,000 per year on a very low equity ~$36,000." 

The house is in Buckhead/Brookhaven. The schools are ok, but I think its the location that makes it great. You can walk to restaurants, shopping, etc. And the house is on a quiet street. 

At this time, I don't really want to purchase another home to rent. So if my choices are to either keep renting or to sell and just put the cash in the bank, would you still recommend selling? And why is it better to rent cheaper houses?