All Forum Posts by: Melissa Hartvigsen

Hello @Kyle Kamna,

I would like to give you some feedback on your calculator but need more context.

For example, to see if you are on track with your ARV, I would need to know:
How many bedrooms and bathrooms are there now?
What is the square footage?
Do you plan to add any bedrooms/bathrooms?
Are you remodeling the kitchen and bathroom(s)?
Are you doing this on the cheap? Ex for a kitchen remodel are you going to paint cabinets and get new appliances, or mid range like refacing cabinets, replacing light fixtures and hardware, and buying new?
What are projects are you anticipating for the $75,000?

It looks like you completely skipped the selling costs. I think you should also factor agent costs for when you sell your flip as well as closing costs.  It is customary in our market for the seller to pay the commission for the listing agent as well as the buyer's agent. In our market the going rate ranges between 5% and 5.5%. Closings costs covers property taxes, title and escrow fees, and are typically 1-2% of the sale price.

-Melissa

Hello @Tyler Crist,

In my market you can call the local utility provider and give them the property address. They won't be able to give you specifics, but can usually tell you what a bill is in high season versus low season. Other utility providers might give you an average bill amount. 

A quitclaim deed is not the most secure way to pass title because it does not come with any guarantee of the seller's ownership status like a general deed would. Quitclaim is usually used to transfer property ownership within a family. An example is when an elderly parent adds a child to title, or a couple that is divorced removing the person who moved out from title. Another reason someone might use a quitclaim deed is to correct a typo on the title.

Cheers,

Melissa

Hello @Eric Thompson,

For my personal portfolio (5 units spread out over 3 properties) I use apartments.com. The expense and income tracking features are user friendly and intuitive so the learning curve is less than learning Buildum. (I used that professionally and it was clunky). Since you have a property manager you won't need the advertising and tenant screening portions.

You can manually enter payments from the tenants, and manually enter your expenses. For income statements where you can customize the dates or select a specific tax year. I love the phone app for expenses, I just take a photo of the receipt and upload it right away. The expense report are easy to filter: by category of expense, or you can also isolate expenses by the property type. That way you can choose to see all of your expenses across all properties, or just specific properties. 

Since you are paying a property manager it seems like a lot of extra work for you to manually enter everything.  Have you tried asking your PM for additional information so you get what you want without you having to use Buildium's portal?

If they can't give you what you want, would you consider hiring another PM?  Going this route, I would recommend asking the prospective PM to show you a demo of their platform and the reports they provide to their clients.

Cheers,

Melissa

Hello @Michael Valle,

In my market the average cost for a detached ADU including permitting and bringing in utilities runs from $220,000 to $240,000. It is about $30,000 cheaper on an attached ADU.

There are a few local builders that do pre-fab ADUs and deliver in the Pacific NW. I did a consult with Wolf Industries. Wolf is based out of Battle Ground WA, and serve the whole west coast. They deal with the permitting offices regularly and were able to accurately estimate those costs for me. The consultation was helpful for me to properly calculate the costs for a detached ADU.

If I were in your shoes, I would evaluate each of your ADUs (the attached, and detached) like you would any other investment property. BP has the rental property calculator where you can factor in your loan cost, rent, expected income, etc. Then you can see when you would break even, and your future potential earnings based on the time frame that you plan to hold the property once your ADU builds are complete.

Cheers,
Melissa

Hello @Troy Welch,

1031 exchanges in the tax code are designed for tax deferral on investment properties though a like-kind exchange, and not personal residences. Generally (assuming the assets are eligible) the exchange must be set up prior to acquiring the new property and disposing of the old property in order to qualify for any exemption. The IRS does not let you do this after the fact.

Gains from the sale of your personal residence may be eligible for a capital gains tax exemption up to $250,000, or $500,000 if the property is jointly owned with your spouse and you file taxes jointly. The IRS has length of ownership rules for meeting this exemption. You can read more here https://www.irs.gov/taxtopics/tc701 and should consult with a CPA if you have further questions. 

Cheers,
Melissa

Hello @Roy Taieb,

Now that you have a social security number you should start building your credit ASAP, it is imperative for you in order to secure a loan. Generally a traditional Fannie Mae/Freddie Mac conventional loan or a government backed FHA loan will require at least a 620 score. You may be able to get by on a lower score if you use private financing; that comes with a higher down payment requirements and higher interest rates.

Here are a few short cuts on credit building: 
1. Sign up for Experian boost and import in your payment history from your cell phone bill, electric bill, rent payments (applies only if you pay your landlord electronically).

2. See if someone you know will add you as an "authorized user" on their credit card, this will "import" their payment history on your credit profile.  Make sure the person that you ask to do this: 
*pays on time, no late payments in their history
*does not use more than 30% of the available credit on that card
*has had the account for several years
*is willing to list you as an authorized user, and will not give you a physical card

3. If option 1 and 2 don't work; open Secured Credit cards with a local bank or credit union.  The bank takes a deposit from you for the opening amount of the account. The deposit is there in case you default and do not make payments.
Example $500. This will be your new credit limit. Never let the balance on this card get above $150 (this is 30% of the available credit. If you go over this amount it will negatively impact your score). Pay the entire balance every month (this will keep you from paying interest on the card).

Another way to buy the house now is to use a qualified co-signer. They do not have to live with you in the residence to be on the loan.  

I also recommend you interview local realtors and lenders.  Find someone who has built their investment portfolio the way you are proposing to. The realtor can give you insight to your local market and help you identify properties. The lender can talk to you about your financing options and give you realistic projections of the loan cost and monthly payments.

Cheers,

Melissa

Hello @Austin Remus,

I rent to travel nurses in Portland Oregon. I use FurnishedFinder and Airbnb (30-day minimum). In my experience, 80% of the traveling nurses book through FF to save on booking fees.

On Facebook there are several "travel nurse" groups that you can join where you can message travelers and advertise your place. Facebook only generated one renter for me in the almost 4 years I have been doing this.

https://www.furnishedfinder.com/stats will give you an idea of what your competitors in Denver are charging for a room.  

Due note that ER nurses need to be within a 10-minute drive to the hospital. I have had health care professionals (physical therapists, phlebotomists, x-ray techs, etc.) and they are more flexible on drive time.  Top requested amenities from my past travelers: off street parking, free Wi-Fi, access to kitchen and washer/dryer.

Cheers,

Melissa

Hello @Jacob Kurian,

I wouldn't pay for Rentometer.  They will let you look up a few properties for free. This will give you an okay baseline of what others are charging, but does not give you any context regarding the amenities or renovations. 

Instead, you should try the Bigger Pockets has options under "Tools", "Calculators", then "Rent Estimator".  On the BP site when you put in your address it will pop up a price suggestion as well as properties nearby that it used to suggest the price. I recommend clicking through the listing photos to see if your rental is the same, better, or worse and adjust your price from there.

When I was a property manager, I also called my competitors on a regular basis to help me establish rents.  This is an undervalued skill in today's market. Talking with other small landlords and large apartment complexes will give you a sense of how many people are competing to rent units like yours, if they are discounting prices to get tenants, how quickly you might expect to rent your place, etc.

Best wishes for your first investment!
Melissa

Hello @Raj A.,

The classifications are based on age of the property as well as amenities.

Class A properties are typically new within the last 10-15 years, have luxury amenities and low foretasted maintenance costs. (Think downtown high-rise, and the most expensive apartments in your market).

Class D properties on the other end of the spectrum are older than 30 years, have little to no amenities for tenants, higher vacancy rates and higher turn over, and likely have high foretasted maintenance cost due to neglect. (Think low-rise dense housing with lower rents in your market).

Bigger Pockets has a great post breaking down more detail at:
https://www.biggerpockets.com/blog/defining-asset-classholistic-approach

Cheers,

Melissa

Hello @Gregory Saunders,

Bigger Pockets has several calculators to help calculate rent, click the "Tools" Bar. Select calculators, and epending on what type of rental you are considering short term vs long term, you might want to use:

Airbnb

or

Rent Estimator

Other ways to estimate rent:
Short term rentals: https://www.airdna.co/
Mid Term rentals: https://www.furnishedfinder.com/stats
Long Term rentals: https://www.rentometer.com/

You can also do it the old fashioned way, and call local apartment complexes for "comps".  Ask what floor plans they have, how much rent is for each unit, what amenities they include, if they include any utilities in rent, how many new leases they signed in the last 30 days, how many vacancies they currently have, if they are offering any concessions (i.e. rent discounts), etc.

Cheers,

Melissa