All Forum Posts by: Mike Arias
Mike Arias has started 4 posts and replied 20 times.
Since you are looking to turn your primary into a rental, you have a big advantage versus buying an investment property. You know all the cost (exact property taxes, mortgage amount except for homeowners insurance, you will need landlord insurance but you can use your insurance as a rough estimate; maybe increase it 20% - I don't know what it will cost). Run the numbers. Make sure the rent in your area will cover all those cost plus the vacancy, maintenance that the others mentioned. If it does not, then it is best to sell. No need to proceed to this next section.
Another advantage you have is you know exactly what the house needs and does not need. You know if the roof is good, if the water heater is nearing its age, whether the HVAC works well, etc. Focus on making those improvements that are needed. If you know the water heater is near the end of its life, replace it. If your kitchen is outdated, you will need to upgrade it (but focus on what a rental would be acceptable and not what a home buyer would want).
Quote from @Mil Sanghvi:
Hi,
Can anyone recommend any banks and credit unions to take out a HELOC on primary residence and possibly a rental property? Georgia
I'm looking for the best rates and terms at this point. So far, I have received Prime minus 0.5% 85%LTV. Bank pays 1600 in closing costs on a ten year term, then 20 year amortization.
Perfect Credit, High Income.
Please reach out to me or DM me.
Try credit unions or local banks. I have been successful with both for HELOC on a primary. Avoid national banks.I have used a credit union and a local bank. Never closing costs. Some may offer .5% discount if you do autopay. I am not in GA but this should apply in any city/town.
Post: Advise for managing property of out of state
- Posts 20
- Votes 7
I just heard about Hemlane in a podcast. They offer property management software so it seems they do what every other PM software does. One thing different about them is that they have local networks of teams including handymen which may address your concern. You will need to check to see if they do have a network where your properties are located. Just Google Hemlane. Maybe their services (seems robust) are what you are looking for. They seem to specialize in out of state property management. Not sure how their pricing compares. Best of luck!
Not sure why many say to focus on markets closer to where one lives (I live in NJ and I would never invest here). That is not always possible and many people have started their real estate journeys investing in other states so I would not really take that to heart. You can be successful if you believe in yourself and build a local team [especially real estate agent].
Brightinvestors offers tools that let you see if specifically areas/neighborhoods are good to invest in. I don't have a subscription yet but definitely will get one soon.
Good Luck!
Post: What is the best way to estimate rent and CapEX's for out of state investing
- Posts 20
- Votes 7
Quote from @Chizitem Ibeneme:
I'm a college student, and I plan to start investing in multifamily homes once I graduate, and I recently started looking at deals on Zillow just so i can practice underwriting. But I hit a wall.
First: Trying to find out what similar properties in the area (10 m radius) rent for, I used rentcast and rentometer for this, but they gave me two very different results. So I'm asking, What is the best way to utilize the results they both gave me and narrow it down? Just so i can do the preliminary analysis on the property
Second: I'm finding it difficult to get a clear price estimate of the CapEx's that might be needed. So what I'm asking is if there's a better way to estimate CapEx on a property during preliminary analysis, i.e., without having to go to the state where it's located and asking around, i say this because there has to be a good way to estimate these things before going deep into the deal
Any insights on this guys?
I have been researching myself rent comps using Rentcast, Rentometer and Zillow. All 3 will give different amounts/ranges. I have not done enough comparisons to know which is more accurate (need subscription for Rentometer and Rentcast to get full access which I do not have). My opinion is that Zillow appears to be the most accurate but I don't know if it depends on the area meaning maybe in another area, Rentcast or Rentometer may be more accurate. I would use all 3 plus look at properties currently available for rent that are similar to what you are trying to comp (3 bedrooms/2 baths; similar condition; size; etc). Sometimes I see properties currently for rent lower than those 3 services. You have to dig in why is rent lower. Maybe it is not a good area for rentals (especially if the homes available are in very nice condition). Always be conservative and try to aim for the lower rents to do your analysis. If it cash flows with the lower rents (even if say its $100), then dig in further. If you do end buying, you can price your property at a higher rent than what you used to do your analysis. You can get lucky and get more cash flow. Worse case, you cashflow a little or breakeven. Good luck!
Quote from @John Mason:
@Monica Gonzalez You can also try Dealcheck free version dealcheck.io
This! Dealcheck is awesome. I use the free version but eventually will get the Pro. It will help you analyze deals quickly but you will likely need to adjust some of the figures such as rent, % towards vacancy/cap ex/maintenance.
Quote from @Donald Hatter:
- Builders have many homes to sell at one time so it is easier to negotiate a better deal than with a home owner in the same neighborhood who is trying to sell their primary residence
- Buyers bust out of deals all the time and builders don't like holding completed homes
- Lower maintenance which leads to easier property management expenses. I literally don't expect to speak to my tenants more than once a quarter. Most of the homes come with a one or two year warranty so we set it up so that they can communicate with the builder directly to handle maintenance issues.
- Taxes are usually much lower the first year. How much lower depends on what time of year the home was completed
- Usually can charge a much higher rent for new homes. People like new homes
- It is easier for me to identify with which homes will be more marketable in the future years
Cons
- Cash flow usually isn't as good (which is ok with me, because it is always an equity play for us). For example, if a home has an accurate value and list price of $450,000 and I can get if for $400,000 (because of incentives and timing), and it sells for $490,000 three years later, I am not as concerned with a monthly break even cash flow scenario.
- Some builders aren't as friendly to investors
I hope that helps.
Quote from @Donald Hatter:
Hello fellow Bigger Pockets investors! My name is Donald, and I am a Realtor and real estate investor based in the Greater Houston area. I specialize in identifying, negotiating, and investing in new construction homes.The main focus of my investment strategy is to negotiate the best possible deals on new homes in growing communities. By securing favorable terms upfront, I aim to maximize my ROI when selling within a 3-5 year window.I believe that connecting with like-minded investors is key to continued growth and success in this industry. If you're interested in new construction investments, share your experiences, and let's explore potential opportunities together!
Hi Donald, what are the pros and cons of investing in new construction single family homes? I assume pros are little maintenance, no cap ex for maybe at least a decade, and possible favorable loan terms from developers. This would be buying from a developer buying new houses in communities. I believe some are investor friendly but others may not. I believe new construction homes don't cash flow as well, based on what I have read but not sure if true. Thanks!
Post: Status of HELOC on Primary when Converting to Rental
- Posts 20
- Votes 7
Hello, if I have a HELOC on a primary home and I move out to convert the house into a rental property, do credit unions/bank typically have an issue with that? I know they do not like to give HELOC on investment properties. In this case, everything was done when the house was a primary.
I know the other option is not to tell them but I would need to do an address change which may flag this.
Thanks in advance!