All Forum Posts by: Monica Evans

@Greg M.

Thanks! I figured that painting was just part of the standard process. That said- there are quite a few holes in walls and scuffs all over the walls. Even the ceilings are scuffed! So, was just wondering. Thanks for replying to me!

Experienced landlords:

Generally speaking, when you are turning a property between long term tenants, do consider re-painting as a “standard” part of the process? Or, do you consider that as “extra” wear and tear and deduct the cost of the paint from the security deposit?

Also- what are items that you typically deduct from the security deposit when changing tenants?

Thanks so much!

Hi Guys,

Question on HELOC's - is the goal to use one and then pay off after REFI? Or, do some people use them and just make monthly payments with cash flow of the property once it's rented out? I'm guessing that depends on people's specific situations and what makes sense for them, but any general guidance on this?? I don't really understand the benefit of using a HELOC if you're going to make monthly payments over time and end up paying a ton of interest on the equity in your home, but I'm admittedly not a very finance/business savvy person and maybe that is a better gig than paying closing costs to pull equity out on a refi as opposed to using the HELOC.

We currently have the option of refinancing our first rental property purchased in 2018 and pulling out 40K but the interest rate on the new loan would go from 5.25% to 5.5% and cash flow on the rental would go from $535/mo to $310/mo. Option #2 is we could get a HELOC on our primary home of $52K which we could use for the down payment of a second rental. What I'm confused on is if we use the HELOC for down payment and bank lends the rest to buy the home (assume $125K house), then we fix it up, would the strategy be to then refi the home and pull out equity to then hopefully pay off the HELOC?

Has anyone done that or do most folks make monthly payments on the HELOC with cash flow over time vs paying it off? Really curious as to how people are using HELOCs. Thanks so much for any input and guidance!!

Hi Everyone, Thanks for the input! Much appreciated. Question on the HELOC strategy - would the goal be to pay off the HELOC soon after purchasing the new rental? If yes, would you say the best strategy to do that is by doing a BRRRR not the new rental and use the cash out from the refi to pay off the HELOC? If yes, then I would be refinancing anyways and thus paying closing costs. What am I missing? I'm new to this and I'm having a hard time wrapping my head around this. Any further clarity would be appreciated!!

Hi BP!

My husband and I are at a fork in the road in our investing journey and I am hoping to get some advice/guidance from folks who are more experienced than us. In short, we bought our first rental in 2018 and plan to buy our second in the next few months. We have an option to refi our first rental to pull some equity but we are both unsure if that is the best option for us. 

Here are the numbers from a high level:

Rental 1 bought in 2018 for $142K with $5K seller assist. Loan balance is currently at about $111K and is at a 5.25% rate. We rehabbed the property which cost us about $40K and rented it out for $1525/month on May 1 2019. Mortgage monthly payment is currently about $990/month. At the time we closed on that property, there was one down the block under contract (totally rehabbed, a tiny bit nicer than ours) for $210K. We are checking with our agent on currently value of our rental - however we assume that it would be around $190K. 

Refi option: Assuming it appraises for $190K, our bank gave us the option to refi and pull out $36K. Closing costs would be about $3200. New interest rate would be 5.5%. New monthly payment would be about $1215/month. 

Alternatively we leave rental 1 loan intact, preserve the 5.25% rate, and leave the equity in there and then pay cash down payment from savings for next rental property.

I know that Brandon and many others have talked about the BRRRR strategy a ton, the issue is that me and my husband don't know the exact terms that would make a "good" BRRRR which would make sense to do. (i.e. does the fact that the monthly payment goes up quite a bit and significantly decreases cash flow mean that we should leave the existing loan intact to preserve the cash flow there?) Long term, we aren't sure which option is best.

As mentioned above, we're hoping to get guidance/feedback/advice from folks who perhaps have done this before and can speak to it. If I left out any pertinent details, just let me know!

Thanks very much!

Monica

Hi guys!

If anyone can help clarify this for me, I would greatly appreciate it!! When you BRRRR a property, would your cash flow go down and potentially go away?

My husband and I have a rental that is cash flowing $525/month and I’m thinking that if we refinance to pull equity out (we rehabbed it prior to renting it out), wouldn’t the mortgage payment go up and therefore we would lose part or all of our cash flow? If the answer to that is yes, what is the financial benefit of pulling the equity out only to lose cash flow? I get that it could help fund the next investment however are there any limitations on the numbers to ensure this doesn’t make a great deal bad just so you can buy another property?

What am I missing? I would appreciate any insight!!

Thanks so much!

Monica

Hi BP,

My husband and I just had tenants move into our first rental property on May 1, and just received the below email from them. We are looking for guidance from other landlords on how to handle this situation. Do you typically take care of pest issues? If not, would you make any kind of exception since they have only been there for 3 weeks?

Also, my husband and I have never seen a mouse at the property during the last year of renovations (and we were there almost every day of the week for 11 months). However we realize that there could still have been an issue that just never happened to see.

We would appreciate any advice and guidance from current landlords, thanks so much!!

Email from tenant:

So, we're in need of an exterminator ASAP. Walking through the kitchen last night, I noticed a mouse trotting towards the back of the refrigerator.

I've laid store bought traps through the kitchen area, but we're in need of a long term resolution. Are you able to have an exterminator come through to provide some sort of a decontaminate throughout the home?

Hi everyone,

My husband and I are currently filling out the lease for our first rental and we’re looking for guidance on how much personal property insurance our tenant should have as we need to note that requirement in the lease. Can you please share perspectives on this and/or is there an industry standard? Also related - how much liability insurance should they have?

Thanks so much,

Monica

Hi everyone,

We have a family interested in our rental property who has a mastif and they’ve asked if we’re open to them having it. The listing says no pets but they have asked anyway. Our insurance company said mastifs are on their restricted breed list so technically can’t cover it however explained that since the tenant would be occupying the property after their inspection, technically we could start our policy and then have them move in and it would be fine. However if they were already there during inspection it wouldn’t work. (Not sure I understand this but that’s what they said). The mastif is 8 yrs old, already gray in the face and basically just lays around all day.

Overall otherwise great candidates with income (3x rent), credit scores (over 600) and past rental history (8 years at last place).

3 questions:

1) would you rent to them and allow the dog?

2) how much would you charge for a pet fee and pet rent?

3) am I allowed to ask her whether the dog is insured at her current rental or is that violating any rule/privacy law etc?

Thanks!

Monica

With the rule of income must be 3 times rent, is that gross income or net income?