All Forum Posts by: Bryan Montross

When my wife's mom's husband passed away, their home was in terrible shape. Her mom was living in assisted living and couldn't do anything with it. Surprisingly the funeral home said they could help and would buy the house. Essentially they wanted to pay the amount that was owed on the property. I proposed fixing it up and then selling it on the market and the family agreed. I oversaw and paid for all the renovations and after we sold the house I got my money plus profit and my wife's mom was able to pay off the mortgage and still have a healthy profit. This was my first flip and I was glad I did it on the property because I didn't have to worry about acquisition costs and carrying costs. It gave me a way to get a feel for flipping. However, I was only 20 min from the house. I think if I were 4 hours from the house I wouldn't have done it. Unless I knew a really good contractor in the area I trusted. I think you might be better off selling it to an investor in the area.

With such a short timeline for living in the property it makes me question whether buying is the right option. It doesn't give you much in the way of exits if the market isn't doing well in 1.5 years. One thought might be to use the money you have for the house to buy a rental in an area you can at least break even or get cash flow (Do you want more appreciation or cash flow). Then rent near your work. Now you know you have a good rental and hopefully it is offsetting your current rent and paying for itself.

The only thing I might say is if you are planning to move back to the DMV when your overseas tour completes then it might be worth buying and renting while you are gone. Now when you come back you have more choices and can either move back in, or if the rental is doing well, buy another house.

Good Luck.

@AJ P. I find myself in a similar situation as you are in. I have started to think about it like this. If all I am going to do to rehab the property is fix it up, make it look nicer, install new kitchens or baths then I tend to look at it as a flip. In my area right now I can't buy a home at market value and rent it out to make cash flow. If you refinance the property to a full 70%-75% (You're not going to get 80% on a cash out refi as Matthew said) it's essentially that you are buying it at that price. If you wouldn't buy the house at that price as a rental then it doesn't make sense. However, if my rehab is adding ways to make money, then I would keep it as a rental. Can I add an ADU? Can I split the upstairs and downstairs to make two units? Can I add bedrooms and make it rent by the room? If I can find a creative strategy that can increase my rental income, then I am going to keep it as a rental. I hope that helps you in the way you think about future investments.

Sometimes finding a HELOC on a rental property can be very difficult. If you can find one, that would be my first choice, but I would not use the HELOC for a long-term investment. HELOCs tend to be very good for short-term debt. Maybe to buy a property all cash, do some value add, then refinance and pay the HELOC off. If you're going to use the money for a long-term investment I would go with a standard 30-year fixed mortgage. If you can qualify for conventional financing you can get better rates, but you do have to go through the whole process of the lender digging through everything you have and asking for things you don't think they should ever need. Just look at whether the increase in payment would be beneficial based on what you are going to do with the money.

@Mary Jay Real Estate Investing is a long-term investment. You really have to calculate what your return is over the life of the investment. If you only plan to hold it for a short time, I would never go with a negative cash-flowing property. But if you plan to hold it for 10, 20, 30 or more years, just project what you think you will be making. If you buy a property that is losing $100/month, that's $1,200/year or $12,000 over 10 years. If you look at the median home price over a 10-year period do you ever see where it dropped $12,000 over 10 years? Additionally, I don't think rents over a 10-year period have ever gone down, so your $100/month loss is probably less than that.

However, is that the best use of your money? Are you getting the best return you can get with your money? Generally I feel you could probably be doing better with your money and get a better return, but I don't know where you are investing.

Let me tell you a story of mine where I had a negative cash-flowing property. When I bought the property it was cash-flow positive, but the crash of 2008 hit and I was underwater on my loan and rent dropped so much I was negative cash-flow. Because I was underwater, and had the income to support paying the extra, I kept the property. I still have it today and provides almost more cash-flow than any other property I have. It's gone back up in value so much I pulled an equity line of credit from it that I use to fund repairs on my BRRRRs or flips. I looked at the property as a long-term investment and have done very well with it.

You mentioned you want to diversify. I think that is a wonderful idea. The big question is how much time do you want to be putting into real estate? With $1M I would look at maybe buying a higher-end short-term rental if you are willing to put the time into it. I think that is somewhere you can get the returns you are looking at. I would then put some into a syndication, but I would also highly consider putting some of that money into an S&P 500 index fund and just letting it grow. That just helps to diversify even more by taking some of your money out of real estate all together. I hope you find some of these ideas helpful. 

I think many people have said something similar, but it really does depend on your situation. If you plan to move back to NV, I would really consider holding it and renting while you are away. When you come back you can look at how it is performing and decide if you want to move back in.

If you don't plan to come back, then it is a little harder decision. One common question is to ask yourself if you were to see your house on the market right now, would you buy it as a rental? If not, then it might mean it is not worth holding as a rental. However, I still greatly believe in real estate and that it is a long game. Time in the market is better than timing the market. If you can sell and buy another property that cash flows better in an area that might appreciate better, I would do that. Maybe you can use the money to buy a small multi-family home in Ohio and house hack. In the end, doing something like that will probably give you better returns and set you up better for the future.

@Brianna Johnson The best way to see what your market has is to go out and look. Look at listings of similar properties to yours and see what the pictures have. I would even schedule a meeting with the property manager to look at the property. Then you can get a feel for the whole property, so what it is listed for, and now you know better what your property should look like to get similar rents. Hope that helps.

If you are a buyer looking to buy off the MLS, why wouldn't you get a Buyer's agent. As it was said earlier, the seller has already negotiated the commission for the sale of their home regardless of whether there is a buyer's agent involved. As the buyer, you don't usually pay for the buyer's agent. It usually comes from the seller (although this may be changing in the future). Having a buyer's agent will help to navigate you through the market conditions, negotiate the best deal for you, and will always look after your best interest. As a cash buyer you already have a strong offer, having an agent with you will make it even easier.

Someone once told it to me like this. When starting out and you only have a couple of properties it is probably best to keep them in separate LLCs. As you move further in your investing and have many properties, then you can start putting multiple together still based on risk tolerance. Why? If I keep putting my properties into the same LLC for the first say 5 properties, if anything happens at any of those 5 properties you could lose them all and have to start over. If you were at all relying on money from those investments, it is now gone. If you had kept them each separate, you only lose 1/5 of what you have worked hard to build. Now say you have 50 properties and you decide to make bookkeeping easier by putting 5 properties into each LLC. Now if something happens at one of the properties you could lose 5 out of 50, but you still have 45. So losing 5 properties means a lot more to the person who only owns 5 properties than it does to the person you owns 50. How much are you willing to lose if something does go wrong at a property? That's what you should be thinking about.