All Forum Posts by: Michael S.

Scott - I have worked through the rental analysis spreadsheet on BP and found that while I may make some slight cash-flow or break even, the potential maintenance and vacancies could put me in the red monthly. Just like you are saying. That's what concerns me.

My hope it to gain appreciation, have renters pay down principal, enjoy tax deductions for a few years to not lose as much money on the property. I'm realizing this isn't a great investment opportunity since I bought high, but I'm hoping to make the best of it and gain some experience for another investment property.

Would you recommend avoiding putting an additional $10,000 down to increase cash-flow? My thought is that it makes sense to keep that money on reserve for maintenance and vacancy or invest it in something more lucrative.

How about taking a loan on another property that could be purchased now in the low market and rented with positive cash-flow? That might help us long-term, or do you think that might be too much to take on since I'm just starting out and would also like to get into a larger SFR with my family over the next few years? Thanks for your advice.

Scott W.When we decide to rent, if conditions are the same as they are now, then rent in this area would be between $1600-$1700. That covers everything: P&I, taxes, insurances. After a refi that would break us even or give us a profit of $50. I'm not exactly sure yet until I get definite numbers when I fill out the refi application. I'm also not sure exactly how much would go to principal yet, I'd imagine more than $200 per month, which happens now before the refinance.

From what I have been told by a mortgage consultant, I don't think we would have a problem finding a lender; they assume we would be renting or selling that property and consider it a non-issue. I have also heard that we could go through a credit union that does not follow the standard guidelines that conventional mortgage lenders do. I do wonder if both of those statements were correct.

Right, our townhouse's value has declined over the past 5 years while we have owned it. I am finally eligible to refinance under the DU refi plus. We could sell right now, but for $35k less than the price we purchased it for, and we would have to pay $10k out of pocket if we went with a realtor to sell it. That is why I am avoiding the sale currently.

We would like to move into a single family home, maybe within the next year or 2, since we have our first baby on the way. When we do move, I am thinking my best option is to hold this property at almost break even until the value increases significantly, then sell, or even continue renting it until I am tired of it.

I guess my main question is - does it make sense to put down even more cash during the refinance now, if the ultimate goal is long-term rental?

I'm thinking that the furnace, ac, and roof are original (20 yrs) and need to be factored into my maintenance costs. Putting an extra $10k or more down would shrink my maintenance budget, so I am thinking about avoiding the cash down. I just want to make sure I'm not making a silly mistake in thinking this way.

Thanks for the advice Bill.

Hi everyone,

First, I want to say thanks for taking the time to read my post, and I appreciate any advice you can offer.

I currently own a townhouse that was purchased during the peak. We have lived in it as our primary residence for about 5 years. Instead of selling the townhouse now, and taking a loss ($35k less than we paid for it), we have decided to refinance and live here for a bit longer. I'm thinking about the future and the potential to turn it into a long-term rental, or go with a lease option.

If I decided to turn this into a rental, do you think I would be better off putting an extra $10,000 - $20,000 now during the refinance so that my monthly cash-flow would be greater? Otherwise, without that extra cash down, renting it during the low market would have me breaking even each month or MAYBE gaining $50 each month. I realize the additional benefits of gaining equity, tax deductions, and appreciation, but it just seems rough to break even on the rental. Putting down an additional $10,000-$20,000 upfront on the rental seems like a bit much though for a $100-$200 per month gain. When the market starts to come back I know I'll be able to increase the monthly rental income. Should I just rent to break even for a few years until the market turns around a bit?

The refinance is another 30-year fixed (we have about 25 years left on the current mortgage), which reduces our monthly payment by about $400 per month. This is what would allow us to break even. I have read that it makes sense to go with a 30-year if your plan is to rent.

If I went with a lease option, I realize I could take an initial payment and increase the rent slightly, but would I be making a mistake potentially selling the house after 2-3 years in only a slightly better market? I realize that most folks don't actually follow through with the purchase option, but I think I'd rather start to build a portfolio of homes and bring in some monthly income long-term.

I'd like to get involved with real estate investment, and this feels like an opportunity to turn a loss into a long-term gain, while kickstarting my investment career. I do work full-time and plan to continue that while getting involved with real estate on the side.

Hopefully that makes some sense, I can clarify anything that might seem confusing.

Mike

Jenkins Ramon Much obliged.

Brandon Turner Yes, I love podcasts, so I thought it would be best to start there. I actually Googled "best real estate podcast" and BP was the first link. I then searched iTunes, checked for reviews, and gave it a chance. You guys make it very accessible and realistic. I probably would have never joined the community without hearing the podcast first – I think it helps remove a potential barrier for some people. Thanks for the resource recommendations.

Hi everyone,

My name is Mike, and I'm a new member from the south jersey area. I have found myself in a predicament with the current market and subsequently I am interested in long-term real estate investment. I have been considering ways of generating passive income in the world of technology, I work full-time as a systems administrator, and I had never taken real estate investment seriously until my wife and I decided that we wanted to mov recently. The BP podcast is great, I've just listened to a few episodes thus far, and it seems that the community here is excellent

My wife and I purchased our first townhouse just after the peak of the marke and we are now considering the possibilities of refinancing, renting the property, doing a lease option, living here for a few more years, etc. This way we would not be walking away from the money we have already paid into our townhouse by trying to sell in this market.

I plan to write up strategies for each of the options and work through the numbers to do what is best for our current situation - but also to get involved with real estate investment long-term to gain financial independence and build supplemental income.

I'll probably post in more detail about this outside of the new member section. Thanks for reading this, and thank you in advance for any advice you might provide. I hope to meet some knowledgeable and successful folks on BP!

Mike