All Forum Posts by: Nate Huber

I believe I'm in the right forum here... I have two questions. (1) Based on my goals and the information below is my home worth renting out, and (2) If not, can anything be done to improve the numbers and situation?

Goals: Cash flow would be great (of course), but I'm primarily interested in this house as a long-term investment and addition to my portfolio.

Background: I'm new to property ownership. I own and live in a 3 bedroom, 2 bathroom ranch in a desirable area suburb of Charlotte.It's my primary residence and only property. I purchased it 2.5 years ago at $275,000, interest rate, 3.88%. I've had a lot of property appreciation (about 140%). I would like to rent it out within the next two years or so and move into a larger house for my family. 

I've used a few calculators and arrived at these annual numbers...

Net Rent --- Annual Rent $23,472 (Based on Zillow) - Vacancy (26 days) = $21,800

Property Taxes $1,925
Insurance $1,288
Maintenance (8%) 1,744
Property Management $981
Leasing Fees $978

Total Expenses $6,916
Net Operating Income 14,884

Cap rate 5.41%
COC Return (before taxes) -0.54%
Net Cash Flow -$52

I know that a negative COC is discouraging, but it's borderline and my goal is long-term investing. I easily have the capital to make up for the difference. I'm wondering if I can tip the scales in my direction either through renting my place for a higher price or lower my monthly payment/expenses.

A few questions I had...

Could refinancing be a good idea? If so, how would I go about this? I'm not very knowledgable about refinancing, so please keep that in mind if you answer.

Could standard inflation resolve this over the next couple years? By my calculation, an 8% COC could be achieved with about $2,050 rent (numbers above are based on $1,956).

Thanks in advance!

Thank you all for the responses! I'm glad the general consensus is it's ok to do. To provide more context based on your answers, this home was priced higher than the high-end of the comps our realtor pulled, but this is a unique home near the center of our town so we rolled the dice a bit. The chance that it is truly over priced is a definite possibility, appraiser skill or not. I'm hoping that because of it's location, schools and proximity to the town center, it will appreciate nicely and provide a strong rental opportunity down the road. In other words, that this 5k will just be a drop in the bucket. 

And although we hope it will be a great opportunity for the future, we love the house now. It's not just about the investment for us. We have plans to spend roughly between 15-20k to renovate and modernize it, and we'll really enjoy living there. 

@Tanisha Griffith I wish but he won't budge. We've asked.

@Shaun Kelly Love to get a response from someone so close. We were the first ones in there, so unfortunately, very little leverage and I'm sure he knows that. The interest rates were of course a motivator. Had they been higher, we would have waited.

@Don Harris Thanks for the comment, Don.

@Kai Kopsch She believed from the beginning that this house might be overpriced and hasn't provided us with any other options since the appraisal came back. Should she have?

@Joseph J DiFranco There doesn't appear to be any excessive seller-paid expenses. We are going through Bank of America. Would getting a second appraisal be worth the expense? 

Hi all,

I'm a first-time home buyer. I found a home in a Charlotte suburb, Cornelius NC. We love the home and fits well what we want both home and location-wise. The issue is that the house under-appraised by $5,000. The asking price was $300,000 and it appraised at $295,000. The seller will not budge or lower her price. We also have just under $2,000 in this house between due diligence, appraisal and inspection. If we walk, we would lose that. 

My questions is, is $5,000 (less than 2% of the home's worth) really that significant? Especially considering that we already put $2,000 into the process? We plan on keep it for at least 6 years and then potentially turning it into a rental.

Thanks!