All Forum Posts by: Nathan Thompson

Hi Josh, thanks for the info!  Are you a real estate agent in the area?  If so, I'd love to pick your brain on what's available out there and see if it makes sense. I'll also be in the area on the weekend of June 18th and planned to check out some listings in person. 

I have a 4BR/2BA in the Denver metro area that generates ~$2700 in rent by renting out by the room.  Bought for $380K in November 2018, but didn't live in it long enough to avoid capital gains taxes if I sold it. Based on comps, it would probably sell for between $500K to $525K. I'd sell through Redfin at 1% seller's agent fee because we bought with Redfin last fall, so I estimate 6% closing costs (not including holding costs and just need to touch up paint in some areas, but have new flooring, new roof, and recently upgraded electrical).  

I'm considering renting it as a SFH through Nomad (property management company) that can guarantee rental income for 2 years for a 5.5% fee and have given me a rental range of $2700 - $3100 ($2700 is the guaranteed floor, would be $2550 net). I can get a 3-year guarantee for 7.5%. Guaranteed rent is a minimum floor, but could go higher as leases are re-negotiated after a year.

Some numbers: 

Market value: $500K

Mortgage: $1760 @ 2.25% (VA loan)

Rental Income: $2700 / month

Cap Rate: $2700 rent * 0.5 expense ratio * 12 months = $16,200 / $500,000 market value = 3.2%

I'm considering selling and doing a 1031 exchange in one of two markets: San Antonio, TX or Albuquerque, NM. I have family and friends in both cities, so I'm in the area occasionally and would like to be able to tour properties before buying out of state. My goal would be to find a multi-family or potentially a multi-family and SFH depending on what I find.

My thought process: Cap rate is pretty low at 3.2% and I feel like appreciation will slow considerably and potentially correct as interest rates eventually rise, lumber costs decline for new builds, and homeowners start selling as covid fears subside. I think I can take some profits as buyers are overbidding (comparable home just sold for 8% over list - $40k over on a $500k home) and re-invest in a cheaper market with better cap rates. 

Long-term goal: Appreciation is nice, but my goal is to generate cash flow that can eventually replace my salary. 

Anything I should be thinking about that I'm missing? Anyone familiar with the San Antonio and/or ABQ markets that can give me their thoughts? 

Thanks in advance! 

-Nathan

Hi,

I bought a house with my ex and I'm trying to decide what to do with it now. We owe $244k, payments total to $1355 PITI + $270 HOA (includes water and all exterior maintenance, some insurance). I live right outside of Denver and comps in the last few months have been around $290 - $295k (in the same complex, exact same layout, ours should go for a few k higher).

Details: 

PITI: $1355

HOA: $270 (has increased approximately $20 per year since I bought 2.5 years ago). How do you think about HOA when you consider risk for a rental?

Top Two Floors Rent: $850 per room, including utilities.  I could possibly get $900 - $950, but that was the rate I had it at when I just had one roommate and I think $850 is a good, conservative estimate in the market, considering the number of responses I get at that amount.

Basement Rent: I could get an additional $850, conservatively, but could go up to $1000, possibly higher, if I installed a bathroom. 

Utilities: Electric is $100 per month on the highest months, so I just assume $100.  Internet is about $100 per month also, but could lower to $60 if I weren't living here.

Total Expenses: $1820

Rental Income: $1700

I'm considering a few options:

Stay here, buy-out: Continue to live here in the basement room while renting the top two bedrooms. I'm going to install a temporary shower (quoted around $700) and am considering installing a full bathroom down here ($6k for rough in and I'd do the rest). I'd buy her out for approximately $15k (we discussed buyout) and I'd have to refinance at a higher rate (4.5% instead of 3.75%), but I'd have to refi VA possibly which would cost an additional $8k. Additionally, we talked about me just staying here until next summer. In that case, I'd benefit from the low monthly expense, she would get half of any appreciation and isn't responsible for lost rent due to tenants not paying. This would allow me to save an additional $20k through the year. And I wouldn't need to refinance. We have a good relationship and trust each other.

Move, but keep as rental: Buy another house and rent out rooms separately. I think I'd get around $2550, which comes in at slightly lower than the 50% rule after utilities. I would either refinance this house into a conventional or keep the VA loan. Refinancing seems like it would make sense if I could hit 20% equity to avoid Mortgage Insurance, or is it different if it's considered a rental property now?

Rent to one party: I could probably only get $2k which makes it not worth it, because of the low cash flow. 

Sell and buy elsewhere, rent out rooms: Profit about $50k - $18k (6% or less if I negotiate a lower rate because I'm buying) split two ways, so about $16k, and use a VA mortgage again.

I'm leaning towards staying until next spring, then selling.  Any thoughts?  Mostly, to anyone that has rented out rooms separately, was it worth the extra cash flow if you weren't living there?

Thanks in advance!

Thanks Anson, amazing job on that hoarder house rehab! Wow!

Thanks James! 

Hi all, 

I introduced myself a couple years ago, but due to a career change and a planned move, never did much else.  My goal for the past couple years has been to move to Colorado for the good life of skiing, climbing, and skydiving. So, I'm finally making the move this summer after getting my teaching certification and some experience and securing a job (somewhere in Denver, hopefully west in the Lakewood area).

I'm interested in buying shortly after I get to the area this summer.  I'm in no rush, but would like to at least start learning more about the market and maybe connect with a few people before I go.  

I'm interested in building a portfolio of cash flow properties, but I'm not sure what the best area to specialize in would be. I have VA loan benefits, so ideally I'd look into multifamily, but understand the numbers don't quite work in the area. I'm also open to buying a house and having roommates cover the mortgage to get started, which is similar to what I do now in Maryland.

Long story short, I have some ideas of what I'd like to do, but like many others, am not sure where to get started.  So, here I am!  Looking forward to the move!

I have an offer in and approved for a condo in my area that I would be living in, while renting out the other rooms. I live in the DC metro area. This condo is 1157 sq feet and other units that have sold in the area sold for 145k each, with one being a foreclosure and the other being a short sale, both are about 100 sq feet smaller.

In this complex, there haven't been any regular sales in the last year. The last regular sales I've seen in these buildings was a little over a year ago and those sold for about 230k.

How would you go about valuing a property like this? Just go off the short sales? Or assume that the value is somewhere in the middle?

My intention would likely be to live there for 2 years, then probably turn it into a rental property. Possibly refinance out of my VA loan and get a VA loan on another property.

I'm currently looking for a house to buy that I can occupy and rent out the additional rooms. I'm buying with a VA loan and have been looking at some short sales and foreclosures in the area. Couple questions I have...

Does buying with a VA loan make the process much more difficult?
Will I need to get an inspection before I make an offer? I know with the VA loan the inspection requirements are a bit tighter.
I've seen mixed opinions on this, but how much should I offer to be taken seriously? If I offered 85% or so of the listing price on a home 25 days on the market, would that be looked at?
Any questions I should be asking my real estate agent that are important?

This would be my first home, so I'm not sure what exactly to ask.

The property I'm looking at is listed at $113k, with 3br (I can rent out 2 of them for $1000 a month), and there's a $90 HOA, on a townhouse.

I'm just finishing up reading Deals on Wheels and starting to look at some homes for sale in my area. I live in the DC metro area, so I'm looking in MD and VA mainly. I've noticed that each state may treat mobile homes differently.

Can someone tell me where to look to make sure I'm following the rules in each area?

I just want to make sure I'm not getting myself into any trouble. Thanks in advance!