All Forum Posts by: Nicholas L.

Hi @Juan Orozco got it.  I'd say that loan paydown usually creates equity.  If you're in a market where home prices are falling, equity creation will be slower than in a market where they are holding steady or rising.  So again, it just all depends on the market and the deal.

Hi @Juan Orozco this is a great question.  I'd revise what you said a little - cash flow is actually your TOTAL income minus your TOTAL expenses.  Your rental income might come in every month - a check from your tenants - but your expenses might be "lumpy" in that you'll have a major repair once a year, a month of vacancy after tenants leave, etc. The key is to make sure you're actually calculating your net income after ALL expenses, and not just PITI (principal interest taxes and insurance). PITI dramatically understates the total cost of owning a rental property.

Depending on financing, expenses, vacancy and whether or not you're able to raise the rent, your cash flow might or might not increase each year.  It could decrease one year, and go up the next.  It all depends.  If you've financed a property, it likely will go up dramatically after the mortgage is paid off (for example, if you're on a 15 year mortgage, in year 15 + 1 month you no longer have principal and interest - but you absolutely still have TI and all other expenses to pay.)

There are lots of great threads on BP about how to segregate your rental income - for example, into different bank accounts - and also how to calculate your total cost of ownership.

@Luke Dilorenzo I'm confused, were none of the families willing to sign 12-month leases?

Hi @Nicole Putnam who is "he"?  What does your lease say about frequent overnight "guests"?  What exactly does the lease say about vaping?  How did you deliver the "reminder"?

Hi @Brittany Washington Question 1, what does your lease say and what do the relevant laws say?  Question 2, I have one tenant who pays through Zelle and another who pays through Zillow Rental Manager.  Both are free for ACH and work well for me.

Hi @Dan V. I haven't purchased insurance for the exact situation you're describing before, but this seems reasonable to me for builders risk; I'd try to get 1-2 more quotes so you can compare across insurers.  I have purchased vacant home insurance before when not flipping but when getting ready for tenants, and it's generally extremely expensive, I had one policy that was about $300 a month for a SFH (we only carried it for 6 weeks and then switched to landlord.) Here's an old but relevant BP thread on this topic:

https://www.biggerpockets.com/forums/67/topics/72454-insurance-on-flip-property

Hi @Helen Zhang the short answer is yes, loan terms will vary depending on whether you purchase the new house as a primary residence, second/vacation home, investment property, etc.  Terms will be best purchasing as a primary - lenders will work up a comparison if you want to see different options.

Hi @Pam Holbrook are you financing the purchase, or purchasing in cash?  I think you're going to pay more than $2500 in closing costs, and then you'll have holding costs during the rehab and a second round of closing costs if you refi.  Is the $1100 a month an estimate, or based on actual rental comps?

Hi @Mike Geier - are you working with a real estate agent?  They can pull comps for you.  If comps don't support a starting sale price you're happy with, set it higher and see what happens.

Hi @Pete Jimenez you're going to pay (1) closing costs for the cash purchase + (2) holding costs while you rehab + (3) closing costs when you re-finance; doesn't mean you shouldn't do it, just that you will have potentially significant out of pocket costs in addition to the money left "in the deal."  See what your cash-on-cash return would be.