All Forum Posts by: Nicholas W.

 Well that is pretty nice.

Out of curiosity why do you plan to pay for the utilities?

Okay, Assuming there isn't any upcoming CapEx it might be okay depending on what you're long term goals are. I'm still a little fuzzy on the expenses though. The way I see it:

Rent: $1450

Mortgage: $721.50 (my numbers show $773 for $144k at 5% but regardless)
R&M: $43.50
Vacancy: $101.50
Taxes: ?
Insurance: ?
Utilities: ?
Garbage: ?

Based on your $1158 expense figure that leaves just $291.50 for taxes, insurance, utilities and garbage. Are taxes really that low there???

To start with the discount points. Run your numbers and figure out the break even point of paying the points. It may be 7 years, if there is a very good chance that you will own the property and more importantly not refinance for 7 years then you'll come out ahead. Accounting for the time value of money though I still wouldn't pay the points unless you plan on keeping both the property and loan for 10 plus years (probably unlikely.)

As for the down payment. Remember that as soon as the loan is paid of to 78% LTC (78% of the purchase price) you can eliminate the PMI. So I would say take the no down loan and if in a year you still haven't found a good use for the cash then you can consider putting it towards your principle and eliminating your PMI. Having cash will open up many doors in this industry so if you can keep it, do so.

 That makes it a little bit better, why would you be paying utilities? Also what condition are the mechanicals in? Roof, Hvac, plumbing, electrical, siding, windows. What's the age of the house?

To put it simply, no. At least not by my standards

There's not enough spread, you don't have anything factored in for vacancy or repairs or maintenance. Is this a single family house or a duplex? If it is a SFR why are you paying the utilities? Put a 5% vacancy and $50 (minimum) for repairs and maintenance and your cashflow is less than $200. And that still doesn't account for any CapEx.

My thoughts are definitely do it. It will give you the opportunity to both see if there are any maintenance issues that need to be addressed as well as decide whether or not you really want to renew the lease with that particular tenant. It's easy to turn a blind eye when the money is still coming in, but if they are doing damage or causing unnecessary wear and tear you will be money ahead by replacing them.

I'm in the same boat as you. My premiums are similar and I have a German Shepherd. Part of the motivation for me was the common issues German Shepherds have with hip dysplasia (which is covered by my particular insurer.) Although I could choose to self insure as I can afford a $10,000 vet bill but, like you, I don't ever want to have to put a price his life. The fact of the matter is if I was faced with thousands of dollars for another year it would be a very difficult decision that I don't ever want to make. Another thing to consider is that you are usually a few thousand deep in tests before finding out that a given procedure is too costly when considering the success rate. I too have considered canceling the policy but I view it like any other insurance, you're paying for peace of mind.

Take a look at the following post from last month. There is quite a bit of good information pertaining to the protection of LLC including some input from a lawyer or two.

https://www.biggerpockets.com/forums/51/topics/381974-has-an-llc-ever-protected-you-first-hand

Shay, if you get a chance pick up a copy of Garrett Sutton's Loopholes of Real Estate. I just finished reading it and he has information about putting your primary residence in an LLC. In some states under certain circumstances it can be beneficial but it has to be done just right to ensure you're protected.

 No problem, happy to help! The quality of tenant can be vital. You'll probably have more options when filling a vacancy and more importantly better qualified applicants.