All Forum Posts by: Nick Wehrley

@Jeff S. Hey Jeff, the area is filled with homes 500-800 sqft and obviously bigger as well. It wouldn’t be an issue at all fitting in. I’ve frequently been driving for dollars scoping out this size range.

As for the land, with some looking around and a possible off market deal, with time I’m confident I could find an R2 lot for relatively cheap compared to the build. I’ve researched a good number of R2 lots selling for $10-30k that aren’t wooded

I have a 4/2 1550sqft rental (1945 build) that I’m considering selling to potentially build two 2/1 ~700-800sqft houses. My first rationale is the smaller homes will attract the type of tenet I’d prefer compared to the larger home I currently own which would be larger families. Turnover, in theory, should be cheaper as well.

The current rental cash flows ~$400/mo. If I were to sell and build the two smaller houses, I could likely fund them enough from my gains on the current rental (and a little out of pocket) so they also cashflow ~$300-400/mo each.

So, at the end of the day It’d be a wash or a little loss, cashflow wise, on one house and I’d gain ~$300-400/mo on the other house. Of course, I’d be using the equity I’ve gained in the current house so I wouldn’t have that anymore, but do not see any issues with the new builds appreciating as this is a rapidly growing area.

I’m looking to discuss any pros/cons, faults, suggestions to this plan.

I have a 4/2 1550sqft rental (1945 build) that I’m considering selling to potentially build two 2/1 ~700-800sqft houses. My first rationale is the smaller homes will attract the type of tenet I’d prefer compared to the larger home I currently own which would be larger families. Turnover, in theory, should be cheaper as well.

The current rental cash flows ~$400/mo. If I were to sell and build the two smaller houses, I could likely fund them enough from my gains on the current rental (and a little out of pocket) so they also cashflow ~$300-400/mo each.

So, at the end of the day It’d be a wash or a little loss, cashflow wise, on one house and I’d gain ~$300-400/mo on the other house. Of course, I’d be using the equity I’ve gained in the current house so I wouldn’t have that anymore, but my current focus is cashflow, anyway.

I’m looking to discuss any pros/cons, faults, suggestions to this plan.

@Chris Seveney Single member LLC and hadn't turn any receipts over to CPA during the course of flipping it

@Nicholas Coulter Yes, I'll have to reach out to him on this as well. Just didn't know if anyone has run into this before. It is a single member LLC and I hadn't turned any receipts over to my CPA over the course of flipping it yet, so depreciation hopefully shouldn't throw a monkey wrench in there

I purchased a house in September 2022 with the intention of staying a year then moving onto the next. I've ended up staying here for an additional year and now in just over a month I should be capital gains exempt if I were to sell due to the 2 of last 5 years rule. But since this wasn't the initial plan, I already placed the home in an LLC about a year ago, will that prevent this rule from being valid?

Quote from @Caleb Brown:

Quote from @Nick Wehrley:

Quote from @Caleb Brown:

Rick has good points. I would try to keep if you can. That interest rate is a gold mine and over time this property will get better. I know PM's are scarce but maybe chat with others. What you mentioned are normal things so PM doesn't seem bad from your points. Did the tenant get evicted when they didn't pay? 1 month for a turnover isn't unrealistic depending on what's needed. 

3 years the property should have appreciated so you do have equity. I'd say chat with some agents to get a feeler on activity then run #'s. I would first see what's out there to weigh your options. If your property will beat out buying a new one then keep. You could try to tap into the equity by doing a line of credit or worst case refi if you wanted to buy another. 

Tenet didn’t get evicted, just got behind on rent then bounced once their contract ended. As for the PMs, they have been a struggle - consistently don’t pay me until I remind them, poor communication, etc.. But, I’ve yet to find better in the small town. 
If I were to sell, the money would go directly into more properties. However, I do think I’d be hard pressed to get that kind of cashflow. Possibly if I went STR. 

 Hmm. Any chance to self manage? Being in a small town that kinda stinks but there might be another PM close enough. Hard to beat that cashflow and rate

I don’t have interest in self managing given it’s multiple states away. I’ll definitely research for more PMs but last time I did there were only two within range. The one I’m with and one that did a no call no show on me to walk the property lol. 
A property with a little less cashflow could turn out to be more returns if more consistent. 

Quote from @Bjorn Ahlblad:

Sell a property that is showing any amount of CF and has a low rate mortgage? Not a chance! Don't overlook potential tax benefits and appreciation.

I’m with ya on that mindset. It shows cashflow but only sometimes is. I understand appreciation is there but it is a small town so it’s not crazy and I am more in the cashflow game currently

Quote from @Caleb Brown:

Rick has good points. I would try to keep if you can. That interest rate is a gold mine and over time this property will get better. I know PM's are scarce but maybe chat with others. What you mentioned are normal things so PM doesn't seem bad from your points. Did the tenant get evicted when they didn't pay? 1 month for a turnover isn't unrealistic depending on what's needed. 

3 years the property should have appreciated so you do have equity. I'd say chat with some agents to get a feeler on activity then run #'s. I would first see what's out there to weigh your options. If your property will beat out buying a new one then keep. You could try to tap into the equity by doing a line of credit or worst case refi if you wanted to buy another. 

Tenet didn’t get evicted, just got behind on rent then bounced once their contract ended. As for the PMs, they have been a struggle - consistently don’t pay me until I remind them, poor communication, etc.. But, I’ve yet to find better in the small town. 
If I were to sell, the money would go directly into more properties. However, I do think I’d be hard pressed to get that kind of cashflow. Possibly if I went STR. 

I have a long distance SFH that cashflows about 500-600/mo on paper and have owned it for 3 years. This thing should be a machine but the PM always seems have something come up that causes me to not cashflow. I've been negative for the past 6 months.

- Previous tenet skipped out on last months rent
- There was a turnover but that only took a month. 
- New tenet fees 

- Small toilet leak (should’ve barely changed things)

After those bullet points, no explanation for low cashflow. 
This was originally meant to be a flip but decided to keep it before looking into PMs and there aren’t many options. When is it time to call it a day and sell a property that should be killing it, but just isn’t? 
I'll still come out with a good profit, but to sell a, sometimes, high cash flowing SFH with a 3.75% rate also seems crazy.
TIA!