All Forum Posts by: Cheryl C.

I, too, agree with @Max T..  Making the tenant pay for repairs under XX amount or the first XX amount of any repair is a recipe for disaster.  I had a tenant once who had a tub leak with water dripping into the dining room.  He didn't call me until the ceiling collapsed because he thought he would have to pay the plumber (based on a prior rental).  Needless to say...I was shocked.  We have to educate our tenants from day one to contact us immediately with any repair issues.  And we have to inspect because those "silent" (great!) tenants can be your worst nightmare.  I had a hoarder once who never called - guess why?

Thanks Bill Exeter and everyone else.  Yes, I have some cash sitting around and want to pay-off the mortgage now - before I sell and 1031.  I can always put a mortgage on a property later.  I've just been through some tortuous refi's and I don't relish going through the loan process again.

@Joel - Thanks! I've got a good intermediary and know not to touch the cash!

Underwriting is completely over the top.  And the Underwriters don't seem to know what they even need - so they ask for everything including the kitchen sink.  Last year I went through a four month ordeal when I refi'd 10 loans with my Commercial Bank of 20yrs (800 FICO's and 35 yrs with the same employer!).  The most ridiculous requests for explanations and additional documentation that you could imagine.  And we have w-2 income sufficient to qualify with zero rental income.  I had to supply all leases and explain the month to month tenants - they weren't going to count these.  I guess the 2yrs of tax returns is insufficient: yeah, I inflate rental income!.  Liquid assets are sufficient to pay off all debt tomorrow.  I "lost it" a few times on the Underwriter.  Seriously, they don't even understand the new regs and do not know what they need.  "Where did the money come from on the account you opened 8 months ago?".  What?  You have all our current bank statements and brokerage accounts  -  I told the guy that I robbed a bank.

I am planning to sell a property and 1031 in to 3.  I currently have a loan on it.  It's my understanding that I have to spend all my net, buy properties that, combined, exceed the sale price of my current property, and take on as much debt as I am paying off.  Is this correct?  I haven't done a 1031 in a number of years and don't know if anything has changed. 

Is it still 45 days (after closing relinquished) to identify and 180 days to close?  Can I go ahead now and use cash to pay-off existing mortgage and NOT have to take on new debt?  Or, is there a waiting period?  I am very tired of doing mortgage apps and would rather pay cash at this point in life. 

Doing this will free up dead equity and allow me to triple the cash flow of the original property.

Thanks for any info!

I had to drag my husband in, kicking and screaming.  It's important to understand the background and risk tolerance of your spouse.  My husband grew up in a family that barely got by and he is risk averse - really, how could he not be?  His parents didn't invest in anything (intelligent - but no "vision").  My background was very different.  My mother owned rentals and I spent my teenage years painting and cleaning her apartments.  The part that I enjoyed the most was going with her to look at potential acquisitions.  After the first few successes, he was on board ( we started buying rentals at 23 yrs old).  It did take about ten years to earn my freedom to buy whatever I wanted without consulting him.  He used to tell his friends that whenever he went out of town for a few days, his wife bought a house.

I handle all the real estate (buying, selling, tenants, loans, etc.) and that's fine. I don't really like someone looking over my shoulder. He has his job and I have mine. About 7 years ago, he took the plunge himself - forming a Hotel Company (his longtime profession) and buying 4 large Hotels with 4 partners and forming a management company; all in addition to his full time job as a high level Hotel Executive. So he now has the balance of a solid W-2 job and the satisfaction of being an owner of a significant commercial business. Although I am very happy for him, I'm actually a little jealous. They got in at the bottom and his equity has surpassed mine! I guess this is a good thing! Due to REI, money has not been an issue since we were 28.

We are now in our mid-50's and life is very good.  Fast approaching 35yrs of marriage (we were kids).  A paid off Winter home and a paid off Summer home - now, if I could only get him to take a day or two off here and there and goof off with me.

Ben, I've been thinking of getting out as well.  I'm actually mad at myself for putting a new tenant in place last week.  The thing is, that I go through this periodically and the desire to sell everything usually passes.  Plus, thinking about the tax hit hurts my brain.  Lately it seems that I've had one pain in the neck thing happen after another - just plain sick of it.  I think I will start selling as the leases come up.  I'm thinking that I will invest for yield - dividend stock, hard money and muni's (as someone suggested).  I may carry some paper.  I'm really bummed that an assistant that I hired 6 months ago isn't making the grade and I can't just turn operations over and spend the winter in FL and the summer at our beach house.  I should have fired her months ago (stupid, stupid, stupid!).  I only have 20 or so properties but have been a LL for 30yrs.  Time to pick up some enjoyable hobbies and walk on the beach.   Looks like I've convinced myself!

As a long-time Naples LL, I would suggest that renting is by far the better alternative to buying.  My tenants pay far less than the cost to own and I'm talking "seasonal" renters (3-6 months).  There may still be a window where buying makes more sense; especially if you buy a property that does not have rental restrictions - many Europeans come for a month or two during the summer.  I've been lucky and have had the same (great) tenants return for up to 10yrs.  I have 3 places in Naples and would be happy to discuss this further.  PM me if you like.

Good topic.  I agree with, and relate to, many comments.  Personal Finance should be taught in school and integrating these concepts into other courses is an excellent idea (btw - having the word "rich" in the title of any required text will never fly, imo). I took a Pers Fin class freshman year in College (I was an econ major) and learned some good stuff.  I was happy to see that it was still offered when my son enrolled in the same school.  I insisted that he take it.  I was very aware of my parents financial and business activities from a young age - I'm quite sure that I knew much more than they were aware of!  I was around 16 when I first calculated my net worth.

I shoveled snow (I actually looked forward to a big storm and was up at the crack of dawn with a shovel on my shoulder and wasn't back home until dark), cut grass, raked leaves, etc.).  Why?  I wanted movie money, PF Flyers, records, clothes, a sting-ray bike, etc.  At 12 I started a bait stand on the road above our cottage (my mother helped set it up) because I loved to waterski and needed gas money.  I spent summers painting and cleaning my mother's apartments for 50 cents an hour.  I had saved-up (I was never "forced to save" and have doubts about that tactic), and bought my first car two weeks after I turned 16.  I have a point to make here:  none of my siblings did any of these things.  Guess who has financial success?  One lives paycheck to paycheck.  Same parents.  Same education.  "Nature" plays a big role.

Despite my best efforts, my son has no interest in RE.  I did find him an reo which he bought at age 20.  I can't blame him if he is not interested; different strokes...  I am a Hall of Fame athlete at my Ivy School.  My son has the genes but never had any interest in sports.  He likes to read.  Again, out of my control.  I can say that he handles his finances very well and excels at his job. He maxes his roth and 401, saves and invests.

Financial illiteracy is a huge problem in this country and should be part of basic school education.  Sure, it should be a parental responsibility - but, as has been pointed out, the kids that need it most are unlikely to have parents capable of any contribution. 

I've thought a little more about this from a "newbie" standpoint.  My first consideration was always - can I get out of this tomorrow without losing money?  The answer had to be yes.  I could fire-sale this thing tomorrow if my situation required it and come out whole.  All of the other factors (location, cash flow, etc.) are very individualized and vary greatly.

@Account Closed 

I have an agent/broker that I work with and his rep. is on the line too.  Even in what may seem a large metro area - people know people.   And they remember.  I just don't think I'd get too many places UC after a few re-negotiations and I'd definitely need a new agent!