All Forum Posts by: Colin Reid

I have an issue and I'd love to hear your ideas.

I bought a rental back in June. The home inspector warned that I would probably need a new air conditioner in the next few years, so I planned to start saving all my cash flow as soon as I got tenants in. It took a few months to get it rented, but my property manager got a military family to sign a lease before they even arrived in town based on the video tour and pics.

On Sept 10th, the day before they arrived for the walk-through, PM goes to let the cleaning lady in and the HVAC is blowing warm air. He calls me, and we filed a claim under the home warranty. The tenants can't stay there because it's over 80 degrees inside, so I'm pro-rating next month's rent for every day they can't occupy the house. They haven't asked me to pay for their hotel yet, but their "house hunting leave" runs out on Monday by my math, so after that the Air Force stops paying for their hotel.

The warranty company only deals with one contractor in town and those guys dragged their feet for 3 days before sending the bids to the warranty company. The warranty company tried to offer a $500 "buy out." I called and they said that's all they're paying for. That means just to repair this ancient unit is going to cost me $1000 out of pocket. To replace and upgrade, which is the proper solution, would be over $3,000. That's a tough pill to swallow when I've only received a half-month's worth of rent, and I'm only going to receive, at best, 20 days worth next month.

Right now I just want the thing fixed and my tenants in before they decide to find another place. So I'll pay for the quick repair.

I know this problem isn't going to be solved by the bandaid we're putting on it, so I'm looking to get creative for the future.

I have heard on the podcast that some landlords will buy appliances on sale to have on-hand when something breaks. Can that be done with an air conditioner? Is there somewhere I can buy a unit, maybe put it in place myself and just have the HVAC contractors do the installation? Would that be significantly cheaper than just going through the HVAC contractor?

Another idea I had was buying a handful of window units for emergencies like this. If the main AC craps out, I could run them over, hang them in the windows as a stop-gap until the proper HVAC repair can be done. I will lose at least $400 in rent because of this little debacle, which would pay for a few small window units, or one big one that could cool half this house.

Since it sounds like the warranty company will never fully replace this AC unit, would it make more sense just to bite the bullet and pay to replace it?

Thanks in advance!

I bought my first rental as my first primary residence. I took 6 months to get to know the area while renting myself, then bought my first home. I didn't even consider REI at the time other than as a roof over my head. A few years later, when I got orders to move, I turned it into a rental, and bought another home, which I live in now.
I just bought my first "deal" about a month ago, which I have no intention of living in myself. That one took a few months to find, once I started looking. I worked with the same realtors I bought my home with, and they are investors, too. They knew what I was looking for and didn't waste my time with properties that weren't potentially good investments.

I'm rolling my 06 Frontier. I bought it new, and it's paid off with almost 100k on it. I bought it in college with USAA's "Lieutenant Loan." Now I'm looking for more of a "big boy car." I plan on keeping the truck and always having a truck. I've been putting the payment into savings since I paid it off.

The issue is the credit report. I'm getting ready to close on my 3rd property, including my residence. This will be my first true investment, and once it's rented I'll be cash flowing about $400/month. I obviously don't want to have a brand new car loan just before I close on a mortgage. So the new car is waiting for this deal to close, at the earliest.

I'm looking at a new Trail Premium or Limited Edition Toyota 4Runner. It will be the most expensive vehicle I've ever owned, by about $20k.

I understand if that's what they're asking. It's not a problem, just not what the lender asked for. I'm also trying to avoid unnecessary work where and when I can.

This won't be my only deal while I'm in the military, just the first. If this is a standard request from lenders, I can lead it next time and have it ready.

Craig,

Thanks for the quick reply. We are all clear on the conventional loan. I even told her about the trouble with the VA website and she included me on some traffic around her office with some coworkers who are "sharp on VA." The consensus seems to be they need a VA letter or a letter from my Commander. I reminded her it is a conventional loan and she told the email chain that it's a conventional loan. She said she needs it to "verify benefits" and "for the file." I thought we were also clear on the fact that it's an investment, not a residence.

Does she need to verify something about my other two mortgages (both VA loans)?

I'm in the process of buying my first true investment property. I am Active Duty Military and have used my VA Loan twice for my first two homes. This time I am using a conventional loan, since I have no intention of living in this property, only renting it. The lender is asking for my Certificate of Eligibility from the VA, but I don't understand why. I'm not trying to use any VA benefits.

I have been searching for my first real investment property for a month or so. I have a rental property already, but it was a combination of luck and being too lazy to sell my former residence that has that one cash flowing. This is my first property that I am buying expressly as an investment.

Once my mom, who is a realtor, kinda threw me in the deep end and referred me to an agent, it kind of forced me to start looking at properties. Without her, I would be one of those people who learned forever and never actually invested.

My agent and his wife (also an agent) are investors, so we were on the same page from day one. I told them my criteria; SFH, 3/2, in two specific school districts. I decided on these criteria for a few reasons. First, that is the area and the market I understand and I'm comfortable with. I only want to own properties that I would be willing to live in. I also know that most renters in my area are very similar to me in demographics, and these two school districts are desirable. People really do choose to live there based on the school district, and avoid other areas for the same reason.

So we looked at 10 or 12 properties on my days off. I took lots of notes, and my realtor works with the HOLD worksheets from the Keller book, [i]HOLD,[/i] so he supplied those with the listing sheets. My mom is a Keller Williams agent, my realtor is with KW, and I've been reading [i]HOLD[/] and [i]Millionaire Real Estate Investor[/i], so I am familiar with the sheets and it was really convenient using the same analysis method as my realtor. I would go home afterwards and put everything up on a big whiteboard to analyze. We finally found a home that met my criteria, and was actually a rental before. It needs mostly cosmetic work, and only a bit of that. New roof, new appliances, new plumbing, and fresh paint already done.

The sellers listed it at $149,900, reduced a few weeks later to $147,00, then finally to $142,500. I offered $125,000. Seller was offended, which told me I did it right. They countered $139,900. I countered $135,000 (my original target price). Today, I got the call from my realtor, that after another counter-offer or two, I got the place for $136,500!

I gotta put about $2-3k into it, which I'm going to do with a buddy (also an investor, with his wife) but in 2-3 days after closing, it should be ready for tenants. I'm planning to pay my friend in pizza and beer for the help. Should be able to cash-flow $150 in the first 6 months, worst case.

I'm just excited that I have my first "deal" under contract! I've been inspired by reading a lot here, my fellow investors in my area, and listening to the podcast on my way too and from work every day. I really wanted to share this first step with the BP community!

Thanks!

Colin

I am an Air Force pilot, and honestly I may not have even considered REI if I wasn't in the military, and moving so often. My mother is a realtor for KW and she and my dad are both CPA's who met in accounting school, but not real estate investors. I've been around the real estate business for 15-20 years, since my mom got her license.

Another guy in my unit (haven't found him on BP) is into REI and told everyone about it. I was skeptical at first, but then I got orders and, frankly, didn't feel like getting it ready to sell. He told me he could rent it for about 25% more than my payment, and he'd take 10% off the top. Done!

After changing my insurance policy to a rental vs owner-occupied, I'm cash flowing about $50/month, renting to a couple from my then unit. Great tenants, decent management. I got lucky turning a home into a rental.

I bought a great house (maybe not a great investment, but a wonderful home for me) at my new base. My plan at the time was buy a home at every duty station and eventually have maybe 3-4 properties with equity I didn't pay for.

During my recent deployment the news came out that the Air Force is cutting personnel in a big way. I'm not vulnerable this time, but in the early days we didn't know that. I started looking at other ways to secure my future without depending on the military. Chatting with some of my peers, I decided to learn more about REI. I called my mom and she quickly sent me HOLD and The Millionaire Real Estate Investor. That was about 2 months ago.

Now I'm shopping for a first true investment. Unless I find a better property in the next few days, I'm planning on making a low-ball offer on a SFH in my neighborhood (invest in what you know, right?) for about 20% below asking price, with 25% down on a conventional loan and cash-flowing about 45%.

DIY is not an option, beyond hiring a lawn service, perhaps. This will be the first investment in my local area, but I'm military, so that can change at a moment's notice. For the next few years, at least, all my investments will be handled by a property manager. I simply don't have the time or the flexibility in my schedule.

Is there a way I can make sure my manager screens tenants up to a certain standard?

I'm just getting started in investing. I have a rental already, but I'm shopping for my first property that I'm buying expressly as an investment. My current rental is my last residence.

My realtor showed me 5 houses today. One was right down the street from a friend of mine in a very nice neighborhood. I texted my friend to ask about HOA and/or covenants (there are none, thankfully) and he said, "don't be [buying rentals] in my neighborhood if that's gonna drive down my property value please."

We discussed it a bit and he's under the impression that renters don't care about the property, trash the place, and hurt property values. He said that he and his wife chose the neighborhood partly because there were not many rentals. I have no idea how he knew that, but he said so. Apparently, a few other properties on the block got rented out and lots of owners weren't happy about it.

Much of what he said sounds like hearsay, not based in evidence, but is there any truth to it? I don't expect it will factor in to my decision to buy or not buy that property, but I am curious.