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All Forum Posts by: John Lee

John Lee has started 4 posts and replied 36 times.

Post: Nest Thermostat

John LeePosted
  • Santa Ana, CA
  • Posts 39
  • Votes 54

Anybody try the ecobee thermostat? It works like Nest but has additional sensors you can place in separate rooms. Interested in this one more than Nest.

Regarding WiFi, if you have Verizon, you can add-on their Home Internet and Phone device (MyFi), which runs off your voice and data plan. It costs $20/month additional on your current plan, and I got a promotion where a 2-year contract makes the device free (plus taxes). If you want to offer WiFi through your tenants, just know that they will be using data on your plan (I have 30gb per month, so not as big of an issue unless they are streaming movies/gaming 12 hours a day).

Post: Leveling Bedroom Floor (many high spots)

John LeePosted
  • Santa Ana, CA
  • Posts 39
  • Votes 54

Everyone has chipped in with a lot of solutions. Key is just to get the floor as level as possible. We spent more time prepping the floor than anything else (renovated the whole house, 2br/2ba). It previously had creaky, cheap laminate flooring that was laid on top of the uneven adhesive. After leveling and laying thicker laminate (bedrooms and living room) and luxury vinyl plank (kitchen and bathrooms), it was a night and day difference. The level floor makes the material feel much more sturdy and of much higher quality.

I would use the floor polisher/adhesive remover (posted the link, it was the second link in my first post). Although, I do like @Kyle Foster out-of-the-box solution of just laying down 1/4" plywood to both level and ease the transition to the tile. Just make sure the plywood is lined up well with no seams, otherwise if you get a joint in the vinyl lying on a gap in the plywood, you will get movement in the planks and possible separation.

Post: Leveling Bedroom Floor (many high spots)

John LeePosted
  • Santa Ana, CA
  • Posts 39
  • Votes 54

Regarding the thinset, I'd go with a more heavy-duty rotary grinder. I walked into the Home Depot tool rental department and explained what i needed and they guided me to the right attachment. It's diamond coated, has a few more blades than the link I posted, and the blades are thicker. Used to remove excess concrete, mortar, etc. Just be sure to use it with water or a vacuum attachment (it creates a huge dust cloud otherwise -- know this from experience!).

For tile to vinyl -- you would likely need a reducer molding. Vinyl is one of the thinnest flooring choices (although it is pretty sturdy). It will sit lower than the tile, so molding like this would work:

They didn't have this type of molding for the vinyl plank that I used, so I just chose an equivalent laminate floor color and got the molding for that.

If the tile and vinyl are close to the same height, you could just use a T-molding. Also, I have seen people just use grout or caulk and it turned out OK, as long as the level change is not too extreme.

Post: Leveling Bedroom Floor (many high spots)

John LeePosted
  • Santa Ana, CA
  • Posts 39
  • Votes 54

Vinyl flooring is thinner than laminate, so just foam is probably not the best idea. The more level the floor, the better the results (even floor, no movement between planks). How much prep work you do would depend on how much adhesive and how elevated it is from the floor.

Recently did a house with part laminate, part vinyl, and we leveled the whole concrete subfloor (had lots of adhesive from carpets and some thinset/mortar from old tile).

For the adhesive, we used a floor scraper (cheap tool that looks like a rake but with a blade that you attach to the end). Used the scraper to get the biggest spots. Then we used a rotary scraping attachment that we attached to a hand drill, something like this:

http://www.homedepot.com/p/Forney-4-in-x-1-4-in-Hex-Shank-Coarse-Crimped-Wire-Wheel-Brush-72739/206472317

It was a little thicker than that -- worked great but it was back-breaking work using it with a small power drill. We were doing a rehab for my mom so budget was minimal (probably cost $40 to do 1000sqft, but cost did not include a lot of tough, free labor from me). If I had to do it again, I would have rented something like this:

http://www6.homedepot.com/tool-truck-rental/Coating_Removal_Disc_7/12569/index.html

You attach the grinder to a stand-up floor polisher. Makes the work a lot easier.

By the way, if you have any concrete or mortar you have to break up, you'll need a diamond-coated concrete prep tool (they have some cheaper ones you can attach to a small drill, or you can use the same polishing tool with a larger attachment to make the job easier).

Originally posted by @Red Peterson:
I will post another question relating to acronyms in REI (just like that) that I am not familiar with. I try to make out what SFR, SFH, PTR, PITI, BRRR and many more but I'd rather ask and find out what they mean than pretend to myself that i know them. 😅

SFR = Single Family Residence
SFH = Single Family Home (pretty much same as SFR)
PTR = Price to Rent (as in 2% rule = Price to Rent ratio is 2%)
PITI = Principal, Interest, Taxes, Insurance (If your mortgage payment is impounded, these are all the costs in your monthly mortgage payment)
BRRR (or BRRRR) = Buy, Rehab, Rent, Refinance, (Repeat)

Good and helpful points by all.

One way that I describe it to my friends who are interested in REI is that there are 5 ways to make money in real estate, and usually you are going to make a trade-off. If you want to maximize cash flow, you will probably lose out on equity appreciation. If you want to maximize equity appreciation, you will probably not cash flow well or at all (SoCal!).

5 Ways to make money in REI (from a blog post on BP, I think)

1. Equity capture at time of purchase (buy a $100k house for $70k)

2. Cash Flow (pay $1200 in monthly expenses= PITI + all expenses including CapEx, vacancy, and maintenance, BUT make $1400 in rent = net $200 monthly cash flow)

3. Equity appreciation (buy a $100k house and 2 years later, it is worth $135k)

4. Tax benefits (depreciation, Real Estate Professional loophole, interest deductions)

5. Principal pay down by renters (your renters are paying off your $75k loan to $0 over time)

#1 - #3 usually involve trade-offs.

If you buy an out-of-state, cash-flowing, turnkey rental, you can realize great cash flow but you are likely overpaying a little (no equity capture) and will likely not see great appreciation. If cash flow is important to you, then this is a great investment.

Most people consider SoCal and NorCal an equity appreciation play. Cash flow may not be realized, but many count on their property going up, possibly doubling or more in value. This has been realized in the past, even in recent years, but most see right now (mid-2016) as not a good time for that kind of play as prices don't have much more room to go up. Critics of this argue that you can't predict the future, but there is no denying that people have made a ton of money over the years in CA and similar markets through appreciation (esp post housing crash).

Flipping is obviously not about cash flow or anything else, but equity capture at time of purchase.

BRRR combines equity capture, cash flow, and possible appreciation, so it has gotten a lot of interest, esp in the BP world. It's like flipping a house and selling it to yourself (financed through a bank who pays you for the house), then renting out the house w/ positive cash flow. Sounds great, but not as easy to execute (although not impossible as many are doing it).

If you find a house that you can (1) buy for 70 cents on the dollar, (2) cash flows $1000 per month with great tenants, and (3) is in a great appreciation area in an A or B neighborhood, then you've found the holy grail of real estate! Let me get a piece of that deal!

Being in Southern California, there is almost no chance you will come close to the 2% rule, especially for a SFH. This rule is far more likely to be achieved on a $30k house (requires only $600/month rent). There are a lot of places in the US that have houses like this, but many are in C or D neighborhoods. A lot of out-of-state turnkey companies get close to this 2% rule, but the risks are higher (vacancies, unexpected repairs/damages, evictions).

I've seen it often stated as the 1% rule in many areas, especially in better neighborhoods. However, in SoCal, you still only achieve that 1% rule in multi-families, not in a SFR.

Post: Starting out- Go big or go home?

John LeePosted
  • Santa Ana, CA
  • Posts 39
  • Votes 54
Originally posted by @Michelle Melchione:

It could be because I'm on my cellular phone, I'll try from my desktop later. What are lease options and how do they work?

Think of lease options as like a rent-to-own strategy. You set up a lease contract with an option to buy after a specified length of time. You can specify the amount you will purchase for and the length of time, and you have first right to purchase then. Your lease payments will go toward the purchase if you decide to exercise the option. If you do not exercise the buy option after the specified amount of time, the owner can then sell the property to anyone or just keep it, but you were renting it out the whole time, so it is a win-win for everyone.

If I remember right, you can't rent to a blood relative, so the rent would not be reportable then. Rental properties will not have the same interest rates as conventional, and usually require a little more down, but the rates are so good right now that you should still get a good rate.

Maybe someone else from the forums can chime in who has direct knowledge. What are the rules for an investment property and reporting rent income for financing (if mother lives there does it qualify? what about brother-in-law?)?

@Kiran Rouzie, are you renting out the house that you have the current mortgage (with the second person)? Or are you living in that house and going to rent out the new property?

If you are renting the new property, you can take 75% of that projected rental income and claim it, although with little or no other reportable income (due to self-employed status), that may not help. If you have past experience in REI, they might take your rental agreements and use that as the income (75% of it at least). If not, then they will take an rental average for the area and use 75% of that.

Regarding partnerships, it's just about finding the right person. My criteria is the person needs to NOT be looking to purchase a house in the next 5 years, have a low DTI ratio, and looking to passively invest in real estate. That's where I come in, as I have some potential deals that cash flow very well, allowing the person to generate a passive monthly income with little to no risk (they are only risking carrying the loan and whatever amount they want to invest in the down payment). The good thing about the SoCal market, even if there is a correction and prices plummet, all you have to do is be willing to wait it out and prices will almost certainly come back up eventually. Make sure you have contingency plans or funds if the deal does not cash flow like you think it will, and at least 2 good exit strategies.