All Forum Posts by: Patrick Perez

ALE is wonderful!! Wish I could get them to send me another tenant!! We had a rental in San Antonio ; ALE reached out to us in regards to a similar situation (fire.)

The tenant was great and we charged a higher rent since it was for 6 months.

My wife and I are building a new home as we have a baby on the way. My current plan is to rent out our current home once the new one is done.

With all the delays in building due to weather and Covid, it no longer looks like we will be able to move into the new build before baby is born.We will need to stay put in our current home(the one I was planning to rent out).

So my question is:

We still want to build the new house (about halfway done). We have already put Ernest money down as well as been approved by lender. If we are now planning to use the new build as a rental do we need to disclose that to our lender? If so, will we need to start the approval process over?? 

Thanks for your input!

Very informative, thanks!! Curious if you have any wisdom you could share as far as Kirby, TX goes? It is right next to SA. 

I just sold a unit off of Callaghan and and looking for a new rental property to invest in. Any thoughts on ROI for homes in Kirby?

Hey Curtis, thank you sharing your "Why" for getting into passive income; your journey has not been an easy one. Thank you for being open and sharing all that. A few questions to throw your way:

1) Have you applied for a mortgage yet? Approved or?

2) Have you owned a home before? Was it through an FHA loan ( 3.5 % down for first time home owners)?

When I bought my first place I was a broke college grad and scraped together some funds for a 2/2 condo. I rented out one room full-time and airbnb'd the other. If you were are to qualify and purchase a duplex that would be ideal since I am not sure how you feel with having strangers rent out a room in your home since you have a daughter. You could look into renting out a room in your home to traveling nurses since they have shorter term assignments and pay a bit more for fully-furnished housing.

Are you planning to stay in TN? Having family and community could be as much of an asset as a passive income stream.

Congrats on starting your journey :)

Thank you all for the input!! Really helps. I chewed on this all night and did decide to move forward with selling. This is a great learning lesson for me since this is the first property I purchased outside my hometown. I expected to see the same kind of returns as my other property, but my best intentions and optimism don't count against effective calculations and market rates:)

@Darius Ogloza So the $60 reflects my current HIKED rent rate... I am already pushing it to the limit. The norms for this area are about $200 less than I am renting now. A unit just listed for rent in the same condo complex as mine for way, way lower than what I would need to even maintain a -$60 cashflow.  @Dave Foster I am hoping so...from what I was reading I would have to pay capital gains on what my condo sells at vs. what I lost. It is a bit more confusing to me since I am technically profiting $10k in equity ,but will losing $3000k or so since the closing cost are basically the entire equity I had built up. I plan to use these funds for another property and it would only make sense that I could enjoy the tax deductions on the loss I acquired. @Craig Jeppesen I did counter offer; they countered with my full asking price if I covered the $2500 in closing or asked that I lower the asking cost $2500.  @Chris Svendsen Yeah, that seems to make the most since as I am taking a loss. appreciate the input! And ,yeah,  the 3% is hard earned on her end. She is my boots on the ground since I don't live in the city my rental is. I'll bite the bullet on this one and press on:) @Sam Shueh  Thanks for the input:)

Greetings BPers,

I have another post outlining my decision to sell my 2/2 condo. A majority of BPers said sell and get another property (in short it was not cash flowing as much as I expected and a few water leaks last few months led to $1500 in damage.)

We put unit on market last week and have an offer for $93k. I purchased for $83k in July of '17. My dilemma is that I will be losing about $2600-$3000 overall after paying closing cost. I put $20060 in closing and down payment when I purchased and will net apprx. $17,393 after selling and paying off note. Standing offer of $93k is the high end of comps, buyer's first offer was $86,500. 

I plan to do a 1031 exchange,so losing more money than I invested is really a set back. 

I ran my numbers again renting it out -I didn't run numbers right when I purchased it...I didn't know about BP yet;)- and here is what things look like if I keep it:

- negative $60/mth cashflow (factoring in vacancy, repairs and cap expenses)

However, since July of '17 this property has appreciated $10k (apprx. $5k/yr.) Sadly, as of now all this current appreciation will be eaten by closing cost plus some.

So,Im looking for any thoughts,advice,input,creative ideas from some more seasoned buy and hold investors. Should I keep the negative cashflow and hope unit keeps appreciating (it is a B class condo in San Antonio) or sell it, take the loss and get back in the game elsewhere?

I do see the plus sides of the property tax deductions and interest deductions,but I was wanting this to cash flow much better. Learning as I grow;)

I have thought about asking my realtor to lower her commission since I would buy my next prop through her. 

Thanks in advance!

Patrick

@Tanner Marsey This unit is in San Antonio.  The property taxes on this unit might as well make this be an Austin property though, ha! I do want to hold this property since the equity is trickling upward nicely. My desire for more cashflow PLUS the fact that my unit will be at the mercy of the tenant upstairs makes this property less desirable now. We have another property in San Antonio that is in a great area that I would like to slide this money over to (buy another unit there since they are townhomes).

@Dan H. You do have some solid input, thank you! I did not know as much about RE number crunching when I purchased this place (I mostly just saw the rent-PITI and used that number as my basis. ) Now I know the other numbers I need to be plugging in that could help me better determine investment props. At this point I don't think taking the negative cashflow would be something I would like to handle. I am looking to buy some more properties. I will chew on this a bit more though since the equity has been climbing nicely. Thanks for your input! This prop is in San Antonio, I live in Austin.

Awesome! Thank you all for the huddle and motivation! That is what I needed! @Tchaka Owen yeah, I do hear you on the 100% issue.  So, what it comes down to is the $500 just doesn't seem worth the energy since I am now going to be selling the place and hunting for another investment property. My property manager and myself have dragged this out longer than need be. The damage his HVAC caused was $1200 and he is paying $700. By the time I factor in civil court fees, driving back and forth , trying to rope in his HVAC company and my HVAC company it just doesn't seem worth it. It really does suck that he won't own up to it, but he bases his decision on what his HVAC company has told him...as mine also says his HVAC company was in error. Sigh. It got really complicated. the other $1000 in damages was from a busted faucet on my washer connection, totally separate and totally sucks! I do thank all of you for your input! Thanks!

Greetings Fellow BPers,

I have a few buy and holds and am in need of some advice on one that has nose dived. I have a condo that was cash flowing nicely up until about a few months ago ( $1250 Rent -$802.21 PITI & HOA=$447.79 cash flow) In short I was self-managing it since I lived in the same area, but have since moved away.

Over the last year my PITI has increase due to taxes to $837.47. I am now paying $78 for property manager and added a warranty for $50/month. The amount for rent I was able to get decreased (I was renting each room individually for $650 and $600, but now the rate is $1099 for both. Average rent for the similar units is about $900) New cash flow is $132.53/month.

After attending last weeks online Webinar I was able to play around with the BP calculator and get a better picture at the numbers since I did not account for things like 5% vacancy, 5% repairs, 8% capital repairs. Sooo, all that to say in the course of the last 3 weeks I had $2200 in damage done from a nearby unit that flooded (they are paying about 70% of amount) and an old faucet that broke inside my condo (it is old). I have a cushion to absorb these unfortunate series of damages. Sadly, a the current cashflow of $132 I am now at it will take pretty much a year and two months to recuperate this loss, GIVEN there are no more serious damages down the road.

I am really needing some input from fellow investors on courses of action. I did consider pursuing civil court to get the neighbor to pay out the full $1200 in damages, but the time, effort and $150 in court fees deters me from this course (plus the drive for court).

The biggest options I have been entertaining:

+SALE IT: I really don't want to sell, but I am considering it. I should profit $20,000- $25,000 hopefully after fees. I put $20k down on this place, so really hoping to get more than that. I would roll this money over into another property. Only thing that sucks would be the need to forego my business deductions in order to qualify for another loan ( I am self-employed and currently have 2018 taxes on an extension until Oct.)

+ INCREASE RENT: I am not sure if this would be doable since I am already renting hire than comps next door. I was able to get more when I first bought the place because I have some very, very desperate renters who turned out to be more drama than it was worth.)

As I am currently in the thick of all this I am open to other suggestions. I just told my property manager about 30 minutes ago to accept the neighbor's $700 reimbursement for damages* I am also reaching out to my realtor for a more solid CMA. I'd love y'all input:)

* The upstairs HVAC was replaced a few months ago. My tenants downstairs from the installed HVAC reported water coming in through floor area following the install. We had HVAC folks come out who said the upstairs neighbor's plumber did not flush the drain pipe after installing. Turns out since this condo is so old the drain pipe upstairs is connected to my drain pipe...so when everything came down from upstairs it clogged our line and flooded unit. We have had our two HVAC companies blaming the other and our HOA just changed companies...so new HOA cannot verify if old HOA company was supposed to inform HVAC company about drains being linked.

@Joel Leveille Nice! I haven't heard of that site, but looks like they take some of the hassle out of finding properties. Think of your real estate investing like college or a career...you will not learn everything there is in a short time. I have been learning as I grow for years now by attending meetups, listening to podcast and being online just like you are:)  BP just had an awesome podcast that may help you get a grasp on things---https://www.youtube.com/watch?v=PyP5nmrYrwA

As per your questions:

This will make me get a Loan from the bank, which one should I take? 

+ There are several ways to fund your real estate deals. A bank is one way (which I have used). You can also go through what is called a Hard Money Lender which is an investor who lends money to other investors for projects without having to go through a bank. They will have a bit higher interest rate. I got my first property through Wells Fargo since it was my first home which I lived in. I used the FHA Loan (google it) and only had to put about $4000 down. There are other first time home buyer programs in local markets. Best first step is to speak with a mortgage lender (folks who actually loan you the money). I have had a great experience with the folks at Guild Mortgage. They can probably explain all your options in better detail. If you go through a bank or lender expect to need some decent credit history and no to little debt.

And if I did get a Loan would I be paying it for 15+ years? 

+ Technicalllllly yes and no. It all depends if you are living there or renting the place out. The renters will be paying everything ( Principal payment, insurance, taxes, interest,etc.) You can get loans for 15-30 years through banks, mortgage companies. If you go through a hard money lender you may only have a few months to pay them back. The beauty in having a rental property is the tenants pay everything, but you can still claim the interest deductions,etc on your taxes.

+ My college roomate has 10 properties. he is a teacher and coach, not super rich. There are mana, many ways to access money. Listen to the podcast I linked above, this girl is beast!! And she didn't have a lot of money. I have 3 properties, each rented out and each was purchased differently. My first was my condo which I got with FHA loan. I lived there for 5 years then rented it out after I saved up enough to buy a bigger home. In my new home I rented out two bedrooms and didn't have to pay for mortgage. I saved up more money and put money down on a 3rd place. My wife and I were able to buy a place under her name since we moved away for a bit and she qualified for a 1% down home. We only put about $2000 down.

Again, listen to the podcast above, the lady they interviewed had no money and used her tax returns to buy cheap, cheap places. Crazy awesome!

I just don't understand how people have so many properties, doesn't that mean they would have taken out loads of loans to get them or already have that type of money at their disposal?