All Forum Posts by: Paul Vail

@Allen L. -- look into how many Americans lose their lifetime of wealth accumulation -- medical bankruptcy. It's a game here. The politicians stir up FUD (fear, uncertainty, doubt) and voters fall in line with their preconceived party/tribe bias and NOTHING gets improved. Just as the medical/insurance/lobbyist groups prefer. Although many of the medical professionals I know would prefer any system over what we have now. Pre-HMO or EuroCanadian model. Yet the voters are -- sheeple.

@Joshua Hughes - Maybe what I wrote doesn't make much sense. So I'll try again. I do not know your current financial situation (nor is it any of my business, nor am I a CFP/CPA). I am simply guessing from the first post that you have successfully closed on your first SFH investment and you have it rented and there is currently positive cash flow. If I'm wrong on any of that, then kindly clear up my thickheadedness.

So the part that gave me concern (because I've made mistakes in the past and I am fiscally conservative) is where I interpreted that you don't have any cash cushion.  THAT's what has me nervous for you and why I suggest building/rebuilding something that you could fall back on if a pricey surprise on the current property (or your own property) comes your way.   Could be a massive roof leak, hot water heater, hvac, or the tenant leaves the upstairs bathtub runneth over for a few days before noticing.  For one (or more) of those, I'm inclined to start building a CD ladder as a dedicated emergency fund.  Even if that means throwing much or most of the + cash flow into it until you have your buffer.   Is that buffer $2k, $5k, $10k?    Only you know your comfort.  

No, CDs don't pay much (0.8% presently for me on 60mo note), but they pay better than any other easy-access account. They can be cashed out early with generally painless fees (6 months of interest only in my example). Only their interest earned counts as income, so unlike Robinhood/equities, there is no added tax tracking pain such as short-term or long-term capital gains -- or potential for capital loss because the moment the bathtub disaster strikes might be the week after the stock market 'corrected' 50%. FDIC insured accounts protects you in boring and wonderful ways.

BTW, my personal opinion is just that: not a fit for anyone else. I like investing in the stock market (very diversified ETFs for equities, and for bonds, and for REITS). I like US Treasury I-bonds and TIPS for conservative inflation hedges. I like BRRRR (five R's or 4?). I haven't BRRRR'd yet, but I will. All of these tools are great and make for terrific balance. All in on one or the other toolset seems -- limiting? Money is not evil -- how it is used and abused is. Unsecured debt is evil. :) I think everyone should do all of the above with smart financial moves and avoid usury debt products like student loans and credit cards. Everyone has their own model. If we were sharing a beer, I'd ask pester you about your risk tolerance, stress levels, how much can you do or leverage out on before it adversely affects your family life or sleep... and then buy another round. That's an excessive amount of prattle out of me. Have a good Monday.

@Bruce Woodruff - great questions.   My wife and I had our own businesses for decades.  Being self-employed in NC, we were really stuck with only one option: BCBS-NC.  With two kids under roof and fortunately all of us reasonably healthy, we had a HSA-compliant HDHP that ran us >$1400/mo.  Fast-forward to me selling one of my businesses and her still working hers, I did what many old farts do at that transition: got a gig at the local hardware store.   Working for not a lot more than minimum, my bigbox gig did offer very reasonable bennies including a HSA-HDHP that covered a LOT more for 60%/mo of the blue beast.  I started that gig about the time ACA really starting kicking in -- and the same plan based on our joint income would have been more than what BigBox offered.  Easy math decision.   But my wife sold her biz early into the Covid era, and I left BigBox earlier this year.  Suddenly, our income math became very different and the similar ACA (HSA-flavor) suddenly was a very different price.  

Here's where ACA makes little sense: to truly be a game-changer for the insurance industry (scam, etc.), it's pricing should have really depressed the premiums/profits. It was so watered down and gutted by the career politicians as to be just another math nightmare. If you go through the online formulas and change your inputs, you get vastly different outputs for their programs. We now pay less than when I had my BigBox job. There are perfect income numbers and donut-hole pitfalls. Once I start my own BRRR empire, it'll undoubtedly get less favorable. As @Bud Gaffney stated - a scam.

@Frankie Parker - ask yourself: would YOU want THEM repairing/fixing YOUR property?   Do you trust them to work on your home?   I mean, if they were professional painters or handy-people, maybe.  They could do it in lieu of rent reduction.  If you would trust these particular tenants to work on your home, then sure -- let them caulk away.  But aside from the mold, none of the caulk wear/tear you describe is their responsibility.

I worked in a hardware store for 7 years as my first retirement job.  Based on the questions I routinely answered, there's a substantial segment of the population that has no business changing toliet paper rolls, let along left unsupervised with a caulk gun.

Now, if you are the tenant, can you do a professional job of recaulking?   Will you remove/scrap all of the old failing caulk and surface, clean the surface properly, buy and use a decent/superior caulk for the location, apply it when the weather conditions are appropriate, and perhaps paint/seal if the location and materials call for it?  Will it look like a professional job with a nice 1/4" or so bead, applied sufficiently to fill the crack/seam/joint (but not use an 1" wide 2" deep 'bead' because the carpentry/masonry/trim/backer-rod wasn't done properly and the caulk is used to hide crappy craftsmanship)?   Or would you be better off to delegate that task to a professional that might charge $xx/hr for their years of experience making it look far better than a layperson?  And as a tenant, what will you consider a reasonable compensation for your time and effort (and reimbursement for buying a quality caulk, not the cheap bottom-shelf crap that sells for 1/3 of the good stuff)?

I'm not trying to be harsh on the OP -- good questions to address.  And not everyone is going to subscribe to the idea that anything you do for your property and your tenants should be an improvement on what had gone before.  Or hire someone who can.  But doing so is a great way to only have to do any job a lot less often, or never again.  Nor do you find every tenant will treat the property as well as if they owned and cared about it. 

One final thought: what is written into the lease?   Does the lease spell out that the tenant is responsible for not only keeping the property reasonably clean and undamaged and responsible for their own tolietpaper, but they are also responsible the general upkeep of caulk?

@Joshua Hughes - Congrats on the buy.  I hope I'm as enthusiastic about grabbing a second opportunity when the time comes as you are.  I haven't even landed my first.  Now, I may be a whole lot more timid than you, but personally I'd be cautious about diving in without any built-up buffer to cover what you already have.  Even just a few thousand saved or growing in a dedicated CD ladder to cover when the water heater or HVAC goes for your existing tenants would go a long way in easing (my) nervousness BEFORE I pull the trigger on a second buy.  Build/rebuild reserves first?

I'm not saying 'pause on buying more', nor suggesting that you have to come at the second buy with your own money. Just have some of your own money safe in a FDIC account for the emergency/oh-$hit fund so you aren't completely broke when things go sideways. It'd suck to go from a meager cashflow-positive situation to having to use credit cards to repair a big something, and then paying CC interest and being cashflow-neg because of a lack of reserves. Maybe I'm too much of a nervous nelly -- it's my inner loathing of the credit card usury industry.

@Joe S. -- I may be wrong, but health insurance seems to be a very regional thing.  In NC, the local BCBS had a bit of a stranglehold on self-employed insurance until ACA came long.  Depending on your income/tax situation, some of the ACA plans can be very affordable.   It's kind of like how banks treat the self-employed -- almost won't bother to talk with you, but if you had a W2 gig, even flipping burgers, suddenly you are worthy of their time.

https://www.healthcare.gov/

Marco,

Like you, I'm just dipping toes in the local Triangle market.  Wow, does it feel expensive in areas.  However, there may be some opportunities in north and east Durham.   Over the last 20 years, the gentrification of areas starting in Trinity Park and now expanding up toward Braggtown and east following the Rt 98 corridor puts a lot of underloved neighborhoods in what seems to be a long-term upward trend.  With the remaking of Rt 70 as more of a freeway connector between I-85 and 147 and cleaning up the traffic flow, that whole chunk of Durham might transform further.  But those are long-term opportunities for 'buying at the right price', if the remodel can attract the right tenants and working with local law enforcement can continue to put pressure on remaining gang activity.

I'm not seeing as much opportunity for significant cash flow in N. Raleigh -- entry pricing is at a premium and valuations smell a little frothy.  Can't bank on appreciation.  Even the obvious growth areas that straddle the future 540 expansion are on the high side, 'though more affordable than around the established highway.  Poole Rd and outer Rock Quarry haven't yet jumped like Garner and Ten-Ten.   After years of the Triangle landing on publishers Top Ten lists for work/retirement and the resulting demand outpacing both the developers and the infrastructure, bargains are rare.  Building a portfolio of cashflow via BRRR is going to be a slow grind until something upends the market.

Originally posted by @Dan Marl:

I am ok with the looks once it is ground out. ... I rather nip the problem at the bud. 
The builder said a weather strip will fall out after 6-12 months as this is what they do previously on other houses. 

 It'll look better without all that awkward sunlight pouring under from the side gaps :)   My other thought is if this is the quality of materials the builder uses, what else will fall out after 6-12 months?    My seals are original from 2001 -- haven't fallen out yet.

Forgive a simple question -- what tools are available to a non-agent (no direct access to MLS) to determine days on market for recent sales in my area? I'm presently using zillow (E.g., https://www.zillow.com/raleigh...).  

(I've tried boolean search tools here at BiggerPockets, but a support person here said 'Unfortunately, we do not have that search feature or functionality for forums and the marketplace.')

The picture isn't too clear -- is that cord wood stacked up to the left of the door?