All Forum Posts by: Peter M.

I did it and honestly most of the time the tenants will respect your time. Of course there are always horror stories but take it all in stride. You could also look at the flip side of 1) at least they are telling you about issues and not hiding them and 2) living near your investment allows you to keep an eye on it better.

If it really gets bad with a particular tenant point to the section in your lease that says all repair requests must be submitted in writing. But overall, it most likely will not be anywhere near as bad as you are imagining it. 

@Bob Langworthy Can you explain why you think a 1031 would be a good idea in this situation? If @Billy Bey can keep 500k of his profit tax free, then wouldn't all of the strict 1031 rules be more of a hindrance? 1031 is meant to defer taxes; if he sells using the homestead exemption he doesn't pay the tax in the first place. Am I missing something?

As for what you should do Billy, I say sell. Put a little towards the down payment of your new home and use the rest to buy up investment properties.

I asked two brokers this exact question and they both said the insurance companies will not penalize for frequent switching. Now that being said, what was their motive? It couldn't possibly be that they would make money if I switch to their plans....

I switched everything in October and had two claims on two different properties in January so you can bet I will be shopping around this October when my current insurance company jacks my rates. I guess I will find out in a few months if the brokers were telling the truth. To me it comes down to the headache. How much will I save by switching, am I getting better coverage, is it worth the hassle? If a company penalizes you for switching, choose a different company. Insurance companies are like ants, theirs tons of them. 

I would highly recommend reading The Big Short by Michael Lewis, then watch the movie again. The problem wasn't as much the subprime loans as it was what the big banks did with them by packaging them into terrible products called CDOs and synthetic CDOs. Once they ran out of loans to make they lowered the standards and pushed them onto the ignorant to make more in fees. Then, because that wasn't enough, they basically started betting on them and that compounded the problem. The saddest part is the US taxpayer paid for the big banks to get bailed out and they carried on as usual. It really boils down to knowing what you are investing in. We here all know real estate (or are trying to learn) so as long as you buy for cashflow and properly manage your risk, you lessen the impact the greedy people on Wall street can affect your own personal wealth. 

When shopping around commercial loans inquire about a construction loan. Smaller banks that are portfolio lenders will probably be your best bet. This way you can include repair costs with the purchase and have them financed all together. Since you seem to be worried about potential repairs this can cover any unforeseen expenses that creep up in the first 6-12 months of ownership. These loans are usually used for new construction so they almost always have a provision for interest only payments while you are taking draws on the repair money. It can be a lifesaver if a big expense comes up but you can always pay the full payment to pay down principle. 

If you don't use the repair funds by the allotted time it simply comes of your loan amount. Get bids for everything you can think of needing or wanting to be done and as long as you still have 20% of the total (purchase price plus repairs), the bank should give you the loan. I even got closing costs rolled into this type of loan when I did a refi last year. Just make sure you over-estimate all of the repairs. The bank won't care if you don't use their money but you will care if you run out before finishing the work. Of course this also will depend on an apprasial so keep that in mind. 

Seems like a good deal from the numbers you provided by the way. Hope it works out. 

@Michele G. It was called the Flooring Works but unfortunately I can't use it again. The contractor I used had about 25,000 sq ft off the stuff left over from a commercial job and was selling it for 1.50/sqft which was half of retail price. The commercial client bought it and let him keep the excess. When I was looking to replace some of it, the same contractor couldn't get it anymore. As I said in the earlier post if you plan on doing any repairs you should buy extra boxes of it because the manufacturer will probably discontinue that exact product. Same thing happened with the Asterik brand of the glue down type-Had to replace the whole floor because they stopped making it. I'm sure they do it on purpose for that reason. 

Step one: Go on Youtube, search "Liar Liar car impound scene" and watch it.

Step Two: Make the repairs, add it to your schedule E, and forget about it. Not worth small claims court. 

I love the stuff and have had it in my rentals for over 6 years. Most of it is glued to concrete slab and it fine if installed correctly. I also have it installed upstairs on wood subfloor and haven't had major problems but I am transitioning it to tile as the tenants move out. But that is an aesthetics decision, not because it has been a problem. The vinyl will be fine but the subfloor would be the issue it it got really wet. 

Posted about this on another thread yesterday with much more detail. Not sure if this is the best way to share the link but feel free to take a look. 

https://www.biggerpockets.com/forums/758/topics/54...

Not worth it in my opinion overall. Especially not for appliances. As others have posted, appliances are cheaper to replace than repair most of the time. Unfortunately in our throw away society most things fall into this category. New appliances have manufacturer warranties that will cover problems usually in the first year. Case in point I bought a new cook top from Lowes. Brought it home and one of the burners wouldn't light. Called Lowes back up, they sent the warranty company and I paid nothing. Turned out a screw had been driven right into the igniter wire so it wouldn't spark that burner. 1 in a million shot. Repair man said he had never seen that happen. No problems with it since and for what I paid for it, even if it breaks in 6 months I've already got my monies worth. 

Flip side, had a home warranty paid as part of a seller concession and first day we got access (in July in Texas) AC flooded the bedroom with condensate. Think we hit the jackpot but lo and behold the fine print says that particular problem isn't covered. Ended up replacing the whole unit out of pocket (full disclaimer: we knew it was going to need replacing soon we just didn't expect it to be on day one). 

Ultimately, it is insurance and they will try to weasel out of it if they can. It is better to find a good handyman rather than waste your time dealing with a warranty company. If you get it as part of a deal, sweet, maybe you will use it but I wouldn't go out of your way. Good luck

I have vinyl plank in 4 units of a 4-plex on the ground floor. This is the flexible, glue down type flooring and I love it for rentals. To damage it the tenants would pretty much have to burn it or take a razor blade to it to scrape off the picture of the wood (don't worry though, they will find a way) The rents range in the 800-1000 range and I would classify it as a B/C class building. The only thing to note about this is that it has to be installed with the correct glue and no moisture. If it is glued down correctly you could flood the floor and after you shop vac the water up you wouldn't be able to tell. I know because this has happened to several of the units over the past 7 years I have owned it. However, the day I had it installed in one of the units there was a big rainstorm and water leaked in from a window. All of it peeled up around the edges and it all had to be re-done. Now this is installed on a concrete slab and it will follow the contour of the floor so being Texas, when (not if, but when) you have foundation issues, you will be able to see and cracks or unevenness but I have never had any complaints from tenants about it. Also make sure you have several extra boxes because if they do get damaged it is really easy to pull them up and replace them but the manufacturer will discontinue the exact model and you have to replace it all. 

I also have the luxury type vinyl in a SFR and that stuff is great too. This is the kind that is more rigid and can be glued or floated but looks and clicks together like laminate. This is a nicer place so we splurged and put it in. It is water/mold resistant and we had a slab leak a few months back the water just dried right up. The insurance adjuster even said that type of flooring wont react to water like wood or laminate will. I thought it was floated when installed but found out he had glued it down which makes it impossible to take out damaged ones without destroying it in the process.

So all in all, if it is a nice rental I will use the luxury type vinyl but float instead of glue down. I would use this in my own home it's that nice. If it is a little lower end rental but you want to make it nice without investing more than its worth, use the glue down flexible planks. Most of this is all installed over concrete. Only a little of the glue down type do I have upstairs on wooden subfloor but haven't had any problems yet.

I also just noticed after writing this that you posted this a month ago so you have probably already made your decision. Hope it works out for you.