All Forum Posts by: Ralph Noyes

Checking in with the BP public on this...wife and I just bought and moved into a SF this May at 6.812% and the monthly payment (4319 all in) is pretty painful. Put 10% down on a 650k sale price. PMI is surprisingly cheap - $71.

What do yall think the trajectory of mortgage rates will be in the next 1-2 years? Generally down, likely, but do you have an idea of where the sweet spot to refinance would be? What are your thoughts on a 15 vs 30 yr term? 

Any chance of a rate modification vs a full on refinance which I'm sure will cost 10-20k? If it must be a full on refinance, are there any tips/tricks on getting the cost down other than getting lots of quotes? Anything else relevant you'd add?

For some context, the current payment is 30-31% of our gross income, we both have 780+ credit scores, no other debt besides this mortgage. Payment is manageable but definitely eating into the amount we can save and invest.

We've got a lease in our current rental that goes through July 23rd but just closed on our property last week. The landlord is "allowing us" to break lease (and handle all the rental ads and showings, of course) but has jacked the rent from $2250 up to $2500. We've been in the property for 9 months - a 3bd 1ba 1300 sq ft SFH in the Glencliff area. The ad has been up on Zillow, FB Marketplace, and Craigslist for 21 days now and we've had 3 inquiries and 0 showings.

My feeling is that 2500 is way too much and just not competitive, so I wrote the landlord with some comps demonstrating that and asking if he'll keep it at 2250. Basically he's got nothing to lose cause we're on the hook till July 23rd....so, we're considering just moving out at the end of May and letting him keep the 2250 deposit. 

What do you all think? There is language in the lease saying that if we move out before July 23rd we forfeit the deposit and are subject to "recovery by the landlord of other damages allowable by law". Can you shine some light on what exactly this may include? 

Figured I'd ask a bunch of professional landlords! Thanks everyone.

@Elliott Hallum Right, brick ranch is what I'm thinking (our unit in St Louis was on the 2nd and 3rd floors = loooooots of stairs), and yes I imagine basement walkouts are probably the most plentiful for house hacking around here. Hoping for some more sound separation between us and the tenants but it could be an option. The sticking point, and the thing that makes it so expensive, is that we're looking for something in south/central Nashville close to Berry Hill. See you at lunch!

@Joey Banasihan Agreed, getting the zoning right is key. Will definitely look into your info link, thanks. MTR for the other unit is what I'm leaning toward - IF we can get something close enough to the center that it'll attract plentiful medical staff. Our last rental was LT but I'm excited about the potential (increased income, flexibility to have friends/family stay, hopefully less management intensive than STR with less red tape/taxes) and my wife is excited to furnish/decorate. A basement unit could work, but building a DADU (or buying one already in place) is the goal.

@Ryan Thomson Yup, I figured posting on here would be a step toward finding that realtor. Wife and I have used someone to buy/sell a starter SF in E Nashville but I'm not sure they're the right person...DP % will depend on what we end up buying and what prices/interest rates are at when we buy. Usually my attitude is to put as low of a DP as possible to minimize the amount of $ that gets parked in equity, have more cash to invest, and have that debt serve as an inflation hedge...but it's so expensive to borrow right now and our PITI would be so high if we only put 3.5% or 5% - might have to change the strategy.

@Jamie Jones detached garage turned DADU is interesting...it's the rehab cost/PITA that scares me. We lived in our St Louis duplex for 3.5yrs and in that time: tore out the plumbing from basement to roof and put in a 3rd fl master bath, retro fitted 3 separate HVAC systems with ductwork, and had all 44 windows replaced from basement through the 3rd fl - all while living in the unit and managing the renters downstairs...little bit of PTSD there!

@Ben Einspahr Yeah, we broke our lease in St Louis to buy the duplex...stressful, expensive, PITA, plus after just having moved from a huge house to a new state I'm not in the mood to move anytime soon. Hoping prices/interest rates will settle down some over the next 6-12 months. Seems like I've been seeing it already the last couple months with rentals and for sales - price drops, removals, re-listings. Similar vibe in Austin (where I'm from), things are settling back to earth.

Hear you on the premium price tag for ADU's and issues with appraisal. Can't help but feel like that'd be the ideal situation though. The reality is probably that we'd have to buy somewhere with the right zoning then build the DADU. I've served as GC on enough of the big projects for our last place that this isn't out of the question, but it's a whole can of beans that I'm not excited to re-open...I like your idea about that time of year. People become complacent (and busy) during the holidays.

Just sold an excellent duplex in St Louis that we were owner occupying and moved back to Nashville after 5 years away. Now the wife and I are hoping to do something similar here after our rental lease ends next July. Yes, that's a while away but I'd like to get the ball rolling well before, even if just by gathering information.

Ideally we'd like to get even more separation from our tenants (our previous place was a top bottom, which wasn't too bad) by having a fully detached unit somewhere else on the property, but I hear this can be challenging for zoning reasons? Maybe easier, more common, and cheaper to buy something with a united that shares a wall? Maybe we buy a single family with the right zoning then build the attachment ourselves?

For some context, her job is in Berry Hill right off I65/Bransford and unfortunately she has to be there 5 days a week. Our 2 year old's daycare is just east of Vanderbilt/21st ave. So, the ideal location would be near or even between both these places. Ideally a 3bd 2ba unit. As many of you know, anything of that size in that location is just bonkers expensive, so we're open to other nearby cheaper areas (we're renting in the north Glencliff area off Nolensville, which is quite a bit cheaper and not super far). We'll likely have enough cash to put down 20% on something that already has a 2nd unit, or put a low DP then spend to build an ADU.

All this to say -- what would you recommend? Have any of you or your clients had success in similar areas with similar criteria? Are we insane to even consider buying right now with these prices and interest rates? Any insight would be awesome. Will also try to make it to the next REIN luncheon for Davidson County next month. Thanks!

At walk through, fan blades were all caked with dirt, cobwebs and dustbunnies abound, hardwood and tile floors hadn't been swept or mopped, countertops not wiped, exterior of kitchen appliances not cleaned, stove top still semi dirty (stove was brand new a year and a half ago but she claims "it wouldn't wipe off"), kitchen sink with soap debris on it, food stains splattered on kitchen backsplash and baseboards, bathtub not cleaned, closet floors/shelves/blinds/windows not wiped down, and my favorite - remains of a carcass of a hawk (feathers and...?) stuck to the wood on the back kitchen deck. 

I pointed all this out to her and gave her a chance to fix the issues, handed her a ladder and some cleaning products, and she cleaned the fans, the animal remains, and gave a half *** wipe down of the counters and windowsills. That is all.

Now, I feel naive for assuming they would clean like I told them to, and have already made a move-out checklist for future tenants to work through. How do you all handle situations like this? We've had the place deep cleaned in the past but that was like $400 and took 4 hours (it's a 1,150sq ft unit with fancy wood trim, tall windows, claw food tub, etc). What would be a reasonable amount to deduct for this?

Thank you!

I've got one person lined up to move in August 1st but she'll need a roommate to split the rent with. She's posted on Facebook and hasn't been getting a lot of quality responses (lots of junk where people don't actually read the ad). 

Thanks.

Hi everyone,

Are there any local (STL) investors who're familiar with the Tower Grove South/East, Shaw, Fox Park, Mckinley Heights, Benton Park/Benton Park West neighborhoods who might be able to offer some advice on property numbers criteria for a 2-4 unit house hack? i.e. what you would consider to be a good deal for the area?

For the last 3 weeks I've been pouring over Redfin and Realtor and going to look at places in person with my realtor and I just don't see many places where "the numbers work".

Right. I know that sounds ambiguous, but that's what I'd like to get some perspective on - YOUR perspective.

When I factor in 5% vacancy, 10% maintenance, 175-200 cap ex, 11% property management, 75 lawn service, 150-250 for utilities (water, sewer, garbage seem to be the norm here), plus the fact that I'm looking to get in with a 5% down payment...well, most of the calculations end up in the negative. 

Yes, I'll be living there and self-managing, mowing the lawn myself, fixing what I can, etc, but I'd like to build that into the deal. I'm sure you approve...

Yes, there are neighborhoods where the numbers are favorable on paper (Benton Park West, Gravois Park, Dutchtown), but I've walked those neighborhoods. They don't pass the 10 o'clock at night test for me and my wife. They also (usually - it's block by block) don't pass the "would I want these people as my downstairs neighbor and have to collect rent from them" test. Plus she works at Wash U and would love to be somewhere closer to the Metro. I digress...

What do you think BP? What areas have worked from a standpoint of both numbers and quality of life/safety? What can I do to get those pesky utility costs down, and maybe even have them mow their own lawn? Are my numbers criteria too conservative, too liberal? 

Thoughts? Comments? Questions?

Thanks for the thoughts and advice everybody.

I was simply blowing off some anxiety steam about debt. I have done quite a bit of reading and research prior to even beginning to look, and I do realize these STL buildings are old and will probably require higher maintenance.

My feeling right now is that as long as the property cash flows (when fully occupied, not me in it) under the following conditions... 
[5% down payment, 5% vacancy, 10% repairs, 175-200 cap ex (duplex vs 4-unit), 11% property MGMT, 75 lawn care, 150-250 water/sewer/garbage (duplex vs 4-unit)]
....it's probably a good deal. 

Since I'm currently looking for a house hack, I'll be saving the cost of a PM and lawn care (and hopefully some BS maintenance), but I'd like to build that cushion into whatever I buy.

I think the real question mark right now is whether to buy something that is basically move-in ready (and significantly more expensive) or buy a fixer and go through that hassle. 

What do you all think of my property criteria and the question of move-in ready vs fixer? I've already interviewed a ton of lenders and found one that'll do 5% down owner-occupied renovation loans, so I know the financing is there. And I've got a few referrals for contractors from my real estate agent and some other friends.

Well everybody, I heard back from the PM that the tenant has agreed to sign a 6-month extension.

I can breathe again!

@Joseph High definitely will be waiting till he's out at the end of April to clean, fix, stage, and professionally photograph. Part of the reason we decided against selling this Winter was because we weren't getting clear data from any of the 3 listing agents we were feeling out.

Thanks for the thoughts and advice, all three of you!

Getting ready to liquidate a former primary residence in another state and will likely clear around 100k, then looking to reinvest into a much more affordable market (st louis) where I now live. Talking to other investors here for guidance, the conversation usually leads to:

"oh, well, you can get put a 5% 10k downpayment on this 200k duplex, and then a 5% 15k downpayment on this 300k fourplex, and then..., and...."

...while I'm listening thinking "190K mortgage, plus 285K mortgage, plus...". My networth is around 250k and I have had to bust MY *** to get to that point. I just can't imagine feeling comfortable leveraging myself that heavily, going into the negative to acquire expensive, highly concentrated, physical assets. 

How do you all conceptualize mortgage debt? What ratio are you comfortable with compared to your equity and/or networth? How do you ease the anxiety of being highly leveraged? Do you just feel that as long as you have a tenant in there paying it down, it doesn't matter? Considering that I want to house hack, would you recommend starting with a small deal, maybe a small top-bottom duplex, or jumping straight into a larger 4-plex situation?

Just for some context, up until recently, I've shoveled everything into tax-advantaged low-cost index funds, so pretty new to this real estate thing and am trying to get my mind right. Any advice or thoughts are much appreciated!