All Forum Posts by: Ralph Noyes

Have a tenant in there until October 31st. Several agents familiar with the area say that, contrary to general advice/trends, sales are constant year round (one even says that in that particular area, they're strongest November-January). I'm a little hesitant and waiting for some more clear data from them to back this up.

In regards to the tenant living there, do you think it would be best to have him out and THEN begin photographing, fixing, and showing the property? The agent we like seems to think that houses sell better with furniture in there, as long as the person is neat, doesn't have ridiculous style, and is willing to allow the agent to show it to buyers.

One of the other agents suggested we try to sign the tenant to a 6-month lease and sell it in late Spring/Early Summer.

Thoughts? Comments? Suggestions?

Just dipping my feet into the St. Louis area (around Tower Grove Park mainly) and have just begun talking to an agent about finding a small multi-family to house hack with. This person is a long-term buy and hold rental investor himself, owns his company, seems knowledgeable. He didn't mention Foreclosures, BRRR'ing, Fixer-Uppers, but did show us a few places (on the computer) that looked move-in ready, or close to it.

Can any experienced STL investors familiar with the south city/tower groves areas comment on whether you feel it's necessary to buy REO's or properties that require significant rehab in order to make solid returns? Are they readily available or are they "unicorns"? If they are available, do you feel that the returns are worth the time, hassle, and risk involved?

Everyone in the blogs and the books seems to ONLY talk about these kinds of properties as if any other situation is sub-par.

So, first time real estate investor in St Louis here. Wife and I met with an agent last night and he threw out 2 interesting ways of dealing with financing when house hacking small multi family's:

1) Do a 10 year mortgage at insanely low interest, have the monthly payment barely covered, while paying down the loan and building equity super fast.

or

2) Doing the more traditional 30 year at higher interest, cash flowing strongly, while maintaining the option to pay extra if that's what you want.

Going into the meeting, I had kind of assumed we'd stick with the 30 based on what I've read so far but...wouldn't it be awesome to build equity like that, pay so little interest, have the option to pull significant cash out using HELOC or cash-refi, and the psychological advantage of owning something quickly?

Since we plan to be FI (financially independent) in 10 years, wouldn't it be nice to begin actually owning some of these properties free and clear soonafter? I know that many of you will point out the dangers of vacancy, going  into negative cashflow, etc, but honestly, we have good jobs and are not terrified by the idea of having to dip into our pockets occasionally if needed (we also don't plan on amassing an "empire", probably no more than a half dozen). i.e. We don't need the monthly cashflow to survive, but are more concerned about the long-term overall return. 

What are your thoughts?

@Devan Mcclish Right. My feeling is that there's way too much tied up in the house, and that it could be better used here in St. Louis. Interesting formula for calculating return on equity. Never seen that before. When analyzing your holdings, do you typically use the equity formula, cash on cash return, something more intricate? 

@Josh Bakhshi I've gone back and forth on the idea of a cash out Refi. Thing is, since we're not occupants anymore but "investors" instead, I've heard that the rates won't be nearly as favorable. Also the idea of acquiring a large loan on the Nashville house right before buying another one here feels like alot of debt. I think too that there's a value in consolidating properties into one concentrated area (St. Louis) both for liability and sanity.

"The Goal" is still forming...maybe to eventually own 3-6 free and clear properties in a single, well appreciating area. My wife and I have primarily been in low cost index funds and are trying to diversify into something that won't crash along with the market (as I suspect will happen within 2 years or so).

Currently have a 2bd 1ba 672sq ft SFH in east Nashville close to downtown, tenant paying $1245/month. (Probably a little under what we could've gotten in rent but we wanted to get it occupied before Winter hit last year...I suspect we could bump it to $1300 without scaring the tenant away). PM is managing it as we live in St. Louis. Got the house for 125k in 2014 on a 30yr mortgage at 4.375%, put 25k down. Currently owe 84k on the mortgage and the property is conservatively worth 220k - i.e. we've got about 135k equity tied up in it. After paying the PITI of $680, the 10% to the PM, and setting aside something for vacancy, maintenance, and Cap Ex it's likely only cash flowing 150ish per month.

What are your thoughts on this as a long-term rental? I'm thinking we sell while we're in capital gains tax free window, harvest the equity, and redistribute into the St. Louis market - either as a house hack or 1-2 rental properties. I know that over the long-term Nashville (particularly the area it's in) will likely appreciate well, but I think that equity will provide a better return in St. Louis, even if we just get some SFH's, but especially if we get into some small MFH's. 

As an aside...: When you're evaluating a rental that you currently own, i..e trying to calculate the Cash on Cash return, do you use the numbers from the time of purchase? Or use the current value? I realize that $1245/mo rent and 220k value is nowhere near the 1% rule...

Hey everyone,

My wife and I are moving St. Louis in October and already have a rental setup there (from a **** landlord we want to get out from under ASAP). So we're looking to buy in the city after that, hopefully a duplex we could move into part of. Seems like that's all you see in the city are multi-family buildings so I figure there should be plenty of selection, right?

What are your experiences in the St. Louis market? Any good, cheap appreciating areas you'd recommend? Any real estate agents in particular? Our rental is in the Tower Grove east neighborhood, which seems to be right on the edge of trendy and dangerous (aka cheap but rising fast...tons of buying, selling, and flipping in the area). I'm thinking we look for something in the area that needs a little work.... thoughts?

Ralph

@Sammy G. Under the 50% rule, $700/month is eaten up if the gross rent is $1,400, and the other $700 will go to the mortgage (I think it's 680 or so), which means net rental cash flow would be nothing...not a very strong case to rent

@Daniel Burke Not *100%* decided, but that was our knee jerk reaction. East Nashville, and Nashville in general are still hot, though a little slowed from the last few years. There's an outside chance we may come back if she gets a professor job at Vanderbilt down the line, but I imagine we'll end up on one of the coasts. My lady is usually more conservative and risk averse...

.....by renting, I'm trying to look at the long term and imagine us eventually paying this place off while also enjoying the ongoing appreciation. But - I do hear that we get to avoid 500K of Capital Gains taxes since it's been our primary residence for 4 years. As for using the would-be profits to buy more rental properties in St. Louis:

a) Her job term is only 2-3 years, with a high probability we'll move again after

b) We're newbies in this RE thing, and if *I* am nervous about reinvesting the money, I KNOW she will be (again, conservative and risk averse). 

Although I suspect that's how/why I found my way here -- trying to learn about this whole game. I've just gotten started on the low-cost index fund thing, but slowly cozying up to the idea of a cash flow hustle. Part of it will be educating myself, but the other, more difficult aspect will probably be convincing/educating her.

@dick

@Dick Stevens Heard that. Like I said though, we'll probably be moving again in 2-3 years. Does that mean you wouldn't recommend buying any rentals until we've "settled" somewhere?

Thanks for the info yall!! Would love to get your thoughts on any of this. Also forgot to mention we've paid down only about 15K principal from the original 100K mortgage.

Hi everyone,

My soon to be wife and I own a house in East Nashville but are moving to St. Louis for her new university job. She bought it 4 years ago for 125K, put down 25K down payment on a 30yr mortgage at around 4% interest. The house is now worth (conservatively) about 225K. It's a small house, about 675 sq ft, that was gutted and re-made before she bought it in 2014. It has a big fenced in yard and is in a hot neighborhood that has long been in the process of gentrification. A few questions:

1) Should we sell it or rent it out? We're leaning towards renting.

2) What should our target price be? Looking at other places in the area, we were thinking about $1,400/month.

3) Property manager or not? We're leaning towards a property manager cause we'll be out of state, are not terribly handy, and both will be busy with our careers.

4) What's the best way to go about getting it rented out? I assume it'll have to be cleaned and repainted. 

5) Should we refinance to a 15 year mortgage to get a lower interest rate? I realize this will increase the mortgage payment and eat into any profits if we rent, but we can easily afford it and would like to get the sucker paid off.

Any and all advice is super appreciated!!