All Forum Posts by: Rumen Mladenov

I use Quickbooks. Still stuck at the 2015 version because I own that license, and I refuse to do the annual subscription - especially given that the annual fee is close to what a lifetime license used to cost. I no longer get tech support/updates, but the software does what I need it to do pretty reliably.

You're negative when only taking into account mortgage loan, taxes and insurance? For your first property? I would not be as fast to say it makes sense as the others...

Maintenance, capex, and vacancy are going to be a bigger issue than the $200 a month you already know you'll be out. Do you account for property management expenses, or do you plan to self manage? If you plan to use property managers, keep in mind the extra costs on top of the flat %, like mark-ups on repairs, leasing fees etc. If you plan to self manage, being new increases the chances of you making mistakes while screening tenants, filing for evictions etc. This property could quickly become a nightmare. 

I am not saying you shouldn't do it, just make sure you know what you're getting into. Some markets just don't make sense for rentals, especially with the current environment of high rates and high prices. Appreciation is great, but those of us who lived through 2008-2010 know it's by no means guaranteed. 

I bought several houses with finished basements. All the ones with drywall/carpet got ripped out and left unfinished - it is just a disaster waiting to happen. The only finished basement I left alone was done with solid wood plank walls and vinyl floors. 

My leases state that "the lease does not guarantee dry basement". Take it or leave it. So far, no one has backed out of signing a lease because of it... And if there is water intrusion, I just point to the lease they signed, and advise them to go to their renter's insurance for anything they stored that got damaged by water. You don't have renter's insurance? That's on you, not me - my property insurance does not cover tenants' belongings.

@Felicia Richardson I got the HELOC while it was my primary residence, a year later it was a rental but once issued the HELOC stays in place even after that change. I only know of one bank that does HELOCs on investment properties, and their rates are higher. Best to get it on primary residence.

I do a mix of both - cash out refi's and HELOCs. While I still could, I used conventional loans, can't beat the rates that are fixed for 15-30 years. Now that I do non-conventional, my rates are higher and only fixed for 1 to 5 years. 

@Felicia Richardson I highly recommend Pentagon Federal CU for HELOC. It had by far the lowest rate when I applied for it, and occasionally run promotions where you get an even lower rate for 6 months subject to a minimum draw amount of $10,000. It is interest only, I had the impression it was 10 years but somehow ended up being 15 years term. Half of my portfolio was purchased at one time or another by pulling money out of that HELOC. Technically it is only available to people associated with the military, but back when I opened mine they let you just make a one-time charitable contribution of like $35 to an associated charity and then you qualify. There is a balloon payment at the end though, that seemed really scary back when I was just starting. Now that I have a bunch of other HELOCs to pull from, I'm no longer worried about it.

@Rianna Mcgee You will pay down your mortgages over the years, and the rent will go up over the years. What barely cash flows now will cash flow better in a couple of years, and a hell of a lot better in 15 years if you have a 15 year mortgage. 

I know a bunch of people who sold some of their rentals, and then regretted it. I do not regret NOT selling any of mine :)

@Rianna Mcgee You can pay off properties organically, no need to sell. I have HELOCs on some of mine, I pay them down with any funds that would normally sit in my checking account earning 0%, and pull out as needed  for repairs/new purchases etc. I also have 15 year mortgages on a few, they don't really cash flow but I got the mortgages before my kids were born and will be paid off by the time they head to college. 

There is a learning curve in this, especially if you manage the properties yourselves. Once you get to the 10 property mark, you've already more or less on top of it. It just didn't seem to make sense for me to stop just when I got good at it... I get referrals from my current tenants all the time, and have a waiting list of pre-approved applicants waiting for my next available property, even though I haven't posted an ad anywhere in years. They also tell me if any of their neighbors are looking to sell off market. 

Not sure I see the point in selling and buying 2 properties every year. What am I missing? Why sell them just to buy them (or similar) a few months later? Are you really that confident that you can force appreciation more than you would lose in realtor commissions, transfer taxes and all other closing costs? I would not bet on it in this market - distressed properties, even the ones at the sheriff sale, seem to be selling at close to ARV.

Other than that, the plan is great. I did buy 2 a year for my first few years, just didn't sell any of them. Did BRRR, where the funds I pulled out pretty much covered the purchase and rehab cost on each property, and used it towards the next one. Hardest part was to start the ball rolling, first purchase and rehab required me to borrow funds from friends, cash advances on credit cards, etc. Then once I did the first BRRR, the ball just kept rolling. Until I hit the 10 financed properties limit, but it's too early for you to worry about that now.

@Ryan Randall Yes. I have two lines of credit with different banks, and I do not keep any cash reserves to be eaten up by inflation. Even in the unlikely case that one bank freezes a credit line, I still have enough on the other to survive a few months with no rental income. Never had an issue in the 15 years I've been doing this.