All Forum Posts by: Grant Smith

How's it going BP,

I recently closed on my first SFH Rental on February 13th, ( i can go into the numbers later) but I am planning on self managing my own property with the help of my mentor (for advice and tenant screening help) who is also a real estate broker and property manager.

The property was built in 1987 and though most of the major systems date into the 2000's, the furnace on the heat pump is original. At the time of inspection and final walk thru everything was in good working order and even though the furnace is a Carrier, it is well passed its life expectancy for a heat pump.

Although i have the money to completely replace the system, I also looked into home warranties. The company i called said they cover rentals, with a $54 monthly charge +$75 service call fee's to fix any major system including appliances and roof (of course with all the fine print do's and don'ts) 

At $54 a month + (estimating 6 service calls a year (conservative)) would bring my monthly payment averaged to $91.50 obvoisly depending when the service calls take place. 

In my thinking, this would cover ALL my monthly CapEx Fee's I have already accounted for + would lower some of my repair cost down to bring my repair expenses down.

Rent is $895

CapEx (for older system) 8%=$71.60 per month

Repair 6%=$53.70 per month

Total $125.30> $91.50

Savings Per month = $33.80 per month

Plus on top of this, they have a 24/7 phone line for service calls which can be made directly to them by the tenant so long as I include their name on the account at time of lease start date.

To me it sounds like a win-win for me as for as money saved and headaches lost, but i know things that sound this could normally aren't. (i may just not have found em yet)

Has anyone else had experience with using a home warranty on a rental home? Can anyone see the error in my ways at which I could be looking at this wrong?

Any help or advice is greatly appreciated.

http://tomsticklebuilder.weebly.com/ Tom Stickle, in full disclosure is my uncle, but has done home renovations and has recently worked with an investor on a flip in Hampton. 

Leon, I am a fresh investor in the local area (native to Hampton), let me know if you would ever need help with anything

My first deal was a HUD home SFH 3br/2b (1792 sq ft) that I bought as an owner occupant.

List $80,500

Closing,  3.5% Down Payment and Repairs: $10,000 (roughly)

Currently still living in the residence and rent out one of the extra rooms to pay half my mortgage.

Refinanced last month and it appraised for $160,000.

Took out $40k of equity to keep my LTV at 75% and only $100 increase on my mortgage.

Have my first rental under contract to close on the 11th and looking at bascially turn key with a cash on cash in the 16% range and upwards of 23% if i manage myself. 

I learned all my information from local meetings and biggerpockets, be smart and understand the numbers.

Just like in school when you were learning math, you cant just read how to do it and understand it. Go home and analyze deals, even if you have no intentions on buying them or cant becuase finances or whatever, DO HOMEWORK. Run mock analyze and get good with the numbers.

Best of luck!

Welcome to BiggerPockets Robert! This is definitely the place to be to gain all the knowledge needed to make you a successful investor! Im in the local area and still quite green when it comes to investing but I have been learning and researching for a little over a year while acquiring my primary residence and my first rental property ( to close on February 11th). There is infinite amount of information on this site as well as insight as to how to become more involved in the local community.

PREIA is a local real estate investor group that meets every month, you can look them up on MeetUp.com as well as TRIG. 

Always smart to get a good foundation of education before taking the plunge, but since you have your main residence rented out, I would suggest looking up some of the many blog post on landlording and renting out your primary residence such as:

http://www.biggerpockets.com/renewsblog/2013/01/04...

Learn from the pro's that have made the mistakes before you and wrote about it so you hopefully don't have to! 

Best of luck!

Feel free to reach out if you'd ever like to meet up and talk!

When you do a cash out refinance, or any refi, the lender will require an appraisal done to accurately assess current market value. If after you purchased the home 6 months ago, you either put sweat equity into it (rehab), or your property has appreciated. Now we are only talking 6 months, but maybe in your luck new sales in the area have offered higher comps to help your homes appraisal! 

The 75% LTV will be based on the new appraisal value, not the price you purchased the property as.

As someone with an Construction and Engineering Management Degree as well, I agree with Dave and Brad. With your concern on planning, Maybe look at available courses or tutorials on some project software.( In school it was Microsoft Project), most commercial builders will use Primavera, and online objects for residential like builderTREND and Foundation. You can also look up the formulas to understand the math behind the program.

Estimating, is probably best done through experience with walk through's with contractors and looking at their task list and estimate for each job. Most contractors will do free estimates on jobs and there's nothing wrong with getting many different estimates on your first couple projects to insure you A. Get a good price B. Understand what each one is looking for and finds. C. Great a small data base of estimates to run through some analysis to get a general idea of an average cost for each job so when you get more experience you can cut back on the contractor bid's and run your own quick estimate with a spreadsheet using your avg cost.

Same with Evaluating

Rick, once you have assessed the current state of the propertyy and get an idea of what needs to be done and a rough budget, compare that number with what you will spend putting down 20%... You can find first time home buyer and owner occupants loans with loan down payments from 0 to 5%.. That might save you enough cash to perform the work yourself and or pay a small amount out to contractors. 

In other words you could put down the same amount of money but get the freedom of picking your own contractors. Negotiating patients dispersents to contractors and doing any of work your capable of yourself.

I was in your shoes almost a year ago and have started the process of refinancing out of fha so when my year of being an owner occupant is fulfilled I can rent it out and repeat the process of another low down payment primary residence .

So I have been living in my primary residence for about 6 months now and have been trying to find creative ways to increase my cash for more investments without having much of a track record in the investing world. I purchased the home well under market value and have done some updates to it in hopes to increase the value even more. 

I have been looking into HELOC's and cash-out refi as a way to take money out of the equity and use it to reinvest into another home. I think im pretty set on going the HELOC route but I have come to another debate within myself on what i should do.

Both strategies will require an appraisal to be done on the property and I am really trying to maximize my appraisal price so I will have access to the highest amount of money the bank will lend. 

That being said, two things that ive wanted to do regardless before i sell or rent the house out is put tile in the bathroom and landscape around the home. I had plans to do this later down the road but if im gonna need an appraisal, is it worth doing it before to increase the amount it will be appraised for or would doing this not really have any bearing on what it will appraise? 

Any feedback or ideas on this or any other ways i could increase my chances would be very appreciated!

hey @Jennifer Crabtree always good to see local investors showing up on biggerpockets! Good luck on your first flip ! Any details on it or kinda of plan you have to rehab it?

Thank You @Account Closed , the only renovations i had to do was flooring and paint and remove popcorn ceiling texture so the counter tops were done when the home was rehabbed back in 05.

And to @Brandon Turner and @Joshua Dorkin , thanks so much, between the endless information available on this site threw the forums and blog, the podcast have been exception with my favorite question being, "how did you get started". So as i continue down my path of investing, years from now i will have someone asking me the same thing and using that as inspiration to go after their goals as well. You guys really run a top notch service!