All Forum Posts by: Randy Janoe

Hi Cody, welcome to BP. The greater triad area is a great rental market

The forgotten part of the 10% of rental property management that you pay for is the lease and best compliance practices 

Would rather just add the $600/year to my budget. Plus deductibles are $75-125.

Often they have an approved vendor list so you're at their mercy. Plus a lot of the big repairs such as furnace or AC have a hard cap on there repair. 

Really a poor illusion of coverage. Self insure.

If it cant be explained easily it is too complicated.

 Ok, some millenials may need that support but we aren't ALL lost. I only had my parents pack me lunch that day and drive me to my interview, not the interview itself. :o)

I think some need to make up their mind, landlord or don't. I have no problem hiring someone else to manage the property so I dont have to learn every last detail and reg. But you better believe whomever I do hire doesnt call his attorney dealing with deposits every time there is an issue, they just take care of it.

I would:

1) Use cash flow to enhance adequate cash reserves.

2) Look for opportunities to earn more than 5.50%.

3) Keep debt on the property, it is also asset protection.

I thought this was going to be a post about Morris Invest. Shew.

Pros:

Bankruptcy Shelter

Matching funds from employer. (Up the the match %, it is 100% return).

Defer taxes

401K loans (if available)

Cons: 

Not as liquid as other options

Market volatility (unless it's in low risk bonds or similar)

Maintenance and management fees 

If you have a high W2 wage, consider how much pegging the 401K will save in tax arbitrage to wait to claim taxes at a lower effective tax when you retire.

Consider an HSA account if you have a qualified insurance plan (high deductible). Limit is $3,500 ($7,000 for families) in 2019 + $1,000 catch up if you are over 55. At 65, the account essentially becomes an IRA and you can pulls funds for non-medical expenses.

Your return is effective tax bracket + (bank deposit rate * average balance). Unlike a flex spend account, it rolls over each year.

 It's really how it sounds. 

A note can have more than one piece of collateral. 

Refinances focus on appraisal(s) and debt service coverage (typically 1.25x-1.30x. Purchases also focus on cost and will lend to the lower of the 3 values (DSCR, LTC or Appraisal).

If you have a portfolio of 10+ properties chances are you have a couple years of tax returns, equity and lease agreements in place to make a valuation based on DSC. If the business cant cash flow independently, a personal guarantor may be required. 

Hi Craig,

Welcome to Asheville! 

To answer your question: I would rent the property. Montford area is highly desirable and premium location. You should expect to see solid appreciation. Although it has slowed down some, it is still outpacing national averages. However, I wouldn't leave all the equity in the property. 1) Debt is a good deterrent for a bogus claim from a tenant. 2) Leverage can maximize returns and fund several other projects.

As for rents, contact property managers in the area. Based on location and finishes you may be able to push rents some, but 2k seems like a solid base to run numbers off of.