All Forum Posts by: Ricco Ardemagni

All great advice so far. Another thing to consider is what's your time-frame for moving by? Is there an opportunity to save more money between now and then for paying off CC and getting enough for a down payment on a duplex?

I think your decision starts with getting a very firm idea of whether the LR house has the potential to provide you with a good cash flowing asset. Then after that decision has been made, decide on how to play your equity/debt in either two markets or allocate it all to your new market. 

To determine if LR house will be a good cash flowing asset for you I'll expand a little more on what the previous posters wisely mentioned:

What amount of rent could you realistically get for your LR house? Now factor in some vacancy (reduce your rent by 5-10% to account for turnover on tenants when no income is coming in). What's your expected revenue left over now?

Now total up your monthly expenses.  

1. Mortgage payment (are you on a 30yr fixed? if not, be prepared that your mortgage payment could change at the end of it's current term)

2. Monthly insurance cost (keep in mind you might need a different type of policy if you aren't an owner-occupier any more)

3. Monthly property taxes 

4. property manager, 8-10% of your monthly rent (you could save here by managing tenants and maintenance yourself, but you don't want it to become a burden down the line since you'll be out of state, so I would evaluate the house's profitability WITH a property manager just so it's already in your expense budget should you need to use one)

5. Lawn care (if your tenant isn't expected to per your lease)

6. a monthly allowance saved for minor repairs (if it's an older home, error on the higher side of this)

7. a monthly allowance that gets saved up for larger repairs (roof replacement, HVAC replacement, appliances, etc)

What's left after subtracting the expense section from your revenue section? If it's still $100+ a month, I'd lean towards keeping LR and over the next year or two save as much as you can towards a down payment for Dallas. If it's not, then I'd look at selling and using the proceeds to go towards the Dallas property...if you purchased LR a couple of years ago, chances are the current market value is 20% or more than it was when you bought it.  

End of day, if your house in LR is a good cash-flowing asset with the current debt under it, find a way to keep it. But if it's not, it could eventually become a bigger liability and now would be a good time to sell it and use the proceeds towards your very wise house-hacking plan in a future market.

@Paul Winka Most participants over the last 3-4 weeks have been majority local. Maybe 1 or 2 people per call outside of Arkansas from what I remember. That being said, the overall participation appears to be on the rise, at least when comparing early June to now.

@Mike Reynolds Come on up. Yes it appears the Hot Springs group likes to meet on the weekends. Unfortunately I'm in same boat as you and can't attend this weekend, but I'd like to make their August meeting.

Paul - the meetup.com platform might be dead for these parts, but https://www.arkreia.com/ is still active with weekly web meetings and they just recently started back at in person meetings. It appears they will be trying to maintain at least one in-person meeting per month. I just went to one last week...there were at least 30-40 folks there, maybe a few more, and I'm sure this will continue to grow as the consistency of the meetings is maintained. Randy provides good information on the weekly web meetings as well. 

Thanks, Rachel. For those types of properties that you provide 20-30yr terms, do you normally require about a 10% down payment?

Has anyone written any seller notes for a buyer recently? Within the last 4-8 months?

Wanting to get an idea of what interest rates you were able to charge, length of term, and price the property sold for.

Thanks!

what are you currently putting in the heading, Jeff? And what's the makeup of the targeted prospects?

Thanks Theresa and Nathan for your input. 

Hi BP Gurus -

I have a 100 year old 4plex property in arkansas, 3200sqft total. Electrical and plumbing have been updated over the years. B, B- type property class. I’ve struggled finding many options for insuring it due to age. 

The least expensive option and my current insurer is charging an annual premium that equals roughly 8.5% of annual rent, assuming 100% occupancy at current rental rates. 

Does this jive with what some of you are paying for a similar property? 

thanks! 

Caleb - Like a few others have implied, I would not count on that private equity being available at 2% if overall interest rates rise. I too have access to a margin account that currently offers a very low rate, but that same line of credit 3 years ago was a full 4-5% points higher. Additionally, your private equity is probably on a variable rate? So if you borrow $100k at 2% right now, if interest rates do spike 4-5% in 3 years, then you're going to be paying more interest on your loan balance, which will negatively affect your cash flow.

My personal advise under current conditions would be to lock into a fixed low rate for as long as possible. Use your private equity source to secure deals rapidly, then convert as much of that deal to long term fixed debt as possible, even if that debt is 1-2% higher than your current floating private equity rate.

This is all assuming a buy / hold strategy. If you don't intend to hold onto the property long term, then other options might be better.