All Forum Posts by: Rob Roy

Thanks everyone for all the responses!

@David Faulkner That is what I was going for- rent out the in-law suite/basement of a SFH, but my fear is once I leave the area I'll have this SFH and could rent it 'illegally' as two units and won't be there to keep an eye on things. Or I'll rent it out as a single family house, but then the cash flow wouldn't be anywhere close to being positive. And this one is on me, but renting out individual rooms in a SFH as a married man with two dogs is not really practical for my wife and I :-/

@Alex Deacon I'm from PA and would love to have those kind of duplex options available to me in Annapolis!  I know you are probably a Sheetz fan... but I'm all about that Wawa!

@Malcolm Lawson Yea the place we put an offer on was nicely flipped and the bottom "unit" really did feel like an apartment all on its own.  It would have been a 2/2 upstairs and 2/1 downstairs.  But now we are looking at "cheaper" townhouse options between $210K-$260K that would get us a lot closer to the 1% rule with a renter in there.  If we go this route, we would buy the townhouse as a primary residence, move out after year and get tenants in and then go buy another one to rinse and repeat.   The idea being to have three townhouse rentals by the time we leave there in 3 years. 

@Michael Hayworth My fear is that after I leave the area in 3 years, even if I did rent out the basement while I was there, once I leave it would make terrible financial sense to rent it out as a single family house- the listing prices are too high and the rental prices are too low for the SFHs in this area to cash flow (most SFHs between $360K-$420K seem to rent around $2,000-$2,600 a month). So unless I go to sell it, there really wouldn't be any sense in buying a SFH as a future SFR down the road in this market.

@Joshua Velte This is great advice and would seem to jive with what we are leaning towards currently.  I just really wanted to find a way to house hack while I was there.  I'll keep an eye out for a townhouse with a basement and separate entrance - this way I could have the best of both worlds.  And that's good to know about the condos. 

@Elizabeth Wilson Fantastic tip!  I will call the zoning office again, but to my recollection they said non-family dwelling in your house and paying rent constitutes as a multi-family property.  They didn't have a problem with renting out your whole house once you're gone, but if you rent out a room or unit the property has to be greater than 14,000 sqft AND you have to be living there.   But I will certainly look into it again..

For some reason, the last part of my post got cut off..

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All the properties we have looked at are less than 10,000 sq.ft. and now I'm not sure what to do. It appears to be near impossible to find a SFH that would rent even close to 1% RTV when we move out and we both don't want to commute 45 minutes to work in order to find a multi-family that would work. A huge reason we took orders to Annapolis in the first place was to live close to that area. Any other suggestions you have would be much appreciated. @Scott Trench I'm trying to practice what you preach, but the man is keeping me down!

Also, I know of a few other people that are renting out their basements full time in the same type of zoned areas in Annapolis. Are they doing this under the radar or is there something I'm missing?

Thanks!

Hello!

I'll be stationed in Annapolis, MD soon and have been looking for any property where I could cash flow, while still finding a place that my wife and I will enjoy living in. In this area, there are virtually ZERO multiplexes that are affordable (found a duplex for $650,000 once...). What this area does have though, are a lot of split level houses where the lower level is considered an in-law suite and many have separate outside entrances, a full bath/bedroom and we would put in a kitchenette and permanent door to create a separate unit. Long story short, I've looked at countless houses online, met with a realtor twice and saw over 25 houses in person and finally put an offer on one the other day. The seller chose a higher offer; so I rolled right into putting an offer on house #2, when I thought about the zoning a little more. We had a conversation with the realtor weeks ago and she assured us that the area we are looking in would be "totally fine" to have a basement rental - only historic Annapolis is where you need to have a permit. Well I finally took it upon myself to do my own due diligence and called the zoning office directly for Anne Arundel County. The agent told me that the neighborhood that we are looking at is zoned as R5 and multi-units and such are only allowed in R10/R15 zoned areas (which is essentially the town center and a few other small pockets). According to the zoning agent, the only way to legally split a SFH and rent out one unit is if the lot is >14,000 sq.ft. AND if you live in one of the units (my original plan was to move out after a year and then BRRRR the two units and go do it again two more times while I would be there and in total leave with 6 units in my portfolio). All the properties we have looked at are <10,000 sq.ft. and now I'm not sure what to do. It appears to be near impossible to find a SFH that would rent even close to 1% RTV when we move out and we both don't want to commute 45 minutes to work in order to find a multi-family that would work. A huge reason we took orders to Annapolis in the first place was to live close to that area. Any other suggestions you have would be much appreciated. @Scott Trench I'm trying to practice what you preach, but the man is keeping me down!

Also, I know of a few other people that are renting out their basements full time in the same type of zoned areas in Annapolis.  Are they doing this under the radar or is there something I'm missing?

Thanks!

I'm a Navy Pilot and just starting out in the world of REI. When I'm not pushing paperwork at my squadron, I'm usually flying up and down the East Coast or landing on an aircraft carrier at sea. Though, it's not all as glamorous as it seems... Nevertheless, I spend a good portion of my free time learning about real estate so I can become financially free once I get out of the military in a few years' time!

@Derrick Dill @Heather Horton Can one withdraw from their Roth IRA contributions (not touching the earnings) penalty free - even if the money has been in the account for less than 5 years?

For example, just over a year ago I maxed out 2015's Roth IRA contribution limit for my wife and I ($11,000 total) and over the last year have maxed both out again for 2016. So in total, I've contributed $22,000, but the accounts are worth around $25,000. If I pull out $22,000 and keep the remaining $3,000 in the Roth IRA, will I not be penalized 10%?

Of course I invested in a Roth IRA before I ever even considered REI and now know I can put that $22,000 to much better use elsewhere...

Thanks!

@Dan Rudolph I would have to agree 100% with choosing a Vanguard ETF. I specifically chose TD Ameritrade because of their commission-free ETFs and their 5 star reviews as a great online broker. I think VCSH is a great choice too. Before deciding to stop my Roth IRA contributions, I was putting all of my money into VBR and VUG (aggressive accounts for the long haul). But I had the same question as @Blake King recently and definitely think a Vanguard ETF is the way to go.

Which leads me to another question, is it true that I can pull out my contributions from my Roth IRA penalty free (as I already paid taxes on them), as long as I don't touch the gains? Even if they have been in <5 years? Doing this would give me about $20K that I should have put into a real estate investing account initially, but was none the wiser at the time.

@Kimberly Gopp Yes, BP is awesome and the podcasts are great.  The best thing about RE podcasts are the guests they have on, who have podcasts of their own!  So I'm continually listening to different RE podcasts and always leaning more from different perspectives.  Thanks for reaching out!

BEAT ARMY!

Hello!

My name is Rob Roy and all of my life up to this point has been dedicated to achieving a life-long dream of becoming a Naval Aviator.  However, now I'm looking towards the future.  I have recently decided that I must supplement my current government income through passive means so that I can set myself up for a great position to "escape the rat race" when I transition to civilian life in a few years.  I am doing all I can now to educate myself (through podcasts, books, etc.) on the ins and outs of real estate investing and each week I feel more confident in my ability to truly thrive in this arena in the not too distant future.  I look forward to getting to know all of you and am excited for the opportunities that lie ahead!