All Forum Posts by: Ryan Treacy

With property management fees, I'll be cash flowing around <$100/month. It's out of state, so I would prefer not to self manage.

Thank you, it feels a bit surreal as I've been wanting to do this for a few years now. 

Quote from @Caleb Brown:

Got it. So you might be leaving some money in? Obviously it's not ideal but it still seems like a decent deal. If you hold for a few years it'll appreciate and turn into a home run

Good to hear an outside opinion. I very well could be overreacting from the renovation cost and estimated rent descrease.
I agree that the long game is the way to go here, it’s just painful to have this much personal capital in the property. It’s not the worst situation to be in but I wish I would have finance the project differently. 
thanks for your insight!

Quote from @Devin Peterson:

A lot of great information was provided but what is your salient purpose? I do not see this. Are you trying to cash out to scale?

There are two main things I’d like to accomplish:
1. I used a significant amount of my personal emergency fund for the unexpected repairs. I’d like to replenish this.
2. I’m ready for the next project but don’t have enough for a down payment. I know there are lenders who cover 100% of the purchase and renovation cost, but I’d like to avoid being over leveraged. Again, I’m still learning the finance side so it’s very possible that I’m being too conservative or missing a creative financing route.  

Quote from @Caleb Brown:

What's the ARV? Doesn't seem like a bad deal with the numbers you provided.

ARV is roughly $160-170k

Some recently sold comps in the neighborhood: $170,000, $178,000, $195,000. My property is not at the level of finish these are, so I would expect to be on the lower end of this scale. 

Hi everyone,
Writing in to get some advice on how to proceed with my first rental property. I purchased the property in mid-April and I’ll be done with the renovation after this weekend. I don’t believe that I got the best deal on the property, but proceeded with the purchase as I felt I was falling into analysis paralysis. I am an architect and used to work in construction. I have a lot of experience on the design and construction side, but I lack experience on the finance side.

I made several errors up front:

• I overpaid for the property
• I underestimated the renovation cost (uncovered several high cost necessary repairs)
• I didn’t (and still don’t) have a clear strategy for how I can refinance to pull some of my personal capital out of the property.
• Overestimated rental income

Some positives with this property and experience:

• I learned a ton during this process that I would have never learned in a course or reading a book
• Appreciation: The neighborhood seems to be up and coming. There are several renovations on my block in process and recently completed. There is a new build across the street.
• Forced Appreciation: I added a full en-suite bathroom during the renovation
• Forced appreciation: upgraded the finishes throughout the house

Supporting information:

• Purchase price: $115,000, 25% down, 7.25% conventional loan
• Bank Appraisal: $135,000 (before bathroom addition, renovation)
• Renovation: $30,000 (currently have $10k of that on a 0% credit card)
• Rent: ~$1,400 (originally estimated $1,700)
• I transferred the property into an LLC
• I am not interested in selling the property as I think the neighborhood will continue to appreciate. I also think I would lose money on the property if I were to sell now.

My questions for the group:

1. Have you been in a similar situation with a property? How did you proceed?
2. What are my options to refinance the property?