All Forum Posts by: Ryan Perkins

David O Thanks for the response. I live in an area with a lot of larger families and I believe that adding that 4th bedroom and 3rd bathroom will have a significant impact on the amount I can charge for rent.

My question: Would it be a good strategy to finish my basement using funds from a zero-interest credit card, then refinance/pull out the cash to pay the card off and rent out the property?

The details: I'm looking to turn my current primarily residence (a single family house) into a rental. It's a 3 bedroom 2 bath with a partially finished basement. I'd like to add another bedroom/bathroom and complete the living area in the basement in an effort to increase the overall value as well as the amount I can charge per month. The problem is, I don't have the cash for it. I do howerever have a zero interest credit card. I also have access to high quality flooring at wholesale cost as well as the ability to do most of the work myself. 

What I'm thinking may be a good option is to fund this work using the zero-interest credit card, then refinance, pull out the forced equity to pay off the card and then rent out the house. 

I purchased the property 7 months ago for $195k. It appraised for $200k. I currently owe $187k. Based on comps, I think I could force the value up to around $220-225k. 

I'm a newbie and have never refinanced before so I could really use some advice/feedback. Is this a good idea? Am I going to run into problems with loan to value? What pieces of the puzzle am I missing? Thanks in advance!

@Luc Boiron Thanks for the advice. That makes a lot of sense and is very helpful. 

@Ryan E. Thanks so much! @Jeff Rappaport Can you confirm this? I'd love to get the details if this is still happening on a regular basis.

Thanks to everyone for the input so far. @Michael Totman You're 100% correct; I meant that, on most projects, you only recoup 60-70% of the cost (based on the data I've seen). ROI was definitely not the correct term in this case, so thank you for clarifying.

Here's a little more info on the property. I just purchased it about 3 months ago. It's in a small, but quickly growing area. My loan on the house was for $189,000. The property appraised for $200,000. It's about 2100 sq. feet with 3 bedrooms and two bathrooms. It's about 10 years old, nothing fancy but most things are in good condition. 

The house has a basement that's nearly half finished. The living area of the basement has lights, dry wall, paint, electric outlets, etc. It's just missing flooring. My hope would be that, simply by adding carpet to that area would allow me to consider it a half finished basement and would bump up the property value. 

Some of the other projects/improvements I've considered:

• The back yard has no lawn. I'd like to plant grass back there and turn it into a real yard. Maybe even add a small deck (DIY).
• I have connections that may allow me to purchase some flooring at whole sale price and have considered upgrading the flooring through the entry, the living area, and the kitchen.
• The kitchen is in good condition, but slightly outdated. I'd like to repaint the kitchen cabinets, add hardware to them, and add a nicer faucet.
• I could also add a bathroom to the basement fairly easily, but I'm not sure how useful this would be as there are currently no bedrooms down there.

I'd love to hear anyone's opinions or ideas on the strategy that may be most beneficial. 

I recently purchased a single family home as my primary residence with the intention of making some relatively minor updates/improvements, pulling out the forced equity to go towards another property, and then turning the home into a rental. 

I'm very confused though as the data I'm seeing seems to indicated that, on average, home repair/remodel projects result in only a 60-70% ROI. Does that mean it's impossible for me to force equity by completing projects such as finishing living areas in the basement, adding bedrooms and bathrooms, etc? I mean, I know that those additions will add value to the property, but it seems as if it won't be enough to offset the costs to complete them...

Is my plan totally shot?

I'm a new investor in the Utah County area looking to get involved in the investing community here. Does anyone have any recommendations of REIA meetings in Salt Lake or Utah County that they've enjoyed? Or does anyone know of any other gatherings of that type? Maybe something put on my BP members?

Kammon Hiatt I'd definitely be interested in getting the details on any REIA meet ups you've been to and enjoyed. That's something I'd like to start getting involved in for sure. I'll have to PM you and set up a lunch sometime soon. It'd be great to meet someone local and talk real estate.

Kammon Hiatt it's so good to hear from another investor around here. Have you come across any others in the eagle mountain/Saratoga springs area? I'd be very interested in getting together with some people that are actively investing to hear their stories. Your strategy sounds great. Will that be your first rental or do you have other investment properties?

@Becca Summers Thanks Becca. Yeah, for how few Perkins are in the Northern Utah area, I'm directly related to very few of them. Always fun to meet another though :)

You mentioned you started out house hacking. I'm assuming that means at this point you have at least one stand alone rental property. Would you mind telling me about it? I hear so much about the 2% and other similar rules and, from what I've seen, that just doesn't seem possible in this area (even in the least expensive parts). Do you find that it's hard to find properties that actually cash flow?