All Forum Posts by: Sam Harover

@Andrew Freed

Thanks for the reply Andrew!

Working with a real estate agent we’re very familiar with down there, the only price I’d accept from our tenant would actually be suggested listing price he gave us. We’d save a decent amount on his cut without listing it (although we’d still use him to help closing it out) and we’d save a good amount on doing any repairs. Plus if we’d be able to close immediately with her, and or charge a prorated amount of rent until closing, I think overall we’d make about the most we could selling to her (unless prices had climbed even higher by then).

We have very little equity in the house, as it was bought on a USDA loan a couple of years ago. Never intended for it to be a rental, but work moved me away again very quickly. The house was recently remodeled so repair costs are low enough it cash flows fine. A worry going forward is that as the house ages, repair costs will go up, and it does not cash flow nearly well enough to outsource all repairs from out of state. It would probably be fine for a handful of years, but If we could fetch a great profit for it now, which it looks like we can, it would be a great stress reliever to start fresh here with something that the math works better on.

Selling an out of state investment. Won’t get into too many of the details here, but essentially own a house 600 miles away and will be selling it to buy something locally, probably a duplex, that I can live in and rent out.

Tenants lease ends Nov 30th. She wants to buy the house, asked if we could extend the lease to February for her to try and get approved for a loan. I’d say it’s a 50/50 shot she gets approved?

I have no issue with it, as I don’t expect to buy anything locally for at least a year, wouldn’t change my plans at all. If we gave her until February and she didn’t get approved, also not a horrible situation, we could just put it on the market then. My only concern is could the house value drop drastically by then? Are there any signs of the market cooling off in the next few months, and do I need to sell the house sooner rather than later?

A brief description of the scenario, and then I'll post some more specific numbers below:

Almost two-years ago I moved to South Georgia for work and bought a house very quickly as the move was rushed. I had hoped that this house could one day be a rental, but was not dead-set on that, as I foresaw myself living there for many years - so I didn't search for the best deal to one day turn it into a rental (nor did I have time, the move was sudden). Fast forward a year and a half and I ended up moving back to where I'm from (Kentucky) for a different job opportunity. Even though the house could have sold for considerably  more than I bought it for, I had almost no equity in it and would have walked away 5,000 in the hole. Fast forward again, and I've now been renting my house out for 7-months. The market continues to stay hot, and after my tenants lease is up in November, I'm tempted to sell the house for a small profit that will remove me from a slightly risky investment and allow me to start fresh back in KY (Where I'm currently renting and saving to buy a duplex to "house-hack"). 

My main reason for selling is because I'm worried about trying to find new tenants every year (if these tenants don't renew) and going through that process out of state. I was able to interview and select this first set of tenants in person, but do not plan to spend time in Georgia every  year to find replacements. I don't think the house cash flows enough to hire a property manager, and my current plan is to pay a friend to host a couple open houses if the tenants move out. The house had lots of interest the first time around, but the rent we charge is quite high for the area. 

As far as maintenance, it hasn't been too rough as the house itself is in decent shape. I bought it remodeled, and so far I've only had one sizable maintenance expense. But who knows what larger costs could be lurking and that also causes me stress.

I'm very tempted to walk away from a stressful situation with a couple bucks that I can put towards something where I live (I have no plans of moving again), but I don't want to make a stupid decision based off of fear. I'm going to put the numbers I have below and would love any advice some more experienced investors and landlords could give me (I'll keep the numbers generic to make it a little cleaner, but accurate).

Numbers on the Georgia House:

176,000 Purchased

169,000 Loan left

3.75% interest

Renting #'s: 

1,600 Rent

1,100 Mortgage (includes tax, insurance, and paying an extra $100 in principal than min.)

500 gross

-200 (Maintenance and Vacancy. Recently remodeled house so honestly a wild guess at 100/month plus 1 month of mortgage for vacancy).

~ +300 Net Cash Flow

Selling #'s (just taken from zillow for est.)

200,000 selling price

-6,000 prep/repair costs

-15,411 closing costs

= +6,700 in profit (+ ~$5,000 in savings from rent cash flow, giving me 12,000 to walk away and put towards duplex).

Conclusion:

I know the #'s here are pretty generic but I given the short amount of time I've owned the house I think they're accurate.

Is it better to cash flow $300 (400 if we quit paying off the extra principal each month) and build equity in the house for years to come, with the risk of renting out of state or to walk away with $12,000 from the entire ordeal and a lot of lessons learned? And if  continuing to rent is the better choice, at what # does selling make more since? 10,000 profit? 15,000? Not sure where the market will be in November, just trying to think ahead.

Any and all advice will be greatly appreciated and read.

Thank you,

@William S.

Looking for my second investment and am leaning to a duplex-fourplex house hack.

They’re never listed on zillow, where do you find the property listings?

@Jim K. I add 48 and 20, then tack on the 7.

@Adam Lippa Thanks for the note Adam.

I haven't been on in a while and just saw this. I ended up buying a reliable small mower for the tenants to use, and included yard upkeep in the lease for them.

The girls I'm renting to work in a nursery, and as parts of the back yard have nothing really growing there, I told them to feel free to plant whatever they wanted.

They seemed to take some pride in how it looks and enjoy it, plus it saves me from paying some super expensive bi-weekly bill to have some professionals come do it.

Originally posted by @Forrest Faulconer:

Hey @Sam Harover, my first landlording experience was renting out our home and moving out of country, I can relate! A washer/dryer is not required but can be a plus, plenty of quality used ones online. I recommend cleaning it up well and having professional pictures taken for advertising, schedule showings on the same day or weekend in time slots, advertise through all means you can think of: Zillow, apartments.com, trulia, cozy etc. Screen and interview well!!!

I would invest in a lawnmower and have in the lease that the tenant is responsible for maintaining the lawn. If your property is more high maintenance you may want to invest in a landscape person. I trimmed back trees and vines way back to minimize the need for that. Installed gutter protectors to reduce cleaning those out. When you leave the house leave it clean, trimmed, tidy to set the expectations high.

I bought and mailed my tenants a years worth of air filters to replace and root killer for the sewage line. I had them set reminders on their phones, I did as well and sent a text when it was the right time. 

I essentially thought of everything that could be set up ahead of time to drastically reduce the upkeep. I ended up having A+ tenants that treated the house as their own. I don't know if I just got lucky or if putting in the extra effort paid off! Maybe a little bit of both!

Good luck!

Forrest

Forrest,

Thanks for all of the great advice, I really appreciate it. Best of luck on all your future endeavors. 

Hey All,

I'm moving in a month and I plan to rent out our current house starting December 1. The price range this house falls in will cashflow pretty well, so my main concern is getting things right from the start.

Legally I've read I need to change my home insurance, any other issues I should look into? I've been a resident for over a year, and reading over our loan there should be no issues there.

Should I provide a lawnmower and have my tenants mow, or outsource for that?

I'll be living in a different state, I have people that can come over and check on serious things, but what about little stuff, like changing air filters. Is it acceptable to have your tenants do that?

Should I provide a washer and dryer?

Really any other advice would be amazing. We have a lot of life changes going on at the moment, so there's plenty of logical questions I have that I can't think of at the moment.

Thanks,

Sam

I purchased my home 13-months ago. I was looking into selling it for various reasons.

I purchased it with a USDA loan. I’ve read some things about the owner occupancy but can’t find any timeline. Is there any issue selling a home purchased with a USDA loan after 1-year?

If I sell it under the 2-year mark and profit, will I have to pay capital gains tax (Georgia)?

I’m 25 and I am leaving my well paying job to pursue something I’ve always had interest in - brewing beer. I’ll be taking a significant pay cut, but the hope is that I learn the necessary skills to open my own brewery. I was hoping to work another year at my current job to save more money (currently I have around $15,000) but mentally I could not take it anymore, and am working my final month.

I have had a keen interest in real estate investing for years, read a few books, listened to lots of podcasts, but I still have a ton to learn. I plan on putting the money into something safe for a year or so while I absorb as much info as possible before making the leap.

Does anyone have suggestions on specific resources I should use, what other steps I should take over the next year, and what specific path I should take in RIE?

Is $15,000-$20,000 enough to start with?

I’d appreciate any and all advice.