All Forum Posts by: Sammy Brooks

Thanks for all the replies! Another point of clarification: I'm now living in Houston, hence the need for a property manager. I will hold this property for a few years and prepare for the eventual hit on CAPEX. Thanks again for the input, learning a lot of good data here.

 Thank you, this reply alone pretty much made up my mind to hold. Really appreciate the feedback!

To clarify, the refi was a cash out refi. I bought the property for 101K about ten years back, and took out 40K in cash. It has not been a primary residence in years, so I did confirm with the CPA of the tax hit if I were to sell.

This info makes things a lot clearer. Thanks for the feedback!

Hi All,

We recently took a family property and converted into a rental. I am now having some second thoughts, after discussing with a local investor. I'd like to hear some seasoned opinions if possible, since I'm still new to this space.

This is the first property that I've made into a rental. It was built in 1977, lately updated on applicances and roof, but otherwise an older property.

Mortgage and escrow: $858.54.  I refied for 3.99% in Feb 2022.

Rent payment: $1250

Property Management fee: $125

Repair costs since conversion to rental: $2636.48

Mortgage balance left: $141,631.67

Zestimate to value: $201,200

Checked with my CPA and I'm looking at about a $20k tax hit if I were to sell based on the amounts above.

As you can see, my cash flow is not very strong, and I'm considering to sell and find a newer/better placed properry. But I'm not sure if it would be worth it with the closing costs and the tax bill. House is based in NC.  Or should I just hold for the time being?

Thanks in advance!

Hi Steve, could you tell me more? Wouldn't this be a tax event? I should clarify that I initially bought the house as a primary residence and that I've never claimed in my taxes as a rental property. Thanks in advance!

Thanks for all the responses! I should explain a bit better...NC house is worth between 165-180K now with 74K left on the mortgage. So the upside is a bit larger initially for a sale versus cash out refi.

With refi, payment would come out to roughly $750/mo for mortgage, and estimated rent payment at $1100.

PM comes highly recommended, well known to business acquaintances and family.

Re: 1031, we already would have someone lined up in TX, if we decided to go that route.  

Would these factors change the analysis any?

Newby here. I find myself in an envious position, and was hoping to get some seasoned feedback on what to do. I have a house that I bought for my parents years ago in NC (3bed/2bath). The mortgage was for 100K, with 10K as down payment. That was the extent of my investment. My thoughts at the time was to eventually turn it into a rental unit someday. Family has made all all the mortgage payments in the meantime, and incremental improvements to the property over time (added back deck with ramp, double paned windows to all bedrooms and living room). Water heater new, HVAC recently updated.

Fast forward ten years, and I am now living in TX and with plans to have my mom move in with us here. So a couple of options to consider with the NC house, now that I've had agents view the place:

1. Sell, for around 165K-180K (after replacing carpet/paint, landscaping). If so we would go directly into a 1031 exchange for a local rental property purchase in TX.

2. Convert home to official rental property using local management company (after replacing carpet/paint, landscaping). We would then go for cash out refi for roughly 55K once tenant is lined up. We would then use these funds for next deposit for rental property in TX.

Am I missing anything obvious here? Am leaning towards the cash out refi in order to avoid the tax event but I'm sure there is something else we're not seeing here.  Thanks in advance!