All Forum Posts by: Sarah D.

@Dan H. We do still live in one; you're welcome to stop by!

@Dan H. Thanks for your kind words!  I agree that we benefited from market appreciation as well.  Also, given that refi appraisals are usually lower I'm hoping this means that if we wanted to sell we could count on another $100K+.

I'm beyond excited to be able to share this. 18 months ago @Chris Dumm and I sold our house and bought a 4 unit complex. The complex had good bones but was a C property (in terms of condition and tenants) in a B neighborhood. We moved into one unit and got to work! We gave the old tenants 60 days notice and renovated each unit.  We put in completely new kitchens, upgraded the electrical, renovated bathrooms, new flooring and paint, etc. We added on site laundry and redid all the landscaping.

Doing all this allowed us to increase rents 30%+, which means the three rented units cover the PITI for the property so we have no housing costs. But as this was a BRRRR, the true mark of success would come when we could pull some of our cash out (we knew we would never pull it all out) to fund the next purchase.

Our original plan for the property was a cash out refi. Unfortunately, one of two big mistakes we made was not planning for the possibility of rates rising; with a huge mortgage a 0.5-0.75% interest rate increase makes a huge difference. Luckily, there's one bank which does HELOCs on OO 4 units. But they won't count rental income until it's reported on tax returns, and all our new tenants had moved in Q1 of 2017, so we wouldn't have the rental income on our taxes for almost a year.

So we waited. And waited. And waited some more. And of course while we waited life kept us busy, units turned over, and we wrapped up some final improvements to the property we didn't get to in the first round. Finally, it was time to do our taxes! And just as quickly start the HELOC process.

This Monday we had the property appraised. Knowing that refi appraisals are notoriously lower than purchase appraisals we anxiously awaited the appraiser's analysis. Today we got the number; here's the breakdown:

Purchase price: $1.175M

Down payment: $235K

Renovation cost: $63K

Sweat equity: Enough to fill a dozen home depot 5 gallon buckets

Initial goal ARV: $1.35M

Actual appraisal: $1.4M!!!

We actually beat our goal! With 18 months and $298K we increased out net worth by $225K! And that doesn't even include the $25K of the mortgage paid down in that time. Assuming our DTI allows it, we can pull out $200K and maintain an 80% LTV on the property.

We've known this whole time that this property was worth it, but this kind of outside validation feels amazing. This has been a tough road, and we've grown by leaps and bounds in terms of our renovation understanding and our landlording skills.

I don't yet have final numbers on loan amount and terms, but even if the story stopped here I consider it a success. More importantly we've almost reached one of our 2018 goal- be ready to buy another multifamily.  Onwards and upwards! 

I used to get so nervous around the 1st of the month and would check our Cozy account non-stop!  That feeling will pass (took me about a year).

For new tenants I just send a text reminder on the 4th if their payment hasn't initiated by then.  Never had a problem.  Also, if your tenant manually pays they may initiate their payment based on when they get their paycheck.  Anyone paid biweekly will be paid tomorrow.

@Jim Adrian  Thanks for your thoughts!  We've had two other tenants that had to move out of the area due to deployment and both gave the required 30 day notice and provided documentation.  These tenants are staying in the area but wanted to move to a bigger place...

@Ericka G.  Thank you for your perspective!  Glad to know it's not just me.

@Joe Splitrock We did TSP wash the walls before painting, but even after the wash and rinse they looked dingy; the smoke damage wasn't as visible but the walls looked really sad (sort of looked like the wall by my 4 year old's bed, which I have washed numerous times).  This is a fully remodeled unit so I didn't think we would get the best renters if we did not repaint.  Even if you don't consciously notice the dingy walls, I think people can subconsciously 'feel' that the place was kind of tired.  And yes, we now have a candle policy in our lease.  

@Jerome K.  No overlap; we posted the unit about a week later than expected because we had to repaint due to candle smoke damaged walls.

@Colleen F.  Thanks for your thoughts!  

@Dan H. They were there a year and left the place smoke damaged from scented candles!  Did you know that could happen?  I sure didn't.  They are also getting charged for that.

Thank you for your input, it is very appreciated!

@Anthony R. We had a tenant who had to do just that.  He provided the documentation and a 30 day notice (as required by SCRA).  

In this tenants case I really this they just wanted to get the move done before the husbands deployment and didn't/don't care about their 30 day notice obligation.

@Account Closed  They already left.  We have new renters moving in next week.  This is strictly a deposit return issue.  Sounds like you would just let it go.  Good to know!  Perhaps it is petty?

However, what good is a lease if people aren't held to the provisions?