All Forum Posts by: Andrew Allen

My TLDR advice: Killeen is good for cash flow but you'll see almost no appreciation. I have owned a house there since 2003 and its actually depreciated in price if you take into account inflation. Rent has not gone up in a decade. They've seriously overbuilt Killeen since most GIs want to use the VA loan to buy a house (like me), and become landlords. Who would want to rent an old home when you can buy a newer one for nothing-down and lower monthly payments? Then they PCS after 3 years and leave another rental house. So most of the residents there are tenants, for obvious reasons and most of the actual owners are absentee landlords. That's why its so ghetto in most places. I don't like owning a house there, but don't have any better place to put the money at this time. Be happy to talk more if you'd like.

You can’t calculate ROI from that example. Even assuming $0 appreciation you’d be ignoring amortization and depreciation. I’m just saying if you look beyond cash flow sometimes it might make sense. More extreme example, would you rather buy a house for $0 down with slightly negative cash flow or one with positive cash flow for $40k down? Again you can’t calculate ROI with this example but there are situations where taking the house for $0 down makes sense.

There are some situations where a negative cash flow makes sense. Simple example, if you can buy a house for $0 down that cash flows $ -100 a month, from a "cash in bank after 1 year" view, that's the same as putting $2400 down for a house that cash flows $100 a month. In both situations after 1 year you are down $1200 out of pocket...and the first situation is actually better if you take into account time value of money.

Obviously a very simplistic example and there are tons of other factors involved...and lots of assumptions to be made.

@Gary Ennis yeah kinda sucks...went through this about 6 months ago. What I did to solve the problem was refinance a rental, used the cash to pay off the 2nd mortgage on my primary residence, then took out a HELOC on my home...basically shuffling money around.

You can’t do a HELOC on a rental in Texas.

@Chirag Shah your estimate approx sounds great but I don't think it will work out in real life. The one thing you're missing is time & demand. In general demand is high right now for great contractors, and they're charging more to reflect that. Seasonally, demand is lower in the winter so you'll see seasonal pricing also. Time-wise, if you want a job done next week you're going to probably pay a lot more than if you're willing to wait 5 months for the contractor to squeeze you in.

I find the best way to get an estimate is just to ask for referrals and get 3-4 bids. That's way more accurate than trying to back-in using a formula. 

@Jim Macedon, what are you looking for? Buy-and-hold SFH?

Stephanie Douglass I used Max Leaman .

That said, with those numbers I don't think a cash out refi will make sense...doubt it will cash flow if you lever up. You should sell before you lose the capital gains exclusion and put that money into something else with a better ROE. Yes I know easier said than done

It's not true you can't cash out refi a rental in Texas. I just did it.