All Forum Posts by: Jon Elson

Currently analyzing a rental property with a tenant who is a heavy cigarette smoker. The property was recently painted. The property is sold subject-to the current lease, which lasts another 6-12 months. The tenant is relatively new to the property (may turnover after lease) and a heavy smoker. If the current lease does not prohibit indoor smoking, is this a deal breaker on a rental property (assuming it cash flows as-is)? Does anyone have experience “de-smoke-ifying” a property? I am comfortable with having the walls and ceiling repainted once the tenant moves out; however, will there be issues with the kitchen cabinets, windows, ect. smelling like smoke? I am posing this question b/c I have never lived in a home with someone who smokes or dealt with this in the past.

What I'm talking about is not a loan from the IRA, it's using hte 401k funds personally, and contributing the funds to the IRA withing the 60 day period allowed by the IRS. However, I don't think that gives me enough room to ge the money back into the IRA account. Therefore, I want to go the way of a refinance. However, I'm torn betweek the 15 and 30 year loans for the reasons above.

These are great points.  I have considered the 30 year option while making the same payment as I would on a 15 year.  However, I'd be paying an additional $200/month in interest.  So, say the 30 yr mortgage is $1400 and the 15 yr is 1800, I would need to pay an additional 600 instead of 400 against the 30 year to pay it off in 15 years with the higher interest rate on the 30 year mortgage. 

The other aspect I was thinking of is using the equity in the house in a HELOC for investment purposes, so would paying the extra equity in the 15 year essentially be like putting the $ in the bank that I can take out whenever I want through a HELOC?

I was originally going to take out a HELOC on my house in the first place (in-lieu of refinancing), but with the my credit being maxed out at the moment, my score dropped 100 points, which messed up my interest rate. So, I figured a refi is a way to get the lower interest rate and boost the credit score back up. This also would leave my debt/income ratio pretty high until I got HELOC paid off, but would leave me able to barrow against 45% of my homes value once it was paid off in 3-4 years.

I was also thinking about transferring $ from a 401k into a self directed IRA. This would allow me 60 days to get the $ into the IRA. However, it seemed really tight to get the $ from the 401K, to the credit cards/LOC, apply for the refi, get the appraisal, and have the cash from the refi soon enough to put into the IRA.

Any other ideas?

I recently did a rehab on my personal residence. Instead of selling, I will refinance, get cash out to pay off the refi and put myself in a zero debt position (except for the mortgage) to allow easier lending on investments.

15 yr - pay off home faster, better interest rate, higher fixed payments, 26% debt to income ratio, and increase equity for future HELOC's

30 yr - lower fixed payment, 20% debt to income ratio, higher interest rate, less equity for HELOC later.

Which is better way to finance a personal residence for a new investor trying to finance flips/buy-and-holds for short and long term.

15 yr - saves $ (interest) long-term and allows greater future barrowing through HELOC (which can be barrowed up to 95% and the home will be at 80% after refi).

30 yr - more cash in your pocket now and lower debt to income for future barrowings.

What do you think would be more advantageous for a newbie?

What would happen to my credit score in the end if I were to use an interest free credit card to finance a flip, flipped the house, and paid back the card?

I understand that my score would initially go down b/c I am using more than 75% of my available credit, but once it was all paid back off, would my score go back up to it's original level, higher, or lower?

Any ideas @Albert Bui ?

The 50% down was in the terms of his contract, I haven't discussed why he needed that much up front yet; I will definitely question this once I decide that I'm going to go with this GC. 

I will definitely get additional quotes, I got a few smaller quotes from a handyman and the GC is comparable on restoring the floors and painting the house, which leads me to believe that he's got decent prices... At this point I'm really questioning whether to go with a GC or sub it out myself to learn about the business and create a little more profit. 

Thanks for your replies guys! I recently got the latest proposal. He decreased his fees to 22% of the total cost of the job. He will be finding the contractors, purchasing material, ect. The only thing I would be responsible for is 50% of the total cost of the job upfront.

I really like the GC that I've been working with to price out the job. I think he would be a great contact to use going forward. However, I'm not sure that there is enough meat on the bone to pay the extra $. I am also toying with the idea to sub out the work myself to decrease the cost and serve as a learning experience. I am rehabbing my own home to sell and pull out my equity to use on future deals, please see the numbers below:

Added value: 45K

Less Cost of rehab: 27K (I didn't want to spend much more than 18K)

Less Additional Realtor Fees: 2.7K (45,000 x 6%)

Less Staging: 2K

Less Holding Cost on Loan: 1K

Additional Equity Upon Sale: 12.3K

So, I guess the question is, is it worth it to take on the risk of the rehab for the extra 12K of profit, I think so. But, since this is my first rehab, am I better off subbing everything out myself to learn the trade and reduce cost vs. having a GC sub everything out which increases cost and alleviates headaches? Another plus to working with the GC is developing that relationship to use him down the road. What are your thoughts?

How much does your contractor usually charge on top of his (or her) subs to manage a rehab job?  I am working with my first contractor, the prices he's getting from his subs are very reasonable, but he's charging 10% for overhead and 20% for profit over and above the sub costs.  Does anyone know if a 30% mark-up is standard operating procedure?

How did your rehab end up going?  I'm in the process of rehabbing my primary residence as well.

First off, I'm a little embarrassed for spelling "vinyl" wrong.  Is there a way to edit my older posts so that I can eliminate these spelling errors?

This is a flip.  I'm new to the flipping game, and starting by flipping my own personal residence.  Houses in this area sell for anywhere between 200 - 300K.

I read a great post @ http://www.biggerpockets.com/forums/67/topics/84596-change-windows where they discussued this exact issue.  I think at the end of the day, I'm going to have to purchase new windows.