All Forum Posts by: Stephanie Medina

I own a LTR in central Houston that I think would be pretty successful as an STR based on the AirDNA data. I also am very interested in purchasing more STRs, and this is a really low risk way to see if I'm up for it (we have a 2.9% interest rate on our mortgage).

My biggest concern is an ongoing plumbing issue we have had. This is a 3 story town home (detached) that shares a private sewage line with 7 other homes. When we lived there up until last year, 1-2x a year there would be a clog that would cause a backup of sewage in the downstairs tub and toilet. The city would come flush the system, and said everyone needs to stop flushing wipes and pouring grease down drains, etc. It persisted despite our best efforts with our neighbors. Once I turned it into a LTR I was determined to solve it, so I had a very reputable plumber camera the line after it happened again. Long story short, he couldn't see anything wrong, but said he would have a lot better idea if he could camera the line during the next clog before it is cleared. He strongly discouraged adding a backwater preventer bc he said he's seen it make things worse. So that has been my "next action step" to wait for a clog to happen again and have him camera it, but it has now been almost 1.5 years with no incidents.

TLDR: There is a chance that the bottom bathroom tub/toilet could fill with sewage during a guest stay, but I am hopeful that the next time it happens will be the last. I just don't know when or if it will happen again.

Would it be a bad idea to move forward with converting my LTR to a STR? If so, and this does happen during a guest stay, how would you handle the situation? Thanks in advance!

Quote from @Dennis Bragg:

@Stephanie Medina

Your question brought me back to a deal a client of mine did in Chicago a few years ago. He took a 401(k) loan to fund the down payment on a four-unit building in a rapidly appreciating neighborhood. The key for him? Treating loan repayments like a non-negotiable expense while reinvesting property cash flow back into building equity. Today, that building generates enough passive income to cover his annual retirement contributions.

You mentioned taking the 10% penalty, which I’d only recommend as a last resort. Instead:

401(k) loans: They’re low-interest, and you’re paying yourself back.

Roth rollovers If you can afford the taxes now, this gives future flexibility.

Creative financing: I’ve seen clients leverage partnerships or seller financing to limit retirement fund withdrawals.

One thing to consider: real estate markets today are vastly different from a decade ago.. so opportunities may require extra creativity.

Have you looked into specific deals yet? Curious what’s catching your eye.

Thank you!  Your post about summarizes what I figured my best options are.  I've also heard about rolling over some money into a self directed IRA to invest in real estate, but that doesn't really solve my problem.  It would, however, give me experience.

I have not seen specific deals yet, I'm still a rookie.  I'm still scoping out all the vastly different opportunities.  I have one LTR, single family home with about 135k equity in it.  I think my next moves may be an out of state duplex and/or a local flip with a realtor friend of mine who has some experience doing it.

For those of you that have good w2 income and want to take advantage of employer matching (100% return!), how do you tap into that money to scale your portfolios?  The way I'm looking at it, if my spouse and I only do employer matching for the 10 years we would have more than enough in there and still 10 years out from being able to access it.

I do plan on doing 401k loans for deals if the numbers check out, and I've considered rolling over some of our 401ks into roth IRAs to access our contributions but we'd have to pay taxes out of pocket (a big hit to cash flow) and we couldn't touch it for 5 years.  Both of our employers now offer roth 401k contributions instead (with matching going into regular 401ks), and I may take advantage of that too, but another small hit to cash flow.

At some point, do you just suck it up and take a 10% penalty?

Quote from @Michael Smythe:

When will you realize, you're going to pay a PMC one way or another.

Mynd charges flat fees to get you in, then make their real profit on marking up maintenance.

You think any other PMC will actually be cheaper?

They will just charge other fees to cover what they need to make.

 Yeah I 100% agree.  #3 is my least hopeful option.  I figure 2 is possibly my best, then maybe 1, 4 feels like a toss of the dice.  But wanted to get an idea of what other people thought!

Quote from @Jaron Walling:

@Stephanie Medina After reading your post it looks like you're factoring 15% for expenses, but property management is only 5% of rent. That's incredibly cheap for PM. You said you want to change PM at the very least. Most PM companies I know charge 8-12% of rent. If that's the case in your market this property would cost YOU more out of pocket. Unless it's behind market rate rents or we're missing details why hold this property?? 

I think you answered the big question on your own. You can sell tax free (2/5 year rule) and deploy that money into something else. If you search hard enough you'll find cash-flow or break even rental property. This may require some creativity or rehab and ReFi (BRRRR?) but it's still possible in today's market.

 Thank you for the reply!  My biggest issue with the property management company is not even the monthly cost, it's the cost of repairs.  They charge a premium for stuff I've gotten quoted a lot less for, and they are a little difficult if I want to send my own people in.  But on that note, I have had a few quotes at closer to $100

Hi all, I posted about this before but just wanted to come back with a little new info.  I'm new to real estate and want to grow my portfolio (a few years out from another), and I currently rent out our previous single family home.  It's a 3 bedroom/3.5 bath in a town home like community (they aren't connected though, so not a true town home) in the middle of Houston and built in 2017.  It's a gentrifying area, but directly next to a very nice area (The Heights for fellow Houstonians).  It is currently managed through Mynd, which I would like to change at the very least.  

Here are some of the monthly numbers:

Rent: $2450

Mortgage: $1161.48

Property Tax: $645

Home Insurance: $216.50

Property management: $139

Repair Savings: $73.50 

Vacancy: $122.50

Capital Expenditure: $182.75

Monthly Cash Flow: -$90.73

Here are my options:

1) Sell and re-invest the money.  This is the last year I can use the 2-out-of-5 years rule since I lived there 2 years ago, so there would be a tax advantage for selling now. I am a little worried about how long it would take considering it's feels like sort of a dime a dozen in the area.

2) My tenant is great right now (according to my old neighbors) and is up for renewal in April.  If they renew, I was thinking about making a deal with a realtor who said she would place tenants for me for 1 month rent and give me her contact lists (she has been in the industry for a very long time).  I would property manage the rest and/or find an hourly on-site manager.  My concern is distance from the rental and limited time I have right now, but like I said, the tenant is great so if they renew I do not think they would take up too much time. Also, the realtor is older and seems close to retirement. This would put the monthly cash flow slightly positive given that the tenants she places a long term.

3) Just find a different property manager

4) Try a STR management company. It is in an ideal area, 3 bedrooms, 3 parking spots (other similar homes nearby only have 2 garage parking spots).

Thoughts?

Hello all, before I joined BiggerPockets and read a few of their books, I made a contract with Mynd to manage our previous home as a long term rental.  I'm about fed up with them and their quotes for repair on some items, and it doesn't seem very easy to send my own repair people.  I live about 45 minutes away, have small kids, a busy job, etc so I'm not sure I am up for managing the property myself even though it is a newer home with relatively few repairs.  Does anyone have any recommendations for property managers that they would vouch for?

Quote from @Michael Smythe:

How much value has it gained since you started renting it?

How much has the tenant paid down your mortgage balance?

Not sure which sources are the best to use for value, but CoreLogic says about 375k (almost) 2 years ago when I started renting, and about 389k now.  Zillow says about 389k > 408k. Bought the property for about 350

Tenant has paid down around 10k.

Quote from @Nicholas L.:

post the complete numbers - monthly rent and all expenses

 The capital expenditure figure I got from Brandon Turner's book.  And to be honest I don't think repairs are even 5% but that is the % I used here:

Income
Rent	$ 2,450.00
Total	$ 2,450.00
Expenses
Mortgage	$ 1,161.48
Property Tax	$ 645.00
Home Insurance	$ 216.50
Property Management	$ 139.00
Repair Savings	$ 73.50
Vacancy	$ 122.50
Capital expenditure	$ 182.75
Other	$ -
	$ 2,540.73
Total	$ (90.73)

I am brand new to the real estate investing world. I just finished The Book on Rental Property Investing by Brandon Turner and Short-Term Rental, Long-Term Wealth by Avery Carl. I have a few more books on my list to read, and a few aquaintantances involved in real estate I plan on meeting up with and learning more from.

Currently, I am probably 2-3 years from a down payment due to a number of factors. In the meantime, I've been wondering what to do with my only rental, which was our previous 3 bedroom townhome in central Houston that we decided to rent instead of sell and is currently managed by a big property management company.

Based on some of the numbers Brandon Turner talked about in his book I had not previously taken into account, I think our cash flow is a little negative every month. I'm hoping to get some input on what some of my options are. This is what I have right now:

A) Take over the property management myself. Time is an issue for me right now, but it's a newish home, and not many repairs, so most of the year it will be pretty minimal to keep on top of. I am just hesitant to manage the tenant turnover right now. I had a long conversation with the realtor that manages many of the townhomes in that area that said she would handle the tentant turnover for 1 month's rent, which sounds fairly standard (but I was going to get a few other opinions). In addition, she would give me a list to her vast contacts for maintenance and other work (e.g., she has a lady that does monthly walkthroughs of her own properties for $30 an hour).

B) Speak to a STR rental property. I went to an info session a realtor put on (an acquaintance of mine) that works with an STR company. They answered a lot of my questions and it might be a good fit for my properties location. I'd like to talk to more of the neighbors from the properties area about this option, and I'd have to figure out what to do with a 1-2x a year City of Houston plumbing issue (long story, but there may be steps I can take to protect my property from it) so it wouldn't affect guests.

C) Sell it (maybe not right now in the current climate) and use the properties to find more advantageous properties.

Any input for this real estate investing student? :) I am happy to share more info about the property if that would help.