All Forum Posts by: Tyler Hill

Thanks again everyone. We decided to hang on to the house as a future rental. We started the refi process last week and will be looking to rent it out in a year or two. 

I do have one last question however. There are some improvements I'd like to make to the home. For tax deduction purposes should I wait until the house is classified as a rental to do some of these improvements or utilize the next year or so to get it ready as a rental?

Thanks everyone for the replies! Lots of questions from all of you. Seems like most of them center around our equity and the need to refinance. Unfortunately we bought right before the housing bust in early 2007. At the time we made very little money and we went with a loan where the first 10 years was interest only. We didn't put any money down either. We made payments towards the principal as our income increased and after we maxed out our retirement funds but that wasn't until a couple of years ago. Needless to say we don't have much equity in the house and our current rate is 5.8%. In 2017 our interest only portion will end, causing our monthly payments to increase. 

A refi at 3.7% and a 12% downpayment would bring our monthly payment down to where we could rent it out with a positive cash flow. If we sold right now we would make about 15k after all of the realtor fees. 

Like many others have experienced due to the housing bubble, what was supposed to be a smallish starter home turned into a ten year ordeal. Our timing was horrible, as was the loan we went with. The good news is that both my wife and I now have professional level incomes and we can afford to either rent it out or sell it. Either way we need a bigger house as our family continues to grow. 

A few others have asked about my calculations. I based them entirely on the book so this included taxes, insurance, vacancy, capex, HOA fees, and other operating expenses. I do not plan to hire out a property management company expect for finding and selecting new tenants.

Thanks again everyone for your helping us make a good decision. 

Hello everyone, 

First post. My wife and I are looking to move into a bigger home over the next year or so and I need some advice on whether or not to sell or rent out our current home. I've read the book on Rental Property Investing and crunched the numbers based on the info in this book. 

Turning our current home into a rental includes refinancing our current home at today's rate, about a 12% down payment, closing costs, costs associated with prepping for a rental, all in a 30 year loan. Our lender has already agreed to the refinance package. So here's the breakdown...

CoCROI = 5.5 %

Positive monthly cash flow of about $172

The property is in a highly desirable area and most rentals in my area have long term tenants (15+ years). We don't have any other rental properties so this would allow us to break into rental property investing, which is what we ultimately want to do. Now those numbers aren't that great but it seems like it might be difficult to find a good cash on cash return in the Portland, OR area in this sellers market. 

The question is should we sell this house and put our money into a new house instead, and purchase a different rental property in the future? Or rent this one out and have less of a down payment for a new house? In either case we are committed to investing in rental properties in the future. 

Thanks for your suggestions and expertise. This is a new thing for me so I apologize if I'm leaving something out.