All Forum Posts by: Ty Coutts

Hello, purchasing a home in the Tahoe area with the intention of renting it out before eventually moving in yourself can be a smart strategy. Here are some key considerations and potential pitfalls to keep in mind as you plan this approach:

Market Research and Property Selection:
Local Market Conditions: Ensure that the Tahoe area's real estate market is stable or appreciating. Analyze rental demand, vacancy rates, and property appreciation trends.
Property Suitability: Choose a property that will be attractive both as a rental and as your future primary residence. Consider factors like neighborhood, school districts, and proximity to amenities.

Financing and Mortgage Considerations:
Investment Property Mortgage: Understand that an investment property mortgage may have higher interest rates and require a larger down payment compared to a primary residence mortgage.
Future Refinance: Consider the possibility of refinancing the property when you decide to move in, potentially lowering your interest rate and monthly payments.
Loan Types: Look into loan types that might offer favorable terms for investment properties, such as conventional loans or FHA loans if the property meets the criteria.

Rental Management:
Long-Term vs. Short-Term Rental:
Long-Term Rental: Offers stable income and is generally easier to manage. There are fewer regulatory and tax implications compared to short-term rentals.
Short-Term Rental: Can provide higher income but requires more active management, marketing, and maintenance. Be aware of local regulations and potential restrictions on short-term rentals in the Tahoe area.
Property Management: Decide if you will manage the property yourself or hire a property management company. A local property manager can handle tenant screening, maintenance, and rent collection, which is especially useful if you’re not living nearby.

Legal and Regulatory Considerations:
Local Laws: Be aware of local rental laws, including landlord-tenant laws, rent control regulations, and short-term rental ordinances if you consider Airbnb.
HOA Rules: If the property is part of a homeowners association, review the HOA rules and regulations regarding rentals.

Financial Planning
Rental Income: Ensure that the projected rental income covers mortgage payments, property taxes, insurance, maintenance, and property management fees.
Tax Implications: Understand the tax implications of owning a rental property, including potential deductions for mortgage interest, property taxes, repairs, and depreciation. Consult with a tax advisor for specific advice.

Transition to Primary Residence
Lease Agreements: When renting out the property, consider the timing of lease agreements to align with your future move-in plans. Offer lease terms that will allow you to move in when you are ready.
Property Condition: Plan for any renovations or updates you may want to make before moving in. This might be easier to handle between tenants.

Market and Economic Conditions
Market Fluctuations: Be prepared for potential fluctuations in the real estate market that could affect property values and rental demand.
Economic Factors: Consider economic factors such as interest rates, job market conditions, and tourism trends that could impact the Tahoe area.

Exit Strategy:
Backup Plans: Have a backup plan in case your circumstances change, such as if you decide not to move to Tahoe or if the rental market becomes unfavorable.
Sale Considerations: Understand the process and costs involved in selling the property if needed. Consider the capital gains tax implications if you sell the property after it has been a rental.

I hope this helped, please reach out if you have any other questions!

Hey Alex, I sent you a colleague request as well, but just letting you know, I can most likely help you out with getting that HELOC at 80%LTV. I would love to jump on a quick call to discuss details, let me know when works best for you. Or feel free to schedule a time using the link below.

https://calendly.com/tycoutts

Hello Renee, to get your project started in Shaker Heights, OH, there are financing options you can consider to borrow money for the contractor. As a loan officer, I understand the urgency on this, so please don't hesitate to schedule a call with me sometime this week to chat using the link down below. I'm sure there are plenty of creative financing options to best fit your situation. 

https://calendly.com/tycoutts\

Best,

Ty

Using a bedroom in your home as an Airbnb, thereby converting it into an active income source, would generally not affect the classification of your other rentals. This is because each property is typically evaluated on its own merits regarding the services provided and the level of activity involved. The key is to ensure that your Airbnb operations, with the substantial services you plan to provide, are clearly differentiated from your other rental activities. This separation should be well-documented to maintain their classification as passive activities. Please do keep me updated. This is super interesting!

Awesome man! Sorry, it is a lot. Take your time and I am here to help!

I would just check with local zoning department to see if you need permits or to adhere to certain regulations. Definitely will take time, but it could be worth it. Just like any investment!

Hey Gavin,

It's great to have you here. It's awesome that you are taking advantage of BiggerPockets. Some other great resources I recommend as a real estate investor myself are: "Rich Dad Poor Dad" by Robert Kiyosaki, REtipster (www.retipster.com), and Rental Income Podcast with Dan Lane. I am also a loan officer so please reach out if you'd like to hit the ground running on your financing. Also, if you just have questions/want to discuss feel free to hit me up directly.

Consumer Price Index (CPI) for Shelter: According to the U.S. Bureau of Labor Statistics (BLS), the CPI for shelter increased by 3.1% over the past 12 months ending May 2024. This includes a 4.2% increase in rent costs and a 2.5% increase in homeowner's equivalent rent.

New Residential Construction Data: Housing starts increased by 3.6% in May 2024, reaching a seasonally adjusted annual rate of 1.72 million units. Building permits, a leading indicator of future construction activity, were up by 1.5% to 1.80 million units.

Rent costs rising over the past few years could finally be hitting the consumer's wallet in that they are becoming weaker and unable to afford higher rents.

Also, looking at the housing starts data, new supply may be entering the market finally, causing prices to drop as consumers have more options. 

This is a more macro view, and I am not an economist. Just my thoughts!

Hey Kevin

Don't be so hard on yourself! It seems like you have a fantastic chance to maximize the space in your existing house so that you can earn rental revenue. It can make sense to turn the garage into an additional living area if you aren't using it for what it was intended for. Giving up a bathroom at first and maybe a room later to increase this area demonstrates a calculated approach to realizing the full potential of your property.

It's important to think about a few important elements before making any selections. Assessing the renovation's financial viability should come first. Examine the projected rental income against the expense of converting the garage and possibly extra rooms. Taking into account both immediate costs and future rental revenue, this analysis will assist you in deciding whether making the renovation expenditure is in line with your financial objectives.

Second, you have choices when it comes to finance. It's simple to use your present savings for repairs, but if you need more money, you might also consider using your home's equity. However, before using your home equity as leverage, think about how it will affect your total financial condition and investigate the possibility of a higher appraised value after renovations.

Speaking of which, it's imperative that you obtain a current appraisal in light of your recent progress. It will help you see your house's potential equity and present market value more clearly. Your decision on whether to investigate other investment prospects or reinvest in your current property can be influenced by the results of this appraisal.

Hope this helps! If you want to tap into that equity please reach out as I am a loan officer. We here at Aslan have over 70 investors, so we can definitely get creative and look for programs that are applicable to your unique situation. Feel free to hit me up any time with questions or if you just want to discuss!

Hey Brandon,

First, thoroughly examine the numbers. Buddy's current $1,594.24 monthly payment consists of principle, 3.875% interest, and escrow. The monthly rental income is projected to be between $1,200 and $1,600. It is imperative that you compute your potential cash flow in light of these numbers. To calculate net operating income, deduct projected operating expenses from estimated rental income, including property taxes, insurance, maintenance, property management fees (if applicable), and any vacancy allowance.

Second, think about working with Buddy to get better terms. In order to increase cash flow, you might suggest a shorter purchase price or a longer-term financing plan because the house is ready to move into and doesn't require any modifications. The profitability of the investment may also be increased by arranging for a balloon payment, extending the repayment time, or negotiating a reduced interest rate.

Thirdly, consider the advantages of purchasing the property using seller financing in the long run. Examine the possibility of future value growth for the property as well as any tax advantages that come with owning rental property. Check to see if this fits with your wealth-building and portfolio diversification goals by taking into account your entire investing strategy and financial ambitions.

Finally, carry out a comprehensive risk analysis. Take into account variables that could affect your cash flow, such as the stability of the market, local tenant demand, and prospective changes in interest rates. Carefully go over the seller financing agreement's conditions to make sure you understand any stipulations or eventualities that might have an impact on your investment.

I am a loan officer and we have over 70 investors here at Aslan, so if your looking for creative financing please hit me up! Also, feel free to reach out directly if you have any other questions or would like to discuss anything.