All Forum Posts by: Veronica Ivy

Appreciation is unpredictable and not a great long term investment strategy, in my opinion; it also means that your asset isn't liquid and not producing cash flow. You won't even be able to cover repair costs and vacancy rates with 1500/mo rent and that mortgage cost.

Refinancing has closing costs. It's not free. There's no guarantee home prices will appreciate (they went through the roof this year...there may be a correction or slowdown after the pandemic). Most long term buy-and-hold rental investors treat appreciation as a bonus and never factor it into whether a property is a good buy.

As I said, this is a bad rental. I'm sure it's a lovely home and very nice to live in as a primary residence. But it's a crummy investment property. I don't buy investments based on whether I would want to live in them: short answer is, I wouldn't really want to live in the homes that I own and rent. The homes I want to live in don't make profitable rentals.

$1500/mo isn't enough on a $200k property with no equity.

That's clearly going to be cash flow negative. And I'm not sure why you'd want to do that. Do you have an investment strategy? How does holding a cash flow negative property help with your strategy?

I agree. Having spoken to my loan officer, 20% down gave me a better rate, too, so that just overdetermines 20% being the best move.

Thanks :)

Just to clarify: I primarily invest in SFHs. I think they're very stable. The issue I'm raising is that the kind of property we buy to live in ourselves tends not to be a good rental property once we move out. It's not that it's a SFH, it's that it's the wrong kind of SFH.

I'd sell it and bank the cash, then buy a property that actually makes sense as a rental. Look into a 1031 exchange so you don't pay taxes on the 30k profit, though.

The kinds of properties we buy to live in tend to be terrible properties to buy as a rental. Most landlords in North America are in your situation: they rent out a property they previously owned as an owner-occupant, and they're not exactly making money off the situation. The reason? The property isn't best used as a rental: it's best used as an owner-occupant SFH.

Hi experts. I have a property under contract. I'm going to use funds from my Solo 401k for the down payment, repaying it at 4.25% over 5 years (the interest goes back to me, which is the great thing about Solo 401k loans; also there are no admin fees, origination fees, etc etc for such loans since I'm both the applicant and the one approving it).

The question is: how much down payment makes the most sense?

Purchase Price: $191,000

Annual Rent: $1750x12 = $21,000

15% down: $30,000. 5yr 4.25% annual repayment: $6,600. Annual PITI w/ PMI: $14,812.00

20% down: $40,000.5yr 4.25% annual repayment: $8,900. Annual PITI: $13,156.00

25% down: $50,000. 5yr 4.25% annual repayment: $11,100. Annual PITI: $12,472.00

(I'm rounding up the 401k loan to the nearest 10k for simplicity).

With reasonable vacancy and repair annual costs, the annual cash flow looks like for the first 5 years only:

15% down: -$4,312.00 After 5yrs: $2,348.00.

20% down: -$4,888.00 After 5yrs: $4,004.00

25% down: -$6,424.00 After 5yrs: $4,688.00

It seems to me that 20% down is the sweet spot. Considering the 5yr cost of the down payment and what the subsequent 5yrs look like seems to bear this out even more. Thoughts?

Yep! They tend to be the local or regional credit unions or smaller banks (South State Bank in South Carolina, for example). The big banks won't touch them. And generally it's 75% LTV and they DO go off of your personal tax returns, which might be an issue for some people who are good at maximizing deductions.

You have to be willing to call around a LOT and to specifically ask for the commercial loan officers. The standard ones have zero experience w/ manufactured homes and falsely think they can't touch them. Sometimes you'll hear 'No' from the standard residential loan officer, but 'Yes, of course' from the commercial loan officer.

I own stick built and manufactured homes (stop calling them 'mobile' homes if they're built after 1976, seriously).

So just be clear on whether you're talking about mobile homes, or manufactured homes, and between manufactured homes in a park (with lot rent and rules, and may be taxed as personal property) and manufactured homes on land that you own and are permanently affixed to the land on a foundation so are taxed as real property.

My manufactured homes are all affixed to land that I own, and so are taxed as real property. I financed the purchase through seller financing. I'm only going to speak to manufactured homes treated as real property on land you own (so not in mobile home parks).

Anyone who says that these kinds of manufactured homes don't appreciate doesn't have a clue what they're talking about. Dave Ramsey says this crap and admits that he's been told by experts that he's wrong, yet he repeats it. I think it's just a false believe that many people have taken on board as fact, but never actually checked.

Here: https://www.urban.org/urban-wi...

Where I live, the housing market is bananas. Most well-priced homes, and especially investment homes, are going first day on the market with multiple offers. Home prices have appreciated 20%+ in the past 12mo, and that INCLUDES manufactured homes on owned land!!

I'm actually in the process of doing a 30yr 75% LTV cash-out refi right now to take advantage of it.

Manufactured homes ARE absolutely durable. People who say otherwise are just wrong. I literally have no idea why they would say this. My homes are in a hurricane zone that has seen numerous Cat 1-3 hurricanes in recent years. No damage to any of the units or others in the neighborhood. Remember: units built after 1976 are built to HUD standards: they're just as strong as stick built homes.

The roofs are no different. The plumbing is no different (with some exceptions). The electrical is no different. They are houses. They appreciate roughly at the same pace as comparable stick built homes.

The PROBLEM with manufactured homes on land you own is FINANCING the damned things AND insuring them. Many lenders are scared off by 'manufactured' even though they're taxed and treated as real property, just like stick-built homes. So you'll just have a harder time finding companies willing to do so. But that's also why you should be willing to do creative financing, including seller financing.

Since financing can (and is) an issue, that makes REFINANCING them just as hard, if not harder. So a BRRRR strategy isn't a great idea. You should be thinking buy and hold with them. All of my manufactured home units are landing in the 1.4-1.8% Rule range, so very cash flow positive, AND they appreciate.

What about this?

 https://support.taxslayer.com/hc/en-us/articles/360046230792-Should-I-complete-a-Schedule-C-or-a-Schedule-E-if-I-am-a-real-estate-professional-

Well the section in the IRS directions was that it was Real estate rentals and leasing...not equipment rentals. That's a totally different profession code for Schedule C.