All Forum Posts by: Will Kaufmann

I am reviving this since the payment due date is right around the corner. I own a 2/1 in Washington West and my tax assessed value jumped from $250,000 to $372,000 over night which increases the bill by almost 50%. I appealed well before the deadline using market data to justify a lower valuation and never even received a response. What makes even less sense is that my upstairs neighbor in a 3/2 is only valued at $284,500. 

I am starting to think about selling the unit since rent is $2,300 and my P&I&Taxes are sitting at $2,100. What do you all think? FWIW purchase price was $326,000 in 2015 and I would aggressively list around $425,000.

Trey:

There are a ton of variables here as the other replies noted, and I think the ultimate question is what do you want to do with your money and your life? For example, if you are looking for an appreciating investment, Wake County may not be ideal given the continuous price increases over the last few years. If you want to stop throwing money at a lease, then buying may make sense. 

Next question - How big of a family do you want to raise? Your current down payment situation may not get you a very large house in Wake County today. If you have to buy, sell, and buy another house in a few years, you will be in for roughly (really, really, roughly) 10% in transaction fees on each deal. Hypothetically speaking, that would be $20,000 on the first property and, say, $30,000 on the next. How does $50,000 in transaction fees compare to renting for another few years until you can buy that second non-starter home that will suffice for longer? These estimates are off the cuff and meant to capture moving costs, time, lending fees, realtor fees, etc. They may not be completely accurate but are worth the consideration. 

I think a rent to own arrangement may help you. I encourage you to do some additional research into how that works, there are a ton of YouTube videos explaining how they work. 

Will

I cannot make this meetup but I will make it to the next one - I look forward to meeting everyone!

I cannot make this meetup but @Josh R. please include my tag on future meetup posts as I would love to join!

Different lenders will have different requirements. My understanding of conventional mortgages is that they are based on a combination of your debt to income ratio and maybe (usually) your liquidity ratio. 

In short, your "equity" in a rental property is not technically going to impact underwriting, but the positive cash flow (i.e., income) from it will. At the same time, the cash flow is a function of your debt and equity in the property, along with rental rates. Basically if it is positively cash flowing, it is income and not debt with respect to your debt-to-income ratio (DTI).

Some lenders may only look at an income ratio or debt ratio, not necessarily DTI. I think the unfortunate answer is that it really depends on the lender, but I will defer to someone more versed in lending to confirm that!

Other lenders may only look at credit and liquidity - think non-conventional loans (hard money, private mortgages, etc.).

I am echoing much of what has already been said in here, but if you need cash and have been contributing for some time, you can definitely look into taking a loan out of the 401(k). For what it is worth, my company's plan has the following terms:

1. loans up to 50% of the value of the plan

2. interest rate of 6%

3. monthly payments (interest only)

4. monthly service charge of $5.00 (really low)

5. no pre-payment - you have to run the course of the loan (this does not make sense to me)

6. if you leave the company, the loan is immediately due

Notwithstanding, I still contribute to the plan because (a) I have a company match and (b) to diversify assets. Real estate is where I am pushing larger pools of capital, but I still want to have some money at work in the markets where I cannot personally screw it up too badly! This is all food for thought - do whatever you are most comfortable with.

Same here, I use Venmo and love it. It may not be a great platform for scaling, it certainly works and it is free!

Hi all:

I have a rental in Philadelphia that sustained water damage and the flooring needs to be replaced. As a remote landlord I figure it may be easier to start with a referral request versus researching and interviewing random contractors. The insurance estimate was for $3,750 for labor and materials, and we will likely go with a lower grade flooring material, so the budget is $2,500 to $3,000 for the entire project. Roughly 700 square feet or so. The unit is in center city Philadelphia so I need a contractor familiar with the L&I/parking situation. Can anyone offer suggestions for an affordable contractor that would be willing to take on this small project? 

Thanks in advance for the help!

Jeffrey:

I started the full podcast binge a few weeks ago and am through 36 of 310 episodes. Even in those roughly 36 hours I learned far more than I thought I would. Your list here includes some things I have not yet contemplated, so it sounds like I should continue the journey towards listening to all of the episodes. Thanks for the insights!

One addition I have is that persistence really is key. I am *hopefully* closing my first deal on Friday and cannot count how many times I could have called it quits up until this point. Resilience and persistence are a must and exemplified by most of the guests on the show. 

Another thought is the importance of having a plan or goal and fleshing out exactly what it looks like on a long- and short-term basis. "If you fail to plan, you plan to fail."

Will

I would considering planning for a higher up-front repair cost and also boosting that vacancy rate to a conservative 10% to see if the deal still makes sense then, which it should. That way you can plan for the worst case and still be comfortable, and if you do better that is great!