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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
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22
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Market fueling my fire

Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Posted Nov 19 2022, 13:14

For the first time in my life I do NOT fear being in debt! I had tons of bad debt in the past and I fixed it with my current home in Lacey, WA. I refinanced my home and wiped out my bad debt! I owed over 22K to one of my credit cards and over 28K loan that I had on installments.

Now, for the fun part! My new mortgage sits around $4600 a month. Comps around my area would only get me to $3400 based off some analysis I’ve done for rent. I'd be covering the difference, bad, right? For me no! Because the difference I would need to pay to cover my mortgage is beneficial... More beneficial than giving it away to credit card interest. That's how I see it.

Where am I going with all this? I listen to the bigger pockets podcast! Why does that matter? Knowledge... I'll leave it at that. I have a plan to execute because I took a leap of faith! I had to start somewhere, and I was tired of the analysis paralysis! I kept myself from tons of deals because i needed to know everything. The tools on bigger pockets helped me see the bigger picture.

Now, thanks to David & Rob! I ask how can I pay this mortgage? And NOT, I must pay this mortgage. ***MINDSET***

I was moved by Zeona McIntyre & Sarah Weaver's podcast (679) MTR.. It just clicked for me like wow... Anyone can do this! You just need to tweak a few things and make sure all your systems line up. I just started their book "30 Day Stay". I now have cheat sheet to making myself successful and navigate the market with fewer errors. Will I jack something up of course! I love when people say, I made dumb decision and that fuels my fire! How can I make them eat their words? Well for me... I have a plan and I'm going to execute my plan, and fix it where it needs fixin...


I was staying up later than the usual which was like around 1130 or midnight. But I couldn't stop reading and the more information I found, the more time I spent looking up the details.

Here we go...


Current plan-

Move a mid-term tenant into my home. How am I looking? Furnished finder and Facebook currently.

I'm offering a discount for their first month. Then I will start grabbing the markets value for rent, which is $3400.

I'm going to be eating the difference for the mortgage because I am just starting out and that’s okay with me, I already created a budget taking these numbers into account. Once I get started, I feel like this is going to take off like a rocket ship. I know how lucrative this business can be and I am going to make it happen.

Exit plans (not in any specific order)

  • Sell that house, but what does that mean? It means that I would most like have to execute a short sale and then go in bad waters with my lender.
  • Reach out to investors to help cover the cost. What does that mean? I know they would want stake in the equity once the market corrects itself.
  • Hold on to my home and keep eating the difference on the mortgage.
  • Take out equity from my other house in Oklahoma to supplement the difference. Why? To keep my mortgage in good standing.

Things I am still working on.

Marketing… I’ve received some attention on Facebook and Furnished Finder, but nothing solid.

How are you solving this problem?

Managing the property by myself long distance. Reason being I am moving.

How do you accomplish this?

Where are the areas, I can improve my thought process?

What would you do differently in my situation?

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Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Middletown CT
548
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1,281
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Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Middletown CT
Replied Nov 19 2022, 16:08
Quote from @Benjamin Gonzales:

For the first time in my life I do NOT fear being in debt! I had tons of bad debt in the past and I fixed it with my current home in Lacey, WA. I refinanced my home and wiped out my bad debt! I owed over 22K to one of my credit cards and over 28K loan that I had on installments.

Now, for the fun part! My new mortgage sits around $4600 a month. Comps around my area would only get me to $3400 based off some analysis I’ve done for rent. I'd be covering the difference, bad, right? For me no! Because the difference I would need to pay to cover my mortgage is beneficial... More beneficial than giving it away to credit card interest. That's how I see it.

Where am I going with all this? I listen to the bigger pockets podcast! Why does that matter? Knowledge... I'll leave it at that. I have a plan to execute because I took a leap of faith! I had to start somewhere, and I was tired of the analysis paralysis! I kept myself from tons of deals because i needed to know everything. The tools on bigger pockets helped me see the bigger picture.

Now, thanks to David & Rob! I ask how can I pay this mortgage? And NOT, I must pay this mortgage. ***MINDSET***

I was moved by Zeona McIntyre & Sarah Weaver's podcast (679) MTR.. It just clicked for me like wow... Anyone can do this! You just need to tweak a few things and make sure all your systems line up. I just started their book "30 Day Stay". I now have cheat sheet to making myself successful and navigate the market with fewer errors. Will I jack something up of course! I love when people say, I made dumb decision and that fuels my fire! How can I make them eat their words? Well for me... I have a plan and I'm going to execute my plan, and fix it where it needs fixin...


I was staying up later than the usual which was like around 1130 or midnight. But I couldn't stop reading and the more information I found, the more time I spent looking up the details.

Here we go...


Current plan-

Move a mid-term tenant into my home. How am I looking? Furnished finder and Facebook currently.

I'm offering a discount for their first month. Then I will start grabbing the markets value for rent, which is $3400.

I'm going to be eating the difference for the mortgage because I am just starting out and that’s okay with me, I already created a budget taking these numbers into account. Once I get started, I feel like this is going to take off like a rocket ship. I know how lucrative this business can be and I am going to make it happen.

Exit plans (not in any specific order)

  • Sell that house, but what does that mean? It means that I would most like have to execute a short sale and then go in bad waters with my lender.
  • Reach out to investors to help cover the cost. What does that mean? I know they would want stake in the equity once the market corrects itself.
  • Hold on to my home and keep eating the difference on the mortgage.
  • Take out equity from my other house in Oklahoma to supplement the difference. Why? To keep my mortgage in good standing.

Things I am still working on.

Marketing… I’ve received some attention on Facebook and Furnished Finder, but nothing solid.

How are you solving this problem?

Managing the property by myself long distance. Reason being I am moving.

How do you accomplish this?

Where are the areas, I can improve my thought process?

What would you do differently in my situation?

I am seeing a lot of future problems from renting at a loss of at least $1200/month (this will be way more after expenses). Why do you want to keep this home? What is it worth and what do you owe? 

This is a loser rental for you. Sell it if you can. No investors will be interested in the future equity at this point in time. Values are dropping. 

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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Nov 20 2022, 05:35
Quote from @Benjamin Gonzales:

I love the enthusiasm, but not your current actions or plans.

You cashed out equity to pay off your debt. You took no action to gain that equity, it was pure luck with a crazy market and some of it may disappear. You essentially borrowed money to pay off borrowed money and now you'll be paying it back for 30 years.

I don't know what your goals should be except for this: get your debt under control and learn to be financially responsible. If you can't handle what you currently have, you won't be able to handle investments and it will all come crashing down.

  • Property Manager Wyoming (#12599)

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22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
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22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Nov 20 2022, 18:35
Quote from @Nathan Gesner:
Quote from @Benjamin Gonzales:

I love the enthusiasm, but not your current actions or plans.

You cashed out equity to pay off your debt. You took no action to gain that equity, it was pure luck with a crazy market and some of it may disappear. You essentially borrowed money to pay off borrowed money and now you'll be paying it back for 30 years.

I don't know what your goals should be except for this: get your debt under control and learn to be financially responsible. If you can't handle what you currently have, you won't be able to handle investments and it will all come crashing down.

 I'm in the driver seat and you're correct! Get my bad debt under control "100%" agree. Can I ask you a question? How calculated was your leap of faith? 

While people love being in their comfort zone... I no longer want to be that person! It's a game of which bank will lend you the most or based off who you know. While my debt was wildly out of control, I never missed a payment. "If you can't do the time...Don't do the crime". I was a prisoner to my dumb uncalculated mistakes. 

I love your challenge about handling my investments! I'm going to ask you to put a pin, in our discussion and I will reach back out to you.

@Nathan Gesner I love what you do for the forum. 

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38
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20
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Ashton Karp
  • Real Estate Agent
  • Bonney Lake, WA
20
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38
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Ashton Karp
  • Real Estate Agent
  • Bonney Lake, WA
Replied Dec 2 2022, 19:40

Putting yourself in the hole $1200 before expenses is not recommended unless you have substantial reserves to weather storms. Are you going to be able to afford vacancies? What if a tenant stops paying and you need to wait 60 days to evict? What if the tenant then damages property on their way out? The story sounds like you can skim by until any problem comes up and then you’re in deep doodoo.

Is moving out of state a guarantee in your life? Are you sure you're underwater for the property? Can you pivot to a STR and lift your income further?

I think letting this property bleed out will set you back immensely. Rip the bandaid off and move on or stay local until you can lower the debt cost or increase the assets income. 

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Marcela Hoag
  • Real Estate Broker
  • Seattle, WA
31
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59
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Marcela Hoag
  • Real Estate Broker
  • Seattle, WA
Replied Jan 14 2023, 14:35

Obviously, I don't have all the info of your financial situation. Are you living by yourself, have family etc?

You may be able to get higher rent if you rent out by room so you can try to breakeven. Not sure how feasible that is for your location though. You will be on the hook for covering some expenses though to attract renters, e.g. furniture, internet, tv, etc.

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22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
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22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Apr 11 2023, 22:08

Update: April 11th, 2023

Since December 15th, 2022. 

I have managed to market any and everywhere possible… Turbo Tenant, RentRedi, Airbnb, Vrbo, Furnished Finder, CHBO. Am I missing anything?

To date, I’ve only come out of pocket once to make my monthly mortgage. I have since been mentored about other approaches to my decision to Refi this home. Which is noted and I will make sure to never make a decision like before asking the group.

Now based off of currently lending requirements I’ve heard of the 3-2-1 buy down I’m trying to get my payments lower because the mortgage plus the utilities is taxing for sure! I wanted to ask the group if this made sense? Or what other methods could I use?

I’ve pivoted to the MTR strategy and I wanted to see if anyone is connected with ALE solutions or any insurance adjuster that is trying to temporarily place a family due to natural disasters. 

Any ideas, thoughts, or concerns with the way I am approaching this? Appreciate the feedback.

Note: I no longer live in Washington state and have since moved to Texas and have a mortgage here as well. Seasonality has definitely been a factor here and I’m excited for the area to warm up. 

Thanks,

Ben






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Bonnie Low
Pro Member
#1 Medium-Term Rentals Contributor
  • Investor
  • Cottonwood, CA
1,497
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Bonnie Low
Pro Member
#1 Medium-Term Rentals Contributor
  • Investor
  • Cottonwood, CA
Replied Apr 12 2023, 05:14

It sounds like you may already be following Rachel Gainsburg's strategy of targeting insurance placements for her MTRs which has worked out incredibly well for her. If you decide to hold onto that property that might be your best move. I appreciate your bold attitude and positivity. I come from the school of thought that everything is "figureout-able" even if it means forgoing the traditional route. You have one of the most important characteristics: an open mind. Just be confident in your underwriting. Practice underwriting lots of deals so you better understand the numbers that will work for you. Good luck!

User Stats

22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
Votes |
22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Apr 17 2023, 19:47
Quote from @Bonnie Low

It sounds like you may already be following Rachel Gainsburg's strategy of targeting insurance placements for her MTRs which has worked out incredibly well for her. If you decide to hold onto that property that might be your best move. I appreciate your bold attitude and positivity. I come from the school of thought that everything is "figureout-able" even if it means forgoing the traditional route. You have one of the most important characteristics: an open mind. Just be confident in your underwriting. Practice underwriting lots of deals so you better understand the numbers that will work for you. Good luck!

 Thank you! I guess for me, my best lessons come from my mistakes :)...

No problem, I got this... I have something better than Federal hikes thanks to BP community!!! The tenacity to keep pushing through the thick brush known as life. Without the community, I would not understand how to implement action. For this simple fact, I thank you BP community. Bonnie thank you for the inspiration! Your words were needed and appreciated, for me this is where RE Logic meets Fact.

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Replied Apr 19 2023, 19:29

Bejamin,

I'm in the Tacoma area, we have a property manager that I can run your property specs through to see where you should be with monthly rental amount or I could run it through my rentometer pro account (you don't have to use her for property management.) I think she lists our rentals on realtor.com, I've got a message out to her to verify. You can also advertise your rental through the NWMLS. Are you certain that you would need to short sale if you tried listing on open market? I could run a sellers net proceeds for you as well, if you're open to it.

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Dennis Nguyen
Pro Member
  • Real Estate Agent
  • Seattle, WA
76
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149
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Dennis Nguyen
Pro Member
  • Real Estate Agent
  • Seattle, WA
Replied Apr 20 2023, 11:23

I like your enthusiasm @Benjamin Gonzales! I also have a few MTRs myself in Burien / Seatac area. If you are having a hard time finding tenants to occupy the entire house, have you considered rent by the room for MTRs? It may work out in your area. 

User Stats

22
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11
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
Votes |
22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Apr 22 2023, 13:51
Quote from @Angela Goossens:

Bejamin,

I'm in the Tacoma area, we have a property manager that I can run your property specs through to see where you should be with monthly rental amount or I could run it through my rentometer pro account (you don't have to use her for property management.) I think she lists our rentals on realtor.com, I've got a message out to her to verify. You can also advertise your rental through the NWMLS. Are you certain that you would need to short sale if you tried listing on open market? I could run a sellers net proceeds for you as well, if you're open to it.


 Angela,

Yes I would love to connect and see how I can be of any assistance. I have tons of families looking to rent my property in Washington but simply can NOT because the numbers for a traditional LTR dont work. I'd love to get some sellers net proceeds. Just to see what it looks like. Thank you,

Ben

User Stats

22
Posts
11
Votes
Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
Votes |
22
Posts
Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Apr 22 2023, 13:59
Quote from @Dennis Nguyen:

I like your enthusiasm @Benjamin Gonzales! I also have a few MTRs myself in Burien / Seatac area. If you are having a hard time finding tenants to occupy the entire house, have you considered rent by the room for MTRs? It may work out in your area. 


 Hey Dennis!

Thank brother! I was actually thinking the samething... Getting in the door for travel nurse's is interesting for sure. So renting by the room is probably going to be my best bet until the market irons back out. I'd love to see the way you market your MTR's and i'd definetly take a slice of humble pie to hear you out! 

Ben

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5
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Replied Apr 22 2023, 19:53
Quote from @Benjamin Gonzales:
Quote from @Angela Goossens:

Bejamin,

I'm in the Tacoma area, we have a property manager that I can run your property specs through to see where you should be with monthly rental amount or I could run it through my rentometer pro account (you don't have to use her for property management.) I think she lists our rentals on realtor.com, I've got a message out to her to verify. You can also advertise your rental through the NWMLS. Are you certain that you would need to short sale if you tried listing on open market? I could run a sellers net proceeds for you as well, if you're open to it.


 Angela,

Yes I would love to connect and see how I can be of any assistance. I have tons of families looking to rent my property in Washington but simply can NOT because the numbers for a traditional LTR dont work. I'd love to get some sellers net proceeds. Just to see what it looks like. Thank you,

Ben


Thanks Ben, I found your property, took a quick look & can tell that it'll be a lil bit before you're in the black related to selling. I ran your property through rentometer & it looks like 75th percentile is ~$3100 for a 5 bedroom in the area (95th percentile is ~$3200.)

I wonder, have you looked into transitional housing providers? I have an investor who rented his place out to Homes of Compassion in Kitsap County. The company covers the mortgage payment & they are responsible for the room placements. It may be another viable option that is similar to the MTR concept. I haven't verified if they're looking for housing options, but Living Clean & Inspired in Lacey looks like a similar provider to the place in Kitsap. Keep exploring options, turning stones pays off!

http://www.livingcleanandinspi...

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Sherief Elbassuoni
  • Realtor
  • Bellevue, WA
1,962
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882
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Sherief Elbassuoni
  • Realtor
  • Bellevue, WA
Replied Apr 24 2023, 06:37

@Benjamin Gonzales, it is good that you got rid of bad debt.

That said, do not get used to get deals with -ve cash flow

User Stats

22
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11
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
11
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22
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Benjamin Gonzales
  • New to Real Estate
  • El Paso, TX
Replied Apr 25 2023, 23:23
Quote from @Sherief Elbassuoni:

@Benjamin Gonzales, it is good that you got rid of bad debt.

That said, do not get used to get deals with -ve cash flow


 For sure! Hindsight…. always a great reminder of my mistakes! This is the only investment home that’s bleeding.