All Forum Posts by: Scott E.

An architect or draftsman is needed if you plan to add square footage, move walls around, build a garage or ADU, remove a load bearing wall, etc.

If you are only doing cosmetic updates, just hire a designer.

Designers can be pricey but it will be money well spend if you have no experience selecting finishes.

Nice offering but you'd want to make sure those waivers are VERY thorough. The amount of liability this could expose you to seems endless. 

Like what if a guest is riding your bike, then chain breaks and gets bound up in the rear wheel while they are riding, which then causes them to launch over the handlebars into incoming traffic? Is this your fault because you didn't keep up on routine maintenance of oiling the chain?

Maybe I'm paranoid but I wouldn't do it.

You cannot look at monthly cashflow opportunity. Aiming for "$100 per door" or "$300 per door" is completely arbitrary and meaningless.

Instead, focus on the return on your investment. So the question should be "If I deploy $50,000 into residential long term rental real estate, what return should I expect to see on that investment?"

The answer will vary a lot depending on the sub-market, property condition, and class. But as a very rough target, most would agree that a 10% return on that money would be strong (meaning that investing $50k would get you $5k in cash flow per year, or $417 per month)

In the event of a natural disaster or roof issue and a $30k cost, the insurance company will be footing the bill. Not the homeowner. You saying "they would just exit the house rather than fixing" is such an abstract opinion to have. Where are you getting this information?

Point taken but here's what I think:

1. The term of the loan is irrelevant. 30 year or 40 year or 50 year mortgage, if people are going to walk away from the property, they are not going to because of the length of their term.

2. Interest rates typically drop in a recession. So if a recession does come (it probably will), then in theory rates should come back down at that time. Which will give these homeowners an opportunity to refinance and lower their payment.

3. Walking away from your housing obligation is much easier than you make it sound. It is financially and morally irresponsible, not to mention emotionally damaging. We saw a lot of this from 2008-2011 due to homeowners experiencing adjustable rate loans maturing, prepayment penalties, and unprecedented levels of unemployment, death, divorce, and disability. I had to use a cliche, but this time it's different. I do not believe we will see a lot of people walk away from their homes this time around if we experience a mild recession.

I have met wholesalers, lenders, and contractors at local meetups. Some meetups are great, some are lame. It's important to keep putting yourself out there and networking though. Valuable connections for sure can be made.

 How so?

Wait the 2-3 months til you get another job.

@Chris Davidson nailed it. The biggest consideration here is the rate on your 1st mortgage. If you currently have a 3% rate on a 30 year fixed loan for your 1st mortgage, then you should not do a cash out refinance. You'll lose that rate and your total monthly payment on this deal will skyrocket from what it is today.

A HELOC comes with a variable rate that is generally tied to the Wall Street Journal prime rate. This means your HELOC rate will be high today. But at least you're only paying that high interest on the amount of the rehab vs the rehab plus 1st mortgage.

Also check with your CPA, but interest on a HELOC when used to renovate the subject property *should be* tax deductible.

What you're experiencing is common. And I hate to break it to you, but it'll always be this way.

I'm getting bids for a remodel in Phoenix right now and the estimates are ranging between $400,000 - $700,000. For the EXACT same job.

Now it's my job to look at the contractors track record, past jobs they've done for me, call references, listen closely when they describe the scope of work, etc. 

After a while you get good at having an intuition on which contractors will do a good job and stay close to budget, and which contractors are just giving you a nice number in the beginning to get the job.