All Forum Posts by: Bobby Lee

I'll likely have to replace the flooring in one of my rentals when my current tenants move out. I'm leaning toward the laminate flooring that looks like hardwood. It looks great at a much cheaper price. It's also more waterproof so you can put it all over the house, including the kitchen and bathrooms.

I have this in another house, installed 5 or 6 years ago.

The issue is that there are really no comps.

So it's anyone's guess at that point. Duplexes can't really be compared to SFR as they are different animals - people looking for a starter house often don't want to deal with tenants. But if it's the same size as an SFR, that's just the best data you have.

You can argue that the buyer can live in one and rent the other - but not all buyers want to be landlords. So why buy two units when I can spend that money on one bigger house or bigger yard for myself and my family? In fact, maybe I don't want renters so close because I have small children. What are the demographics there?

All that being said, I bought a duplex in a predominantly SFR neighborhood. But there were a few other duplexes so there were comparables. Most duplexes were actually an SFR with an ADU, so they were priced comparatively to an SFR without an ADU. I thought that was crazy - why wouldn't I want a second building, even if just to make myself mancave or office space? To each their own, but I get extra rental income for the same price.

Anyway that's a long winded way of saying, it depends.

What do you need the refi money for? Don't forget now if you take cash out of equity but don't put it back into the property, it's no longer tax deductible. If you put it into a new property, you can count is as tax deductible to the new property, but you'll want to talk to your accountant.

If you sell it what would you do with the extra cash? Don't forget to take out cap gains tax and commissions when figuring out how much you'll actually get.

So if you don't need the money now, why not rent for steady and regular income? Best of all, most if not all of the rental income can be free from tax due to depreciation! Again talk to your accountant about that to set it up properly.

Beyond just running the numbers is what you mean I guess?

I generally stay away from 3bd situations because then your only prospective tenants are families. Now if Sun Valley is all families and not young professionals or other single people or young married/no kids types, then that's great. That's my first thought.

Yes, but if you own your home, you should probably look to take equity out of there first. Wouldn't the rates be lower on a refi for your primary residence?

Always look where you don't have to worry about lots of new competition. So geographical barriers prevents new development - there's only so much land along the water, or so much land at the foot of a steep mountain.

You'll know there can't be any major expansion unless they go inland, and you'll still have the better coastside property anyway. Paso Robles is great wine country - but I don't know if the real estate has already matured around that, or for that matter if the wineries are growing or already as big as they're going to be. If you think there's lots of room for growth in Paso Robles wine, then I think that's an area to look at. Big (growing) employers, lots of tourism, nice weather. And of course if there are any other major contributors to their economy, as I don't know the area that well myself.

I compared it to what I use and a few differences:

I compare different financing options, which you can easily do by adding more columns to your Financing box (mostly to see what changes when I increase or decrease my down payment)

For rents I also break it out by units, and I put descriptions (2/1, 1/1, for bed/bath). This way when rents go up or down I can adjust accordingly.

For my estimates, I use 1.17% purchase price for property tax (this is for California, your state will differ), I call my insurance broker to get an estimate for insurance, and annual repairsis estimated at 1.5% of purchase price. So you can make a few more formula driven if you can use percentages like that.

Now you just need some forecasting - how's it going to look 5 years down the line? That's probably where breaking out rent by units might help. It's also great to open up the spreadsheet and compare forecast to actual.

I'm up in San Francisco if you're in the city.  If you have to make your way up here during the workday we can grab some coffee.

Though I checked your profile and you're investing at a caliber higher than me personally.

Nice! My first rental was also my first primary residence. I got lucky because some big employers moved into the area when I moved out and rents skyrocketed (as did real estate prices). Otherwise I would not have been cash flow positive right away.

I've found the best way to find a good property management company is to go see who your competitors are using. Visit open houses and talk to whoever is hosting. See if you like them. You can tell them you're actually there to see about hiring them for your own property.

Then while you're there talk to any tenants you might see. Chat them up to see what they think about the management.