All Forum Posts by: Bonnie Low

Thanks for the warning!

Are you remodeling because you intend to sell or are you holding this as a rental and intend to do a cash out refi? Personally, I don't like microhoods, especially in rentals. Because it is built in, when it goes out (and it will - you're lucky if you get 5 years out of appliances today) you are going to have to replace it for your tenants whereas, if you allow them to buy a countertop microwave, it's on them to replace it. A kitchen vent hood will probably last longer and cost less. We've been installing this type recently https://www.homedepot.com/p/Wi... for an inexpensive clean, modern look. I would not enclose either window - light and ventilation is desirable in a kitchen, there are PLENTY of cabinets so you don't need the extra wall space and like you mentioned, that would mean patching that opening and matching the exterior siding. However, I would move the stove out from under the window - looks like there's room to the left of it - so you can install the vent hood on the wall above it. I would also eliminate the pantry (especially if it's a rental) and let them put their fridge there. Again, you have more than enough cabinet space and it looks roomy in these photos.

@Greg Hoffmann the co-signers to the loan and the names on title can be two different things. We have recently financed properties with my husband on the loan solely but we hold title to the properties in both our names. We are doing that specifically to max out his Fannie/Freddie loan opportunities before he retires.

@Chris Mason - when you say Primary residences aren't held to the cap, do you mean that your primary residence doesn't count as 1 of the 10?

@Steve Vaughan I had the same thought. This sounds like it's targeting the gain, not the asset value. If that's correct, it is going to affect a smaller swath of properties. I'm just glad it's shifted from an income based qualification to an asset qualification. That said, I'd still like to see it shot down or the cap raised even further, say $1M.

Hmmm. Interesting. This is not a very analytical response, however my anecdotal response is that this could hurt comps in rural areas. We're in a fairly rural area so we've really seen the benefits of appraisers expanding the search geography to hit the minimum number of required comps. Often that pulls in properties that are more similar to ours and has resulted in a higher average. For more densely populated markets, this may not be an issue. But it's so hard to say. I'm curious what the BP members who are/were appraisers have to say.

Wow - I don't have any advice for you but I do have empathy. That is a really lousy situation and I can only hope you find a resolution that works. This is a really good lesson to remind all of us to constantly be vigilant through the entire process. Your saving grace may end up being that you DID notice the deed hadn't been recorded and got it done before the bankruptcy had been filed. Had you not done that, I suspect you'd be in an even worse position. Best of luck to you! I hope you'll share an update and let us know how this turns out.

In late 2016 we were really interested in purchasing buy and hold properties in Boise. The market was warming up but was nowhere near as hot as it is today. We made several offers and finally got one accepted in Jan. 2017. Being out of state investors (but with family in Boise) we relied on our Realtor to do a facetime walk through with us before we made the offer. We were satisfied with what we saw - nothing out of the ordinary. It just needed cosmetic updates. The offer price was $130k for a 4/1.5 on a 1/3 acre lot. Our Realtor scheduled a house inspection and we flew back that weekend to get our eyes on the property. The inspector called out some dips in the floor but didn't get under the house for some reason. Fortunately, we went there in person to check it out while we were still within the inspection period. Sure enough, there were several dips in the floor. My husband is very thorough so he was determined to get under the house to see what we were dealing with. Unfortunately, Boise had record snowfall in Jan 2017 so the yard was covered in a couple feet of snow, and this included the storm cellar doors which led to the crawl space below the house. Either the inspector missed it or just didn't want to put in the effort to shovel out the snow to get to the storm cellar. After some poking around, my husband found the storm doors and a shovel and went to work. Once he got the doors opened and went down the stairs to look around, I heard him say "oh, this isn't good." It turned out that someone had tunneled underneath the ENTIRE house. And by 'tunneled' I mean excavated with a pick and shovel and hauled the dirt out by the bucket load because the only way in or out was via the storm cellar stairs. The tunneling was a good 5' deep beneath the entire house. And the reason the floors were dipping? Well, they had strategically left pillars of dirt here and there, reinforced by the occasional brick, pier block or 2x4 to "support" the house. I'd say there were maybe 8 pillars in all. Picture giant termite hills like you see on National Geographic - that's what these pillars looked like. Anyway, since this was our very first investment deal, we pulled out of the offer. It was more than we were willing to bite off and had no idea where to start. A few days later, our Realtor called us back and said the seller really wants to sell it (no kidding!) and wanted to know "what's your price?"  I jokingly said, 'you mean like $50,000?' Our Realtor said yes - he's serious. But we were just too new and too timid. We walked away. It later sold for under $70,000. What I would give to have that property today! It's hard to find anything but mobiles and townhouses in Boise for under $300k today! That's the one that got away.

As someone else mentioned, the variables you're entering can change the outcome a lot. I see you're using 15% down and 25 year amortization. Have you tried running it at 20% down (which would remove your PMI and thus lower your mortgage) and a 30 year amortization? Either of those would change the calculation as would your vacancy rate, capex, etc. And yes, seems like most people are seeing retail prices unless they're well connected and are getting pocket listings or working with a qualified wholesaler - all of these things impact your cash flow potential. But just remember, in almost any market you will find people who are still getting deals and making money so don't get discouraged. Maybe look at a different location or asset type? Is there value add potential that could result in higher valuation and increased rents? Could you manage yourself and cut out the cost of a PM? Do a 'subject to'?? Or??? As an investor it's important to be open minded and not be afraid to think outside the box.

It's good that you're thinking ahead to tax time. Start by having him fill out a W9 (blank forms available online). That gives you all his information. At the end of the year, you will issue him a 1099 (also available online) for the amount you paid him over the course of the year. You will then provide that 1099 to your accountant. He should (if he's doing it correctly) report that 1099 income when he files his taxes. Regardless, your responsibility is issuing the 1099 and providing it to your accountant. What he does with it is up to him but you filing the 1099 on your end will let the IRS know that he should have done the same. It's all pretty easy. The one best practice I have for you around 1099s is that you insist that he fill out the W9 and return it to you before you issue payment. It is almost impossible to get someone to fill out the W9 once you've paid them. And if you don't have it, it's going to be difficult for you to issue the 1099, which is going to put you in a bind come tax season. As for other things you should be aware of, well that's between you and your accountant because no one else can say what applies to your specific situation come tax time.