All Forum Posts by: Bryan Stengel

Hi Craig, excellent question! I am a similar situation. I think paying off a loan with a high interest rate debt and adding to the principal is one way to stay liquid within the property. Liquid cash flow of $200 to $300 per month is only going to take you so far. As long as there are no outstanding repairs, I don't see anything wrong with paying off that loan faster. If you are looking to expand to other properties in the future, that option of a cash-out refinance or HELOC on your appreciating asset is always there. It seems as though you are happy with the property and it is a great long-term hold. For one of my multi-family properties, I chose to dig my toes in the sand and make extra payments on the principal until it was paid off. It now cash flows beautifully, which I continue to utilize for other my other properties. Leveraging debt is our foundation as investors, but paying it down when we can will always open up more opportunities to get creative with out money later on. Hope this helps!

Hi Braeden, my advice would be to shop around for other companies if that is the initial quote you got.  I had arguably 1,400 sq ft of crawl space incapsulated with the dehumidifier for $6,000.  Now my situation may required less, but the company who did my crawl space did an excellent job.  Anybody will charge you whatever you like if they know you're not familiar with crawl spaces, which is completely understandable.  This may seem like obvious advice, but I'd say just get three or four quotes before settling.  Good luck!

That's great that you have 85% equity in this property already. While it does not cash flow, you are at least earning money by paying off that mortgage which is approximately 60% principal. You are definitely in a great position. From a tax reporting standpoint though, I am curious why showing a profit is even a concern. You mentioned that this a commercial property so I am hoping that you are using depreciation on this one, which could go for as long as 35 years with a commercial and 27 years on a residential. Now, I think the best exit strategy to avoid recapture tax continue to build on your portfolio would be to do a 1031 exchange. This will allow you keep the equity and maybe try a BRRRR with another property if that's why you specialize in. With 85% equity, maybe you can put all cash in on your next deal and really execute that BRRRR strategy that gives you some cash flow. Unless you are investing in a location that appreciates very well in which case it then doesn't matter as much.

 Of course!  Good luck with your investment!  Feel free to let me know what you decided to do and how it went. 

It's hard to say if they do or do not appreciate faster.  You have ask yourself too if you're buying these new builds at a premium.  The response I could give you is that it really all depends on location and the type of home.  As Caleb mentioned, a newer home is likely not going to have any potential issues in the beginning.  From an appreciation standpoint, it's hard to say that a home built in the 1970s will likely appreciate less than one built today.  It depends on the neighborhood and maybe even what improvements that hypothetical home built in the 1970s got.  Could be a new roof, HVAC system, or new kitchen along the way (all of which could certainly add equity to the home irrespective of the year it was built).  

You could certainly do a cash-out refinance after two years, but it's hard to say if you'd be able to pull a lot of cash out since it is unlikely your prospective new home will appreciate so fast.  Now let's say you put your own sweat equity into a home that needed some work (so not a new home), I would say a cash-out refinance may make more sense two years after purchase where you possibly could take out cash.  Hope that helps!

Great question Brandon! Scaling is not an overnight scenario unless of course you have a lot of liquid cash to go through. While I don't know your family situation and if moving is a possibility for you, but you may always rent out your current home and move into the newer one with FHA loan (putting 3.5% down). You may qualify and make it your primary for two years before moving to the next. At that point, you may rinse and repeat. Also, you may want to look into a two family home and rent out part of the space of your new home under the FHA loan structure too. That way you could rent out the first property and also generate income from your primary residence as well.

I'm not sure how fast you want to scale, but I see that as a feasible alternative if you don't want to go through the process of either BRRRing or the fix and flip.  It's good to hear that you want to play the long-term hold game as that is how you'll ultimately build equity.  Feel free to follow me and hope that helps.