All Forum Posts by: Chris DeTreville

Ha ha I can honestly say I didn't think my first welcome to the site would be from a dang ole Clemson Tiger. Thanks for the welcome and go Gamecocks!

I jumped the gun a bit and started a thread in the "starting out" forum but anyway, I have lurked long enough and decided to get vocal.
I am 29, and have been in real estate for 6 years. I suffered through a few years of new home sales as I started out...and I am thankful for the experience but glad I am in a new position. A year and a half ago I was hired as a leasing agent for a property management company. I came to the company with the intention to start and head a sales division(calling it a division makes it sound professional, but really we just joined MLS and I set the company up for sales with the help of my broker), and as fate may have it I closed on my first house with the new company today. While most of my job is servicing rentals and working for our owners...I am loving the ability to take on some listings and make some sales. We get a lot of owners who want to sell so in the future I believe most of our sales will be investment properties.

I also fully intend to become a real estate investor myself, and I have taken some preliminary steps toward that goal. That is why I'm here.

Anyway, enough about me. Thanks for the opportunity to share my thoughts and questions (there will be a ton).

Joe G. I appreciate your input. I work for a property management company and Fort Jackson plays an important role in our rental and sales markets. We manage a lot of owners who have done the exact same thing you have done. Some have worked out, some haven't. Working at this company has really opened my eyes. We have a lot of units that we manage so we see it all as far as service and maintenance issues. For me, when I bought the home 4 years ago I put in a brand new heating and air unit, new windows, appliances, etc. So I know this house inside and out which gives me some comfort. Also, though I haven't discussed it with my broker, if I were to have my own rental, I'd essentially be managing it myself even though I'd try and hang it under my company as long as she'd let me (for free or at a huge discount, of course).

As far as cash reserves, based on y'alls suggestions maybe I should bump my 10% savings and try to save more. Also, I have a credit card with a low balance that I could use for extreme emergencies but I don't like the idea of that. Also, I have read some on this forum about using a HELOC as a cash reserve but I am hesitant about that as well. Any input there?

What intrigues me the most about my position is the chance to hang on to this house, and go out- when I'm ready- to find a great deal (possibly a duplex ) and use the same buy and hold strategy and get the great rate as an owner occupant. If I were to put it on the market and try to sell, there are a lot of unknowns and I wouldn't be as flexible when it comes to finding the next deal. I don't know, it's a lot to consider. Sorry for the rambling.

Not to get too far off track..but what do your local taxes look like? Is there such a dramatic difference in owner occupying/ non-owner occupying where you live? I know my county is high..but I'm just curious as to how it compares around the country.

Thanks for the advice. I failed to mention I have a 401k so when I say I have zero saving thats not entirely accurate, but I cringe looking at that 401k statement. I'd rather have my money in a self directed ira or something like that where I could put it to work myself but I digress.

I struggle to accept the prospect of losing money on the house as a rental even if in the long term the equity may make up for it. This is my entire dilemma. I am confident of the location of the property. When I bought the house, across the street was a cul de sac full of duplexes (actually, they were my grandfathers duplexes) and they were run down. But I knew that the entire cul de sac was going to be sold and that they were going to tear out the duplexes and build new homes. That is why I jumped all over the property at that time. The subdivision took several years to take off but it finally started popping recently and the homes range from 250k-350k and they are selling and building like crazy as we speak.

Sorry I was pretty vague on that part. Here is how my county calculates it:

Taxable value $105,000.00
Homestead (if applicable) - $0.00
----------------
Net taxable $105,000.00
Ratio X 0.04
----------------
Total taxable $4,200.00
Millage rate X 0.2592
-----------------
Estimated tax for: 2012 $1,088.64

Local Option Sales Tax Calculation
Net taxable property value $105,000.00
Local option sales tax factor X 0.003124
-------------------
Local option sales tax total $328.02

Estimated tax total $1,088.64
Local option sales tax - $328.02
------------------
Estimated tax for tax year: 2012 * $760.62

I tried to copy and paste and I had to play around with it to be readable.. Hope that isn't a mess. 105k is what I bought the home for but the county has not adjusted yet to the new value of around 130k

Here is if I am the non legal resident:

Taxable value $105,000.00
______________


Ratio X 0.06
_____________

Total taxable $6,300.00

Millage rate X 0.5023
____________

Estimated tax for: 2012 $3,164.49

Local Option Sales Tax Calculation

Net taxable property value $105,000.00
Local option sales tax factor X 0.003124
____________
Local option sales tax total $328.02

Estimated tax total $3,164.49
Local option sales tax - $328.02
__________
Estimated tax for tax year: 2012 * $2,836.47

Coffee is for closers!

Hey everyone. First I'd like to say that I enjoy reading this forum and as a wannabe investor I have found the community useful.
Some background on me before I get into my plan...
I am 29 and I have been in the real estate business for 6 years. I worked as an agent out of college and two years ago switched to a property management company where I draw an hourly wage on top of some leasing and sales commissions. (I'm in a pretty good spot, finally).
I have zero savings but plan on saving 10% of every paycheck from here on out to use as a cushion. I also bought a house in 2009 where my dad cosigned on the loan for me. It is a 2br 1 bath in a good neighborhood where home values are pretty high and steady. I paid 105k and did some rehab using a construction loan then wrapped it all back into one loan. So I have about 130k into the house. My loan balance this past month was 119k. I had been mulling over selling and buying a bigger house to take advantage of the market...or doing a refi and getting my payment down. In talking to a lender recently, we recognized that because I closed in March 2009 I qualified for that FHA "streamline" or whatever it is called that allows me to refi with no appraisal and very little closing costs. By doing this my rate drops from 5% to 3.25 and my mortgage payment goes from $830 to $650. My estimated cash at closing is around $550. I decided to go this route (seems like a no brainer) and spend the next several months to a year saving and building my "cushion".

Because I am getting my payment down substantially, it SEEMS that I could take a decent stab at eventually renting this house and then finding another deal where I can owner occupy (buy-hold) and do the same thing. Maybe even find a duplex to move into as an owner occupant. My worry is this- everywhere I read I read that you make your money when you buy. In 2009 I was green and did not have the investor mentality that I have now. When I bought the house it was not necessarily so that I could rent it later. I don't think I'd have a problem selling it and breaking even, but I think it'd be wise to hold out longer until the market rebounds (plus I have this house already and I am in the process of getting the payment down so much, I just feel like I can work with this instead of starting over). I'm just nervous about taking the risk of renting it when I didn't go into the purchase with that in mind. I've played around with some of the spreadsheets on here and read a lot about the rules of thumb. At my current tax rate of 4% I would cash flow about $250 assuming a $900 rent amt. That is without taking into consideration damages and such, so if I read closely enough on this forum, I need to expect about half of that cash flow to go towards expenses. (is that right?). Now, the biggest worry for me, then "non legal residence" tax increase. In South Carolina, when I am no longer the legal resident my tax rate goes from 4 to 6%...which according to my county tax estimate calculator would catapult my taxes from around $700 (what I'm paying now) to $2,800 a year. !!!...That's $230 a month I have to account for. So there goes my cash flow.

So I guess my questions are...do any of you in South Carolina (or anywhere else for that matter) have any experience turning your primary into a rental? Does the scenario above scare you as a seasoned investor? Is there an alternative to getting absolutely crushed on these taxes that I am missing? Should I save for a while, sell and use the cash out to make a better investment? (I am ready to get started with my investment career and waiting a year or two to do anything will drive me crazy). Advice? Opinions? Anything above not make sense? I am just trying to learn and explore all options. Thank you so much for taking the time to hear me out.

I plan on saving 10% of every paycheck, join a rei group, and read more books. By the end of the year I plan to have my first rental whether its my primary residence now that I rent, or another deal I find.