All Forum Posts by: Sara K Chilcote

Congrats!  We house hack a duplex in Portage, and just finished doing a complete renovation on the other side.  I completely agree, contractors are expensive, I can usually do it myself, and learning to delegate is tough.  Our timeline ended up being 3 times what we thought it would be, but it's done. 

Now to take what we all learn and keep improving our processes!  

We’ve got property in Kalamazoo county.  We just wrapped up a major Reno.  Single family or multi?  feel free to send a message. 

Thanks for the feedback!

I'm not sure if you could do that, but FHA was an option for us because it would be our primary home, even though it was also an investment property. We chose not to use it personally and secured a portfolio loan through a local credit union instead, but FHA is great for a lower down payment. Your bank could easily clarify if it's allowed with one in use already. I don't see why it wouldn't be because you'll occupy, but I have no actual legal understanding of those limitations.

 Do you manage them as one entity, or do you know what each property is costing you *what portion of each mortgage are you having to float personally?  

We currently only own two multi-family, and while they're under one LLC, I still track what each one is bringing in/costing me, so I can better evaluate the health of each individual property.

I don't think a credit score of 650 is asking too much - while it may take longer to fill the vacancy, the theory behind a higher score is a more responsible tenant *though this is far from fool proof*.  Quality over Quantity - the idea being someone who fulfills their monetary obligations on a regular basis is more likely to stay longer, pay their rent etc,  decreasing your turnover.  

Without knowing what renovations and updates have already been done, with a building that old, you can be assured you'll have ongoing maintenance.  

      Do you have a contractor you trust to walk through and assess what may require updating?  How old is the plumbing, furnace, etc.  If you can piece together a list of potentials and plan for them as you go, that could help.  Again though, first you have to stop the hemorrhaging so you CAN.  

This is a calculator I like to use when assessing a potential investment, but it may help you to see the long term effects of renovations, future maintenance, etc so you can determine how long it would take to recoup your investments or what the numbers would NEED to look like for the properties to be self sufficient.   Input your real numbers and see what you can come up with.  

https://www.calculator.net/ren...

I do have separate checking accounts for each LLC, but I don't uses debit cards - I have checks if credit isn't an option.

I personally don't pay cash for anything unless I have to, reaping the rewards offered through credit cards adds up, plus introductory offers etc.  

I can't speak to if you should have multiple LLC's etc, but I have opened multiple LLC's for different businesses, and opening too many new accounts all at once can cause a denial simply for too many new accounts.

Does each LLC have an EIN you'll be applying with? If so, that may improve the odds of not being denied, but too many new accounts or too many inquiries will drop your score in one aspect, but in a month or two, the increased credit from new accounts will decrease you percentage of credit used (unless you use too much of those available credits) which increases your credit score.

 For sure, doing that allowed us to have a lower down payment, a better interest rate, and lower property taxes while substantially decreasing our living expenses.  

I second the HELOC option if you are wanting the funds from equity. There is usually a 5-10 year draw period on a HELOC as well, so you aren't limited to a one time pull either. The interest rates I usually see are a bit higher though, prime + 3 etc, because it's a revolving credit.

Another option is finding a multi-family you could live in as your primary residence and potentially turning your current home into a rental.

The amount of information given doesn't allow me to allot any specific advice, but if the only reason the properties aren't paying for themselves is these temporary problems, there should be a solution to be found.  

Do you have ANY tenants?  

Are you paying the entire mortgage on each property? 

How are you financing the repairs/renovations?  

Is this sustainable until the temporary problems can be alleviated?  

In our latest renovation, we went to replace some carpet - easy right? - that one thing began a snowball effect of an entire main floor being gutted.  OUCH.   We have decided to take the opportunity to update the space to function better as a whole, ideally attracting a different renter. 
We created a plan, began to execute it, when he shattered his clavicle, delaying any work he would be able to do for 12 weeks, forcing us to look into hiring a contractor, which was not in our original budget.  
At one point, we came to a crossroads - it was time to figure out how to stop the bleeding and shift into piecing it all back together.  To be fair, I won't know if this strategy has been successful for another month, but I am confident the value add will offset the additional unexpected expenses/vacancy.  

    It has taken far longer than we originally anticipated.

    It has cost substantially more than we originally anticipated *just carpet after all*

    At first, it was incredibly overwhelming but we are trying to pivot, adding value back into the home to increase the return on our time and                         money.   After all, we're playing the long game.       

HOW they might be solvable would require a much more in-depth conversation on specifics, but my first thought would be assessing how to stop the bleeding.  It's difficult to focus on planning a recovery if you're still hemorrhaging.