All Forum Posts by: John Whittle

I would spend the time getting a job before I wasted time trying to buy a property without one. 

My WAG is about 90k.  I'd get a contractor in there before you buy it.  As Ned said its all about the level of finishes you go with.   Sounds like you will want some decent finishes in this area. The 2nd bath can be done, thats something to talk to a plumber about the price could vary quite a bit depending where you want it and how the house is set up.  

That might be an old sears house.  I tore out a boiler and went forced air in a house just like this a few years ago.

This is done around here quite a bit.  They tie the beams into the joists above too.  I always wonder how it would hold up the long run.  Seems like it would push on the rest of the house.  I've seen a few that looked like they were done long ago with no issues.  I would count on more issues, it wouldn't stop me from buying the house if I could get it for the right price.

House I just did a bunch of work in they had a foundation guy come in for the same problem.  He dug up the outside and poured a new foundation against the old cinder block one.

Well actually I would of fixed the flu pipe cheap enough and left.  If you had refused the work I would of shut it off and left.  

 While this guy was obviously way overcharging.  This sounds like a major issue to me.  Just because its in its own room doesn't mean the basement can't fill up with CO.  We are required to shut down anything dangerous, which a broken flu pipe is. I'm not going to risk someone dying so they can take a hot shower.  I would of shut it down.

 Thats for HELOCs, you can still refinance and get cash out.

Leverage would be taking advantage of the cash you have.  Using the smallest amount of money down or sometimes no money down.  So you can keep cash for more deals.  Buying 4 rentals 25% down each with 160k cash instead of buying one all cash for 160k, is using leverage.  You increase the income with 4 rentals over one even though you have to pay for the mortgages.  Going from a 15 year loan to a 30 year loan would be another way to use leverage.

To take advantage of leverage you still have to produce cashflow.  Your actually negative cashflow if your not accounting for maintenance, vacancy, evictions and capitol expenditures.  Even on a 30 year after you account for all the hidden costs you are still in the red.  Basic numbers are 10% for maintenance and 10% for vacancy of gross rent.  I hate to say it but you really need some properties with better numbers.  I've seen plenty of landlords with one or two properties cruise by for years with no issues, barely making a dime waiting for it to be paid for.  Then a bad eviction comes, rent doesn't come for months, the tenant destroys the place, the furnace goes out, it all hits once and really hurts.  

I'm with Wayne and Marian. Your dad wanted it for you guys to have a house. If he wanted you to invest it he would of just given you the cash. If you cash out with an FHA loan you'll get about 130k but now you'll be paying mortgage insurance and possibly a higher interest rate on a larger loan. At 4% its the difference of 1700 verse 2700. Can you afford that? Will the bank think you can afford that? Your not going to make that payment up with turnkey properties in the midwest. You'll just lose your dads awesome gift trying. Most HELOCs only do 80% ltv so you'll only be able to borrow about 40k that way. Then you'll have to qualify for another mortgage with your dti going up with the heloc payment. Sit back, save some money with that lower mortgage payment, learn all you can then invest.

 I get tenants all the time that set the heat to 78+.  When it gets cold out and the furnace can't keep the house at 83 anymore they think its broke.  You'd be amazed how many people say they're freezing to death with the house in the upper 60s.  The best part is they are the same people that think the a/c is broke when they can't keep the house in the upper 60s in the summer.  

I would have the heating guy watch the thing for awhile.  Sometimes instead of crazy tenants, its something intermittent. Where it'll appear its working fine and cut out later for a little while.

As far as I know equity loans on investment properties are pretty rare.  You'd have to refi to get any equity out.