All Forum Posts by: Chris Lefstad

@Jay Lohn - Small world! 

The property is a few blocks South of Lake Pulaski beach. We're just upgrading and moving across town.

Using what I've learned from earlier posts, here is a summary of my two options:

Sell

• Expect a $175K sale price. I owe $140K now
• After Real Estate fees I'd take home about $20K tax-free
• Not sure what I'd do with the money. Probably buy a rental after saving for another year

Hold

• At first, the tenants would strictly pay off my mortgage (w/ insurance & tax), so I'd have to foot the bill on any maintenance, repairs, etc
• However, once I pay off my $10K second mortgage on the property (which I should be able to do within a year), that would free up $350/mo to save up for CapEx, Vacancy, and PM (per @Aaron Montague 's post)

Here is my line of thought. I'll have $30K tied up in this property ($20K that I could get out by selling, and another $10K to pay off that 2nd note). I'll have it cash flowing at least a bit, the renters will be paying $400/mo principle, and I can write off the interest on this property, its not a bad investment for the money. RIGHT? I guess my main hesitation is that I don't trust myself to consider all of the hidden expenses.

@Jay Lohn @Marc Jolicoeur -

I'm not sure why BP lists me as Minnetonka, and its not allowing me to change it, but the actual property is in Buffalo.

All-

I met with a Property Management company yesterday, and they said $1400/mo ($50 more  than I expected) is reasonable. They recommend an 18 month lease so that the renewal will happen in the summer, which is a more competitive time for tenants. They seemed confident that we could bump up rent to $1500 then.

As @Aaron Montague outlines above, I'm not really getting much cash after all expenses are taken into account. I'm beginning to realize that this is not a no-brainer investment situation, but on the other hand this is easily my best chance to get my feet wet in real estate investing. I'm leaning towards holding and using this as a learning opportunity at the very least (to @Account Closed 's point).

Someone please talk me out of this if its a dumb idea! Thanks again for all of the helpful insight!

Awesome. Thanks, everyone for the great insight. I'm going to call a PM to take a look at the property and give me a second opinion on what it would rent for. It sounds like $1350/mo would make it a tough decision, but maybe they think I could get more for it, in which case I'd want to hold. I'll let you know how that goes!

Thanks, all, for the quick response. Here are more details:

@Aaron Montague 

• I owe $140,000 (would only owe $130K after paying off second mortgage)
• My mortgage payment is $1050 (including taxes & insurance)
• Lets just say $1350 for rent a month, as that seems pretty realistic
• I would pay the PM one month's rent just to do leasing
• I was planning on managing the property from there myself, but I like the idea of including 10% to justify my own time spent managing the property
• Based on my discussion with a potential PM, 8% vacancy seems reasonable here

@Jon Klaus 

I've lived in this house for 10 years, and expect it to rent for $1350.

Hi BP-

My wife and I have been looking to upgrade houses for about a year now, and finally closed on our new home just yesterday. We both have really enjoyed the search and have been considering making the leap into real estate investing by holding onto our current primary residence and renting it out. If we were to do this, we'd get a PM to find tenants and do the legal/leasing for us in exchange for one month's rent, but I would take the management from there.

I was introduced to BP through the podcasts, and have been reading up on real estate investing, and I'm pretty convinced that I want to get into buy & hold investing as a retirement strategy, but I need some advice as to if my current home is the right place to start. 

• I owe $140,000, and could sell for about $175,000
• After expenses, I'd cash flow about $100 UNTIL I pay off a $10K second mortgage that I have on it. So, if I buckle down and get that paid off quick, I would soon be cash flowing $350/mo

My thinking is that selling this thing would cost almost half of the equity that I have into it, but on the other hand I don't know if there are better things I could do with the equity I'd get. HELP!