All Forum Posts by: Clyde Stackhouse

My first couple of questions is what is your strategy in REI. If you are BRRR'ing or simply buying holding could provide different recommendations for each.

Overall when it comes to the equity in the home you could use a Home Equity Loan which allows you to use that money to get into another home. I've heard this can be great as you don't have to deal with as much paperwork when closing on a home that is being bought outright with a HELOC (This is my understanding, I have not used this method). From there if you are Brrring you can do the work on the home (using the HELOC) and once work is done you could do a 'refinance' on the home as a conventional with 20% and pull out the remaining cash which is then used to pay off the HELOC you used to get into the property.

Once again this is tact I have read up on but have not personally utilized yet. Overall I'm a big believer that if you are trying to grow your portfolio via leverage sitting equity is making you 3-4% (Percent on a home loan) whereas if you find a great deal you could be making 10%+ on a rental or even more!

Not sure if this helped answer your question but knowing your strategy might help others speak to other options you have when leveraging equity (If that is indeed your goal).

I would echo what many others have said. I just ran into this with my first rental and Zillow had a zestimate for $850 as this was average for our area. We posted ours for $950 since it's in decent shape and had lots of views and inquires. After so much traffic to the Zillow page, it increased to our asking price of $950.  Not only that we had people saying that they were anticipating $1000 for our little 2bd 1 bath.  

The last thing I'd throw your way is to think about the tenant you are looking for a that fits the neighborhood. A low rent price might scare away a great tenant because they think its too low and might be a 'bad' place to live etc.

Just my thoughts but try to find the balance of a great price point that will attract a great tenant while not leaving your rental vacant for too long!

Best of luck!!

Welcome! My wife and I are also new investors and have our first tenant moving in on October first! What type of business are you looking to do in Omaha? Buy and Hold, Flip, wholesale?

Best of Luck on your REI journey!!

Hey Aar on!

I'd say this is completely up to you. I'd say if they aren't interest-free CC's than I would say pay them off as you are throwing away 20-30% on that borrowed money. Banks when underwriting Home loans look at a lot of factors Credit Score, Debt to Income, total outstanding Debt etc. For me and my wife, we like to keep our Debt to Income as low as possible which has allowed us to buy two homes within a year (1 FHA,1 Conventional). Either way, a large factor that they liked about us was our Credit Score and Debt to Income.

Hope that helps but ultimately it's up to you! Either option will kind of look the same to the Bank (Savings = 20K - debt=5k = $15k 'Cash' or Savings = $15k - Debt $0 = $15k Cash). This is just my experience thus far, still pretty new in the REI world. Good luck!!

So here's the story. My wife and I have finally started in on our REI journey and bought a second home. We will be moving into our new home (Oct 1st) that will be Owner Occupied for 6 months as we do repairs, updates, and reno. Once we have completed the work and hit the 6-month mark we want to move out and use this second home as a rental. My question is, Can I deduct any of the repairs and reno costs as part of our rental hustle (Not forming an LLC yet) even though the house is technically Owner Occupied while the repairs are happening?

FYI our first house is being rented (Oct 1st). In an ideal world, we could 'expense' the reno cost on the new home from the rental income from our old home.

Any insight would be greatly appreciated! Thanks!

@alan_strong 

That's a great idea! I would have never thought of that!! 

@Ryan_Ohri I think we are probably right around 85% LTV is my guess. You definitely have my brain turning with the REFI which frees up the FHA loan. Unfortunately, we are like 2 weeks out from closing on the house so we wouldn't be able to make these changes in that time frame.

I'll need to review the Quals for FHA to see if we could use it on our third home. Our current game plan is to move in and do some minor updates if needed and then after a year move to a new house and rent the previous.

Although the house we are closing on for $155 k and will probably put 5-10k in and other comps in the area that are clean/updated (which is what the 5-10k is for) are between $180k-$190K so we are thinking we will the ability to pull some cash out after a year on the refi maybe?

Also, do you know if you Refi does that restart the 1-year clock on it being your primary resident? My thought is Refi have the lock up period has happened and then after 6 months move and rent it. 

Thanks all for your thoughts and feedback!

SOOO. long story short my wife and I bought our first home almost 2 years ago with a FHA / NIFA Nebraska INvestment Finance Authority. We didn't know we would want to rent this home out at the time but we are now moving and want to rent out our current home. The issue/concern we have is that NIFA's website states that you are supposed to live there for the life of the loan and not rent out the property.

"You must plan on living in the residence you purchase and not renting it out for the life of the NIFA mortgage loan. If you cease to occupy the residence as your principal residence for a continuous period of one year or more, the interest on your mortgage loan may not be deductible for Federal Income Tax purposes."

Has anyone heard of this actually being an issue? our realtor has had several other people do it with no problems but wanted to get BP thoughts and feed back.

FYI we looked into a REFI but we don't have 20% equity in it (2 yrs) and this will not be our primary residence in 30 days when we close on the new house.

Great Questions Matthew, My wife and I are also embarking upon the REI journey! We are meeting with our Tax guy in the next couple weeks to crunch the numbers regarding deprecating the house, how to track expenses that you can use as a write off etc. Hopefully others can jump in and help provide some insight!

@Jordan_Northrup Thanks for the example! I think in your specific example your wife may need to do some further research to understand the state of the market (where I live you have 24/48 hours to make an offer although it's cooling down). Education is key well at least that's what I hear (Still a new investor here).

Regarding the overall question who's in charge/running the business and I think that's a tough question for me to answer for you, BUT. I've found partnerships generally perform better and have greater combined strength than a Sole point person. I think this applies in business AND business within marriage. It takes both parties to give some compromise while understanding that you are both are on the same team. And that takes tactfulness (which I'm still working on) when communicating with your partner and mutual respect.

Lastly, I'll leave you with one practical thing that works really well for me and my wife (In business and everyday life). When we start to disagree on something or see that we aren't on the same page we say out loud the level of importance the topic is for us from 1-10. This helps remove emotions and creates a common language for you to understand each other. This has helped in so many spheres of our marriage and it might sound quirky or dumb but when we start to argue about 'buying everyone's dinner when we are out with friends I can tell her this is a 7 for me. This helps her understand that it means a lot to me to do it but also that I'm willing to not move forward. [I also had to limit how many 10's she could have because if not everything will be a 10 for my wife ;) ].

Hope that helps, and hopefully others can chime in and bring some additional perspectives!