All Forum Posts by: Colleen F.

It depends, do you want to ? or is your lender saying you have to? Some lenders will require it. It used to be you had had a choice but that is getting less frequent even so I have a couple mortgages without escrow for insurance and taxes. I find it less of a hassle to change the insurance and if I have to pay taxes I want to be sure that they are paid. In any case you may not have a choice. In no instance do you pay interest on the insurance and taxes unless you borrow the money to pay them. You will have your payment adjusted each year based on the amount the bank needs to set aside to pay taxes and insurance (this happens due to any increase in tax or insurance), They are not however allowed to set aside much more then the actual cost.

You say you are empty nesters any possibility to rent a room ? Ideally if you have a rec area and bathroom that is separate enough. Are you near a college? Might give you a little relief short term, move you towards your goal quicker, and introduce you to some of the dealing with tenants but it is not for everyone.

In any case I would write the plan down. How long to pay off and when you would target selling. Looking at it in years and dollars and cents will help you realize your goal.

Don't forget to consider Uncle Sam's take in any additional income too.

Sounds right to me but if you have imperfections to cover go as flat as you can.

Curious if any of you have had to paint the hot water baseboard covers and if so what you use. New ones are expensive. Some have never been painted and some already painted a few times so I probably have to use the same type paint.

@Pat L. Looks good but it is not the delivery that kills you here it is the per gallon price. I had a price of $ 4.89 /gallon when other areas were paying half that. There are a couple places you can check like

http://www.checkpropaneprices.com/ but the rub is if you take security from the tenants then if they don't fill the tank depending on the price per gallon it may not be enough to cover a fill. We are still trying to work out something that works for one place. Last years tenants wanted the tank gone ( parents concerned about safety). We had suburban take it out but this years tenants are trying to set it up on their own but so far no luck. It is supplemental heat for one area of the house so they can go without it but to have spent the money for the heating fireplace and its too expensive to use that is crazy.

@Pat L. that is cheap but does that carry over to propane delivery for heating? This is where we had a problem. They quote a price to get you in the door and then next delivery is more. They price gouge because they can. The heat was a 200 gallon (not 200lb) tank. In this case it isn't the tax it is the companies. Unlike oil you can't just call around for a delivery because they all need to inspect the tank to deliver so even if you buy your own tank it is hard to get people to deliver. If I take a 100 lb tank to get filled I do okay not great but ok , not sure how long that will last for heat so we haven't done that switch, not to mention I don't have a truck .

I do like the auxillary heating units with wood. We installed a built in wood stove (sheet rock exterior so not hot at all) but I don't trust wood burning appliance to tenants and you would need to check with insurance on something like this.

Although you cannot discriminate I know how you start to feel after you get a dozen responses and 3/4 are not working, tell you they are on disability and don't look disabled at all. Another couple are on section 8 and it just doesn't feel right. You start to think are they milking the system and will they do the same to you. It is discouraging. However there are people that have legitimate issues that aren't apparent at first meeting. I try to use other screening criteria to judge whether someone is reliable and would take care of my place.

The propane companies in RI gouge you. I would think since you have some of the same companies in MA then you are up against the same thing. (I also live in MA). We have a house in RI with electric baseboard and the heat cost tenants don't understand. Tenants have a problem getting that electric is 350 over normal electric cost they have a $350 bill for heat while their buddy is putting $1000.00 in oil in his tank every x weeks. That being said both for safety and cost I think electric baseboard is better then propane. No one can drive into the tank or fail to light the pilot. You can also be fairly simple minded and still be able to run electric baseboard without calling the landlord to figure out you are out of gas. Yes our 1600 square foot house has had $500 electric bills in winter but that is with college students setting the thermostats. We have a propane fireplace 45000 BTU too and the students who have used that paid more because of the price gouging with propane. Suburban is the worst offender... In any case insulating the floor may help you out too. I found not having cold floors makes a difference. In one room we put in floor heat because of the space but that is expensive.

In Rhode Island by law we can only charge one month. For our college students I would like to charge more but we legally can't. Check if you have a law about this in your state.

If they are 4 plexes and you buy 1 you will get a much better interest rate on an owner occupied building and a 4 plex does not have to be a commercial loan. You will also have to put less down. I think in your case that would let you have reserves. You should not have a problem given your credit score. The unit will not cash flow as well but you are buying a home and investment at this point so you should figure that in. If you have nothing else I don't know if your money is well spent on an LLC right now. It is mostly for liability protection. For our purchase with similar credit we got an excellent commercial rate on an LLC but is was still about 1-1.2% higher then a regular mortgage. I would research owner occupied loans with lower down payments and see if that works for you.

You can set up an LLC anytime. For a commercial loan we were able to finance with the LLC holding title and the loan is personally guaranteed. We had strong credit and this was a Multi-family that had to be commercial not sure if yours does too. For other rentals we financed personally and will then put in an LLC when paid off. Depending on the mortgage there is a possibility of the loan being due if you transfer to an LLC after purchase although I haven't heard of anyone having that issue.

Protecting personal assets I can see but you might wait if you don't have any assets now. What are you anticipating to be the tax benefits? Are you planning to file taxes as a corporation? I would talk to a CPA before assuming any tax benefit.

You mentioned you will have nothing next to nothing left after the purchase I hope that is after the purchase and reserves are set aside otherwise it is going to be a problem, you have to have reserves. You will need to pay taxes on the rental income and there are always unexpected maintenance items not to mention vacancies.