All Forum Posts by: Corey Schneider

Thank you all very much for your advice. Carrie Cavins, I will have to look into that. Right now, I'm only at about 90% compared to the original loan amount. I was counting on the percentage being compared with the original purchase price plus appreciation. That may change my decision. If I can get MIP dropped, then I think I will definitely go ahead with keeping the house as a rental.

With regards to BRRR: Let's say in a few months I owe about $120k and the house appraises at a more conservative $160k. How much of that equity can you pull out for your next deal? Do you do this through a HELOC or complete refinance?

I'm looking to get into buy-and-hold real estate investing. My wife and I close on a new house next month, and I thought that we would keep our first house and use it as our first rental property. Now I'm wondering if we should sell it and find another property to reinvest the proceeds in.

Here's the situation. We're in the Kansas City market, and we bought our house for $140k five years ago. We went FHA, putting 3.5% down at 3.75% interest. Our total payment (P&I, MIP, property tax, insurance) is $1015, and we still owe nearly $123k because less than $250 per month is going to principal. I think that we could probably sell the house for $170k with just minor repairs and updates. I think that it might be possible to rent for $1500 per month, or $1400 easily.

Putting somewhat optimistic numbers into the BP calculator ($1500 rent, no utilities, 5/10/10% vacancy/CapEx/management) gives me only $22.26 cashflow, 4.09% CoC ROI.

The other thing is, as I understand it, once I only owe 78% of the house's value, we can drop the $117 per month MIP (FHA mortgage was before June 2013 and we are about to make the 60th payment this spring).

Would that extra $117 in cash flow each month make this deal workable? Should we try to get the ~$30k of equity out of this house and look for a better deal?

Other possibly-important details:
I work 50 hours a week making over $100k per year, but don't have a lot of cash on hand, especially after putting a down-payment on the house we're moving into. Between my work schedule and lack of handy skills, property management and maintenance would probably all have to be hired.

Any advice is appreciated.