All Forum Posts by: Jeff Mills

Hi @Jared L. Sorry I didn't see a notification for your mention until today. The BP meetups in Provo have still been happening virtually and hosted by @Jeremiah Maughan. I would just contact him and ask to get on the email list.

Sorry for the delayed response @Brent Dahlin. Here is the page for the meetup tomorrow, March 4th:

https://www.biggerpockets.com/forums/521/topics/812302-utah-county-meetup-march?highlight_post=4769746&page=1#p4769746

I've now got some help on this. Thanks, BP!

I'm out of state and recently purchased a property in Memphis that I'm now trying to refinance. That is being delayed because my insurance requires proof that the burglar bars have been removed from the windows in the back of the property. My PM has suddenly become non-responsive for a couple of weeks now but last I heard was that they removed the bars. So I'm just trying to get verification and photo evidence that those bars have been removed. I'd be happy to pay $30 if that sounds reasonable. Please DM me if interested.

@Rachel Garbett there is also a Bigger Pockets meetup the first Wednesday of every month in Provo. https://www.biggerpockets.com/forums/521/topics/675352-utah-county-meetup-for-march

Makes sense. I already have a HELOC on it but I don't know if living in the home is a condition of it.

My main reasons for considering making it a rental is I'd like to own a local rental and I haven't been able to find anything local that cash flows except my own home. Also all things being equal (income, expenses) I assume owning a rental in an apprecating market will give you a better return over time than one that doesn't appreciate much.

But most likely my new home mortgage would be a decent amount more than my current one so it may end up cancelling out the benefit.

@Jaysen Medhurst Ok, I see, so your point is that it's a bad ROE. Correct me if I'm wrong but turning this home into a rental wouldn't stop me from making use of the equity through a HELOC right? In other words, they are not mutually exclusive?

If I can use the equity AND make it a cash-flowing rental would that not be a good idea? Than my ROE would also take into account the properties I have and will purchase with the equity.

Sorry for so many questions, I'm really wanting to make sure I understand this.

@Jaysen Medhurst thanks for your detailed post. I actually should have mentioned that the mortgage payment I mentioned already includes insurance and property taxes. And to be more exact the actual mortgage payment (with taxes and insurance) is $970. According to Rentometer, which I know is far from perfect but I tend to think it's more accurate than Zillow, $1,925 is the average rent in the area for my specs with most of the listings being less sqft than my home.

Does that affect your suggestion at all?

Also, I wouldn't expect the 1% rule to apply to the current home value but what you purchased for. Is that not correct?

By the way, I am currently following your first suggestion and using a HELOC to buy rentals.

@Jaysen Medhurst purchased it at $220k. Zillow estimates it at $375k now and estimates the rent to be around $1,600/month but I've seen smaller homes nearby listed for more than that. My mortgage payment is just under $1,000.

I'm curious why you would say it's unlikely to make a good rental after a lot of appreciation?

Thanks for your response.

We purchased our current home almost 6 years ago. The market here has appreciated quite a lot during that time. Our home's value has appreciated over 50% while my salary is twice what I was making when we purchased it. I also expect the market here to appreciate a good deal more over the next decade. It's very difficult to find cash flowing properties in our state so I've bought one property out of state and have another under contract in a market not expected to appreciate a great deal but cash flows well.

The question I've been grappling with is whether to purchase a new primary residence now and rent out our current home that could cash flow quite nicely. We would have to pay a higher mortgage so we wouldn't be able to save as much for out-of-state investing but we would have another rental property and primary residence in an appreciating market.

How would I go about doing the math to determine what the best choice would be?