All Forum Posts by: Drew Dowdell

I was CC debt free until I started down this path.  I live pretty frugally and my day job pays well. 

As I said, the duplex is essentially done.  I need to buy the appliances and that's it.   Now that it is repaired, does anyone think I can refinance it to pull the cash out and put the cash to the cards?

That was the original intention the whole time. I just am thinking that I wouldn't be able to do a regular mortgage with my CC utilization that high. 

My other idea was to HELOC my personal residence. Pay off the cards. Wait for that to clear up on my credit reports and then refi out the Duplex, using the cash out to pay off the HELOC.... or would the banks see that as a shell game?

@Ralph R. You are right that there is no way I could purchase these properties again at the prices I got them 10 years ago. 

Yes, I'm already way up on the cards and will need another $40k - $50k to finish the 4plex.  I started the 4plex first, but some way into it we found enough "big things" to stop and go finish the Duplex first which was, in my estimation, in much better condition. 

The existing mortgages are all just plain old 5/1 ARMs that were intended to be refinanced before the market crashed 8 years ago.

I absolutely want to keep my personal residence separate from the rental units as much as possible. But if it comes to it, I will use the equity from it. 

The duplex should be fully cash-flowing by June 1. 

The wildcard on the 4-plex is that it can start cash-flowing $1200 a month as soon as the carriage house is finished... which is also the unit which is furthest along.  

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How I imagine it going down is a cash-out refi of the duplex.  Pay down the cards.

Some sort of reconstruction loan on the 4-plex.  Refi after construction complete and units rented.

Lesson Learned:  Go Back In Time and Join Bigger Pockets 10 years ago. 

So about 10 years ago I purchased 2 rental properties (Duplex and a 4Plex). Not long after that, the economy crashed and I lost my job.  The properties themselves were fixer-uppers. Not in the best of shape, but rentable. I wasn't able to replace my job very quickly and when I did, it wasn't the same salary I formerly had.  I came close to foreclosure on one of them, but managed to pull through.

Eventually I got a better job that required frequent travel, things stabilized for me financially, but as I was still bruised financially, very credit shy, and away from the area 90% of the time, the properties slowly fell into disrepair to the point of being unrentable.  I should have sold them years ago, but wanting to be a full time property investor one day, I hung on to them and paid the mortgages out of my salary. 

Fast forward to today. Once my credit cleared up, I gained large credit lines from credit cards. Last year I started using those large credit lines to rehab the properties. (again, started this before really using BP) The duplex is nearly complete and the final vacant unit was listed for rent today.  The 4-plex is in bad shape and still needs substantial repair.

So here is the property setup:

Townhome-style Duplex (both sides 2br - 1 bath) : (Current mortgage balance: $40k, approx value $95k - $110k, Rent ~$1600)

A side listed at $900 per month, tenant pays everything except sewer and trash. This unit is freshly renovated, refinished hardwood floors, nice new tile bath, new HVAC, fenced yard.

B side currently rented at $650 a month to tenants whom I'd love to keep but who are having a baby and have already informed me they will be moving out in August. This unit will need carpet and paint once they move out as it is an older renovation.  I intend to bump the rent up to at least $700 once they leave.

4-Plex (Four 1br - 1bt, varying sizes): Current mortgage balance: $80k, ARV $235k and climbing, Rent when finished ~$3725)

This property is actually two buildings. A 1901 house that was converted into apartments sometime in the late 70s. Electric is split, all other utilities are shared. When finished, I expect the two larger 1 BRs to rent for between $900 - $1000 a month, the smaller 1 BR will rent for about $700 a month. Other apartments in on the same street in a duplicate layout house go for similar. I'm expecting $40k - $50k in repairs to get rented.

There is a carriage house in the back which is a yuuuge 1 bedroom, all utilities are separate. This has built in laundry area, hardwood floors, garage. I expect this one to get $1200.   Under the rear apartment are 4 garages. One of which goes with the apartment above. 

This property was purchased with the intention of it just being section 8 rentals, however in the last few years, Google and a number of other tech companies have moved into the area. Property values and rents have been climbing. 

So here is my problem:  I put all of the repairs so far onto my CC credit lines.  This was not a good move as it has killed my FICOs.  My reports are otherwise clean except for the utilization. 

What I want to do is refi and cash out the Duplex to pay down the CC lines, and do something similar for the 4-plex but to use the cash to finish the renovations. Twelve months ago my FICOs were in the 750 range, today due to utilization, I'm 678. While I have yet to try, it doesn't seem like someone with a 678 and utilization as I have will be able to do a traditional refi on the rental properties. 

One last item.  I also have owned my home since 2003. Mortgage balance is ~$50k and value is ~$135k. I love my home and have no intention of moving. I would rather not use this for equity, but if I have to, I have to.

All of these properties are in the Pittsburgh PA Metro within 5 miles of my own home.

Can anyone point me towards a way to get these properties done and cash flowing again?

I have an Appraiser who I've used for over 10 years. Feel free to send me a PM.

I hand any prospective tenant a list of rules they must pass before I will approve an application. They must sign the list and return it before or with the application.  I am very detailed in my rules list and I do not break my own rules. 

Thanks @Bill S. I have that exact model in another unit and it's what I'm trying to avoid. This tile panelling looks a lot more upscale than the fiberglass reinforced panels I see at HD and Lowe's. It really had me fooled as being real tiles till I touched it.

I stayed at a fairly new Springhill Suites in Denver a few weeks ago and being in this business, I always take note of the fixtures.  The bathroom walls were done in what looked like tile, but cop a quick feel and you'll find that it is actually some sort of plastic paneling. I thought it actually looked really nice and fairly upscale for not actually being tile.  I am trying to locate a source for it.

Here is my dilema. I need to move quickly and cheaply on a bathroom renovation for a rental unit. I had originally planned to go a little more upscale and use actual tile, but time and budget are running thinner than I had hoped.  

A normal tub surround generally will not work because 1) the walls are a really weird height and any tub surround ends up looking too short. 2) There is an exterior window in the shower on the long side of the tub (it seems to be a Pittsburgh thing to do this). 3) The window is tall enough that it means I can't really drop the ceiling down either. 

Since the bathroom is a total gut, I just wanted to get this paneling I saw at the hotel and have my contractor do all the walls with it. So far my local big box stores are a bust. Does anyone have a lead on a material like this? 

I've been very happy as a Buildium customer so far.