All Forum Posts by: Fred Smith

Thanks for all the thoughts. Will not go with the Walmart stuff. 

Steve, with the mis-tints, do you then keep the paint mix color codes so you can get the same color the next time?

Hi,

I need to paint the exterior of my SFH rental. Any recs for best paint to use? I read a good article from Brandon Turner on this site about his preferred interior paint from Walmart. Has anyone used their exterior paint? Thanks

Our tenants recently told us that, due to personal stuff, they plan to "give 30 days notice"/break lease. I told them that we will take out of the deposit to cover any vacancy and she's been cooperative, trying to help find another tenant, etc so we're trying to keep it from becoming contentious. Hopefully we find another tenant quickly. 

What I'm wondering is if people have language in lease or otherwise spelling out what happens if lease is broken. My wife and I are now discussing how we probably should've had something like "if lease is broken, tenant automatically forfeits 1/2 deposit" or something like that. But then if the place is damaged in an amount more than 1/2 deposit, we don't really have recourse beyond it so I'm not sure. I believe, based on state law, we could demand they cover rent through the end of the lease (another 9 months) but my suspicion is that if they decide they're leaving, they're going to leave and the only leverage we really have is the deposit (one-month's rent). Also, I suspect that going to battle over keeping them in the lease would just cost more in legal fees than it would recover and would not improve the situation.

Would appreciate any suggestions on minimizing/eliminating breaking of lease in the future. Thanks.

Hi all,

I have tenants expecting to break a lease who have lined up some friends to possibly move in. I'm leery but open to the idea, as it obviously eliminates a tenant search and possibly vacancy. The new tenants would be a couple expecting a baby and they originally expected a 3rd person as roomate but the 3rd person backed out. The income from the couple (which still needs to be verified) covers my minimum to cover rent but that includes the expectant mother's income, which I expect will stop once she has the baby and maybe before. Is anyone aware of legal issues around asking what their plans are for income once the baby is born? Seems like a straightforward question but I'm always cautious around these things. Thanks.

Thanks Dave. Now what about realtor commissions/closing fees, etc? That doesn't fall under original debt either. Thanks.

Hi all,

I have a property that I bought using a HELOC from my primary residence as the downpayment 1.5 years ago. I'm considering selling the property in order to flip the equity from it into another rental property and ideally, avoid cap gains tax through a 1031. I was doing the math based on the idea of selling for ~350K, pay back the HELOC for down payment (50k), pay off the mortgage(195k), pay realtors (20k) and the remaining (~80k) would go to the next property in order to work as a 1031. But would paying back the HELOC be allowed under 1031 exchange? Or does that money need to go to the next property too? Just trying to make sure my math is in the right ballpark. Thanks.

Thanks @Jack Bobeck, @Lauren Messenger and @John W. for the feedback. 

(not sure this is the best forum for this question. Let me know if I should move it)

I posted something along these lines earlier but thought maybe a more specific question would be better.

Crazy market here but here are the numbers:

Bought a primary residence in '13 for 249K

Appraised in spring '16 for 355K

Took out a HELOC in summer of '16 and used 55K for a downpayment on a rental property that was 255K in fall of '16. Conventional mortgage for remaining 200K

Did some work to the place, are on to 2nd set of tenants. Now cash flowing ~220/month from rental property. 

I'm happy with how it's all gone but don't like the looming HELOC increase, especially with rising rates. Am thinking about options to pay down the HELOC and replace with a more conventional P+I loan. Any suggestions? I think there's a chance the rental would appraise for just high enough to get a equity loan against that and still maintain 20% equity (~319K) but don't know if that sort of thing is allowed so soon after purchase (just over a year now). Any thoughts? I know this isn't the typical way to get into the rental market but we took the leap and so far, so good. Thanks.

Thanks @Ryan Ingram, appreciate your thoughts. 

Another option would be to sell, which would be nice in that I think we'd gross ~$60-80+K before selling fees/commisions, etc (after essentially 0$ cash out of pocket, not including a good bit of sweat equity) but then we'd be trying to find another good investment property in an obviously inflated market. Not really in a rush to do that. 

I'm looking for some ideas on how to handle the financing side of a rental I own. It's our first RE investment and I think it's been a good one so far. We bought it just over a year ago, using a HELOC on our primary residence as down payment. The whole thing felt kind of "can't believe this is allowed" but all went smoothly. We live in a hot rental market (as well as a hot home-value market) and had built up a bunch of home equity in our house quickly so we flipped that into the rental. The rental was financed with the HELOC for downpayment then a conventional mortgage for the balance. The house is pretty new, built in '07 so there were many big repairs but lots of aesthetic stuff to do. I tore out the backyard weed-forest and put down sod, sprinkler system. Painted all over inside and then just put in laminate floors after our first tenants moved out. We have new tenants signed through next June and it's cash-flowing about 200$ after paying the mortgage, the interest-only HELOC payment and ~8% set aside for repairs, vacancy etc.

My big question is would people recommend refinancing the HELOC? If paid off inside of 2 years, we owe fees on it that we didn't have to pay upfront (I think about $2000). My thought was at 2 years (basically 1 year from now), I'd try to refinance it into some kind of more traditional principal+interest loan, as I don't like the idea of a looming increase in payment down the road (HELOC bumps up to include principal at 10 years). Also would like to return the equity to primary residence to maybe do the same thing again in a year or two. I think the rental house would now appraise for high enough that I could borrow to pay off the HELOC and still be at 20% equity.

Would people recommend refinancing this? And if so, what type of loan? Home equity loan? 

Thanks, this place is an amazing resource for people like me.