All Forum Posts by: Eric P.

Lets say I buy a $100k home I plan on renting for $1000 a month.  All my expenses as an owner are $650 a month.  I leave extra for a property manager, vacancies and cashflow..  Is there a rule of thumb on how many months worth of bills I should have extra in the bank?  Like 6 months worth of bills in case of a bad tenant and vacancies + $5,000 for emergencies or something.  Whats a good number to plan for to start with?  Maybe like 20% down on the house, 5% for surprises, and 5% for potential vacancy?

This is exactly why my wife and I decided to step up our first home purchase a little and buy a home we can grow into instead of a "starter home".  We have 2 different groups of friends that did the "starter home" they then started a family and have totally outgrown the house.  Go to sell the house and appraisal comes in too low.. stuck.  My one buddy figures he put $5,000 down in closing costs.  Will have to pay $15,000 in Realtor commissions when he sells and pay $1,000 for movers..  So the house will have needed to increase in value over $21,000 in 4 years just to break even.  That doesn't even factor in all the $ he put into the house to make it feel like home.  So if the appraisal comes in a little low he's not willing to budge on the price, he's already at his rock bottom.  

Yes we do have it in writing.  

We were lucky with the kitchen.  The previous owners had a very gaudy taste that was very matchy matchy.  The walls were all like mustard yellow, the drapes all huge over the top like red silk.  Just red and yellow and gold everywhere.  I actually kinda hope that hurt the appraisal a little as well.  We're doing much more neutral greys, tans, blues.  

They had just updated to Brazilian hardwood floors, new stone tiles in the kitchens, counter tops and cherry cabinets.  Once all the walls have been painted and window treatments replaced we are thinking about painting over the kitchen cabinets as they are just too red.  Maybe they wont look so bad when the yellow is gone, but we're thinking about doing a smokey grey.  We keep seeing it all over HGTV and it would look really nice we think.  We'll also put up a nice back splash.

That was one of the specific questions I asked the broker and he said that wells fargo wil not transfer out my loan. I had him and my lawyer get involved to be sure this was a real option. As I mentioned I could have gone 80/10/10, but if I could get rid of the PMI inside of 4-5 years the PMI route would be the better option. If it isn't gone in 3 years I'll just put a large payment down on my principle. But I'm just seeing if I can get it done in 1-2 years.

Nope, wells fargo

I believe it, I don't think that's the situation I'm in however.

I have a Mortgage through Wells Fargo. I was told when I do the appraisal the equity just needs to go high enough to give me a 80% LTV. Looking at it again though my numbers were off. I'd actually need it to get up to $455k to give me a LTV of 80%. So maybe next year isn't realistic. That's okay, when we looked over all the numbers we knew if we could get rid of PMI within 4 years it would be the right way to go vs 80/10/10 or lender buyout. So I have time, just the sooner the better.

I keep paying extra, get the loan down to $355k in 2 years, maybe do the basement or add a deck by then.  $445k shouldn't be too hard to hit.  

You hit the nail on the head. I'm looking for the win-win. I was saying $7,000 total to have the carpets, steps and two bathrooms all redone. I think this went slightly negative toward the appraisal so I hope having them updated will take me slightly positive. I'll need the appraisal to land right around $440k (which is actually the tax appraisal value) if I want to drop PMI without adding additional capital to my principle.

The house across the street from us is currently up for sale, its a little dated.  Slightly smaller plot and about 400sq/ft smaller than ours.  They're currently listed at $450k.  The only thing they have over us is a partly finished basement with drop ceilings.  I'm gonna keep an eye on their listing.  They're going to be my best comp by far.  If they sell over $440k I'll probably pull the trigger on the appraisal next year and hope that I come in around $435k if I do I'll just put down the extra $5,000 at that time and get it behind me.  

Yea the bathrooms are roll out vinyl and just low quality, which is surprising because it was built by a fantastic local builder.  We keep going back and forth on hardwood upstairs as well, but we both kinda like the idea of carpet in the bedrooms.  We don't plan on selling any time soon, so I don't want it to be JUST about adding value, I want to be sure we're doing it for us as well.