All Forum Posts by: Fran Flanagan

Thank you for the reply. Admittedly, I'm still learning terminology. My thought with the title was that I wanted to explore options and evaluate POS for accessing some of the equity in my rental to facilitate acquiring another property.

Inquiring when a HELOC could be callable is not something that I had previously considered. That would be most annoying to me. I will definitely be sure to ask about that. Thanks again.

We kept our old home as a rental; we fixed it up nicely over the years we lived there. We have some equity in it and we also have a low interest rate. Basically, I have two questions.

I have an ARM that resets in 2019, currently at 2.875%. Currently my tenants' payments on my mortgage (even without extra) pay more on principal than interest. Am I correct in thinking that a HELOC is a better option than refinancing for a higher rate?

Any tips on the appraisal process? My area is popular with young professionsls, mostly older homes, in varying states on renovation. Renters and buyers want a nice place to live without fixing it themselves. This is reflected in the prices of recent sales... If you walk through the houses. If you look towards the high quality end of comps, what my place would get if I sold, I'd have just over 55% equity. I'm concerned that a lazy appraisal could come in closer to 60-65% equity.

I want to make sure I don't waste any money on fees with a conservative lender / lazy appraisal. Some lenders better than others in this regard?

Interesting read. One thing that I noticed is that although the amount of increase is clearly stated at no more than 5%, they completely neglected to mention how often that one may raise the rent this 5%.

Given the tone of this though, there's a good chance that a judge would find 5% increases in rapid succession to be problematic. But offering a series of month-to-month or 6-month leases would seemingly allow for a landlord to raise the rent in a stepwise fashion... at least according to the letter of this law.

I'm new to this as well and have nothing to offer in terms of parsing your list, but a couple of things you said stood out to me. Your post reminds me of my days posting in poker forums where very often the answer can be an introspective look at oneself and his or her mindset.

When someone calls you on the phone in response to your mailing, they're interested / the letter served its function. Obviously, there's always ways to improve your letter, but perhaps you need to work on your closing skills a little more? What's your pitch, what are you offering them? It's likely based on what you said that you aren't giving them the highest possible price if they shop around, so you would need to focus on how working with you would provide a rapid closing (no more monthly payments) and no 6% to a realtor, etc.

Also, you may want to take a look at what these homes are selling for to the guy who "over-paid." How much more was it than your offer? If the difference is substantial, perhaps you need to adjust your math to the improving market? You may have to pay a little more, but if you can assign it for slightly more, your end works out the same.

I might change the approach entirely. Instead of asking for money on the new properties, show up talking about your equity & cash flow in the rentals that you're holding. Then ask for a line of credit.

The interest rate may be higher but you won't have to go every time you buy a new place, and you'll save a ton on repetitive closing fees.

I'm new, so this might not fly, just throwing this out there.

I did the same thing. I suggest that you try turbo tax to start. It doesn't cost anything until the end, if you decide it's too hard then go to an accountant.

But IMO the experience of trying turbo tax will help to prepare you for the questions that the accountant will have.

You are mixing things up and making assumptions.

Equity = Value of property - Mortgage.

In your example, the ARV is 200,000 for the property, but you don't know what the current owner's equity is. Mainly because you have no idea whatsoever what his mortgage balance is.

Assuming that the property is actually worth 200,000. In order for you to have 30% equity, you will need to own the property and have a loan of 140,000 on it.

You can do this either by buying it for $200,000 with a down payment of $60,000 or convincing the current owner to sell it to you for a lower amount, say $160,000 sale and you put 20,000 down.

If he sells it for significantly less than 200k, it's probably not really worth 200k unless you do some significant improvements to it.

I have old long leaf pine floors in my rental. I worried about the nail holes as well but it looked great redone. I'd recommend paying a pro to do them, it's not all that expensive.

Everyone through the place remarked favorably about the floors. No mention of holes.

I'm new to this, but I see no reason to have this middleman earning a cut here. It sounds like this friend may be trying to reach his hand into your pocket. I would get a second opinion from some non-involved parties before doing what you just listed.

Thanks for the kind words everyone. Steve, I definitely enjoyed your ideas regarding rent increase options.

The 1% "rule" seems to hail from a time of higher interest rates (6.5%-8% from dated articles I've found online) when the math just so happened to work out to make it quick and easy rule of thumb. If that made a good deal at 7% interest, surely it makes an outstanding deal at 3.5% interest. For example 150k financed for 30 years would have cost $1k then, vs. $670/ month now.

It seems obvious from reading here that there are areas that are better to be a landlord. But if I were to invest further away, I'd need to hire a PM and pay for repairs. I'm pretty comfortable with numbers and evaluating things the "long" way. I'll need to be selective and patient in acquisitions for sure.

One area that I'm least experienced in is estimating what it will cost to hire someone to do various jobs for me in a rehab. In houses I've lived in I have done most work myself, but I wouldn't have the time to do a major rehab on a rental in that manner.