All Forum Posts by: Frank Wong

You need to find out from your structural engineer if the integrity of the foundation is at jeopardy. Need to ask him straight up. Is this a safety issue and is this something I have to fix?  That's what you are paying him for right?  The answer to this question.  Homes have cracks in them all the time that doesn't mean the foundation is in trouble. How big are the cracks hairline?   

Different strokes for different folks.  Each one offers something different.  I own both and I prefer SFRs and that's all I buy now.  

What's the cost of the deal?  $3,000 does not sound bad at all. How about split the difference $1750?  Besides all the costs you paid you to need to factor in your "time". How long did it take you to find this deal? Time working on it?  For me, I'm never canceling a deal over $3,000.

Hi Chris,

I think for the most part it sounds like you are leaning towards selling your duplex in the Bay Area. This is how I read things.

1. You sell. You get to free yourself from large mortgage debt. Get 2 houses free and clear in NC and get a vacation home. CASH FLOW increases because of the new free and clear properties and debt drops and lifestyle increases.  This sure sounds like a winner to me. 

2. The argument for not selling. Lost appreciation. Sure but you can also get appreciation in NC which is also a growing market. Appreciation is not guaranteed.   You won't be able to move back to CA.  You can always rent nothing wrong with that. It's possible you can get priced out and never buy again. WHO CARES. Its all about Cash Flow and lifestyle. 

 Keep it and you are trapped and if any downturn you could be in an awkward situation of over-leveraged debt.  Sell it your lifestyle and financial freedom increases.  Equity in your home is fake money unless it pays you.  

You said the listing has been on the market for 9 months which tells me its overpriced. You need to do some homework here and work backwards. There is no set % number that you just go and throw on the wall and hope it sticks.  You want to work backwards. 

First, you need to figure the true value of the property. Find out repair costs and now you have an idea how much over-price it is.  Have your agent discuss with the other agent your price based on the facts. The facts would be the true market value. Submit an offer based on that. If the seller does not want to sell then move on. Sometimes people will only sell at a certain price, could be delusional, could be what they need for the loan payoff it really doesn't matter the reason. The facts are you need the seller and you to agree on a price to make a deal.  Sometimes things just aren't meant to be.  Happens all the time. 

The freedom to wake up and do what you want, eat what you want, travel where you want, spend time with your family without worrying about the financial consequences. 

Hi Spencer,

I wouldn't just create an addendum and say its month to month now sign.  I would be sympathetic to your tenant first. Lay down the law and let her know that is what it is, based on the initial walk through and what she agreed upon. 

I agree with @Russell Brazil to sell it.  We don't know what the future of prices will be and how long it will take to appreciate where you want to comfortably exit.  We do know today its costing you -$400 a month.

Seems like a lot of work and liability for little money.  I wonder what the true rate of return will be after factoring maintenance, tires, and repairs.  I am sure you can hack it and make money but it's almost a distraction to prevent you from working on things that can make a lot more money. 

Hi Susan,

It is very hard to cash flow with an FHA loan. At the current price level and loan terms, it's nearly impossible. Unless you found an absolute steal of a deal it won't happen, and waiting to find this steal is also a very low probability play and you will wait forever.

What you are trading in cash flow is the opportunity to buy into a property with 3.5% down. Think about it. you are essentially leveraging 96.5% LTV. Would a lender ever lend on an apartment deal at 96.5%? You have to decide if you want to sit out and continue to save so you have the proper financing align to purchase for cash flow or you buy now at 3.5% accept the current opportunity to get yourself into a deal.