All Forum Posts by: Whitney Hutten

I would say most have war stories.... my worst one is a bus fell onto the roof of the mountain rental 2 days before closing (yep! you read that right).  Nightmare to say the least.

Our most recent "mistake" was over-estimating our numbers and not doing due diligence on the area well enough for a rental.  Fortunately, we figured it out by the inspection objection deadline... bummer it cost us a few hundred to get out of the deal...  

As far as advice, do 1 deal and learn from it from purchase, to marketing, legal, tenant placement.  Post numbers in the forum for an extra set of eyes if you want. Then put together a battle plan for the next one (what worked, what didn't, how to improve).  

Hope that helps!

I like your thinking, however, not a fan of the black.  I find tenants are drawn to a "blank pallet" so to speak.  Greys, light browns, whites.  I like @Jeffrey Hotz idea of whitewash (an alternative would be Behr antique white solid... it's an amazing interior color too!).  That would mix well with the roof currently there.  If you wanted to get crazy, I'd paint the doors red (not orange).  It's a color most people can get behind.  Think like your ideal renter... what would they like (think what your customer wants...).  

As far as plants for the yard in the high desert, I like Carl Forester grass...break up the front with tall feathery stuff and create winter interest. Dogwood bushes and potentilla are another trick I've used.  Think clean lines. You could also lay a dripline on a timer, mulch it, and drop in correopsis, coneflower, sage, bluegrass, dogwood, thyme, purple oregeno (will take over), cat mint (will get HUGE) and allysum (some mixture thereof) and call it a day.  Really hard to kill that stuff when it is established.   Look to see if your local water conservation resource society does a spring sale on xeriscape plants. 

Andrew offers up some great advice.  Point is, you need to understand your goals, which can be very confusing after hearing everyone else's strategies.  

Leveling off is part of the cycle.  I think real estate around here is such a great investment.  Easy rent, easy to move if needed, holds value well (I'm assuming you are in Louisville). 

You are in a very lucky position to be cash flowing a property on a 15-year mortgage.  And both have awesome jobs.  That's awesome!  So what do you want from real estate that more properties will give you aside from just the one rental?

As far as heloc vs refi, would I be correct in assuming that your question is really how to tap into that equity there to start your business?  

Not to confuse you more... but with 400K in equity (assuming you could access all of it, since most banks would only lend on a 70-80 LTV)... and assuming I did my math right based on what you've shared, you could have $260K ish to start your business. Depending on the area/market you could go in as a cash buyer and then refinance out (perhaps only leaving 20% down or none depending on how you did it).

Again, I'm not a fan of tying properties together like that, but if you connect with a great lender who can show you the ropes, it's not the worst thing to do if you understand and can mitigate the risk.  You could start your business without having to cash out your first rental.   

And know that we are due for a correction (or level off) in our market soon (won't tell it by this seller's season), call it just a gut feeling.

Here are some questions to ponder... 

Refinancing - Why do you need the money now?  And is does that need to have it now outweigh the potential cashflow when the loan is paid off?  Remember you will have closing costs to consider too if you refi.  

HELOC - What rate would you get on the HELOC and what return could you get investing that money elsewhere? (I have no interests here... If you are in the market for a HELOC, UMB has a program with no closing fees. So that could be an option.)

Calcxml has great calculators to help figure out these exact scenarios.  

Personally, I'm not a fan of tying properties together (ie, using a HELOC on one property to purchase another)... or for consolidating debt with a HELOC (buying cars, vacations, paying off loans etc). I like my investments as their own entities. Others will disagree or it may not be feasible for your situation.

But I am a fan of having access to cash quickly to close a deal or backup reserves to make repairs (that's how we use ours). If you go the HELOC route, get it paid down ASAP as this is a second mortgage on the original property.

@Travis Knight

It really depends on the cash you are putting down.  To get things to cash flow well in Boulder and Longmont, you may need to put in 30% or more.  Broomfield 25%. Westminster 20-25%.  Again the issue is cost of the home is outpacing the rents.  

(i) the appreciation the market has seen for the past few years - In Boulder specifically, in our neighborhood and price range, we saw 27% last year. I think average was ~20% for the town and ~14-17% for surrounding areas on SFR.

(ii) how much new inventory is coming online - Not much at all.  What pops up is gone in hours.  3 homes came on at 8am this morning, not set to show until noon, and 2 are already gone.  So you really have to find an in with the listing agent (I've scoooped 2 this way in the past).

(iii) what do rents look like for single family and multi-family homes.  In Boulder specifically, I'm getting $800 a bedroom (not sure on multi's).  Broomfield, I'm getting $700sih, Westminster about $600-650 (I think Longmont is the same).

I'm closing on one tomorrow with 20% down and pre-rented for $725 a bedroom in Broomfield.  What drove that rent is the high school (I rent to mostly families).  

Hope that helps!

HI Travis, For some reason my last post got flagged and removed. I agree with Dan, it's not exactly easy to get started with SFR in Boulder. The home prices have outpriced rents considerably unless you are putting some serious cash down (to put it in perspective, I live in the "affordable neighborhood and one "meh" rental went for $570K and the other "tear-down" went for $480K). Rents are about $700-800 per room if you are located close to the college.

The other caveat is that new-home owner, down-sizers, and investors are all competing for the same price point (about $500-$650K) and the down-sizers are winning mostly with all cash offers.  Then there is the condo market (which entry is about $350K+ for a nice 2-3BR/1BA condo).  Also, make sure you partner with someone who helps you steer clear of the affordable housing market as they cannot appreciate like the rest.

That aside, there are other communities around Boulder with wonderful opportunities and are poised for some serious growth and you could start for about $200K+.  Just be prepared to move FAAASSTTT and go over asking in this market (which isn't that great for making your money on the front end).  

I'm happy to share my contacts (hence, PM me as I won't post their phones in the forum... which is what I think got me in trouble earlier). 

Thank you all for the suggestions.  The purchase price will be $150,000, rebuild value is estimated at $230K.  Not luxury...  But that was my shock!  I'll check these out.

All the best,

Whitney

I'm used to getting replacement cost policies, but I could use some education in order to make a good decision.  Both quotes were over $3000 for the year. 

Hi!  I'm looking for rental property coverage for a duplex in Oklahoma.  Would anyone have references of an insurance carrier who has competitive pricing and a great policy?  The quote I got today was for $3400 per year.  Is that normal?

Thanks!

Whitney