All Forum Posts by: Blake Gullett

@Bill Jacobsen this might be a huge newbie question, but can you refinance from investment to primary residence if your rental does, in fact, become your primary residence?

Thanks guys. I have been and will continue using BP as a learning tool. If anyone wants to jump over to the analysis section of the forums I'd greatly appreciate any feedback on my post in there.

I joined the site today after it was recommended to me by a friend. My real estate experience up til now is only from buying my primary residence. I'm 28 years old and bought my home in 2007. I have worked in the Engineering Department for a short-line railroad for the past year, and was a mail carrier for the USPS for six years prior to that. Anyways, I've been interested in RE investing for years, and have been trying to research and learn as much as possible. I'm currently looking for my first investment property. I jumped the gun and posted a thread in the analysis section of the forum before introducing myself. I apologize.

I'm looking for some input on my situation. My father's co-worker is near retirement, experiencing health issues, and wants to cash out on his house. The gentleman owns two homes in the area, and has moved into the home he usually rents and wants to sell the home that had always been his primary residence. He currently rents it to a friend going through a divorce for $600/mo, and I'm pretty sure its just a verbal contract at this point. Anyways, this house is not on the market and I'm getting first crack at it. I've got two people running a CMA on the property but haven't seen the results yet so the market value is just an estimate. I am scheduled to look at the property tomorrow. Here are the details:

2 bed, 1 Bath, detached 1 car garage

Asking Price: 35k

Fair Market Value: 55k

Rent: $600/mo (although i believe this property could demand higher)

Property Taxes: $66.24/mo (Has an owner occupied exemption of 6k. Assessed at 14.8k)

Insurance: $60/mo

Mortgage P&I (30yr investment terms, 15% down, 5.4% Interest rate): $166.59

I'd also like to get your opinion on some factors affecting my decision outside of this property. Mainly my current house and what you believe the smartest move is with it. I bought it in '07 just before the housing crisis...lets just say it's not pretty no matter how you look at it. I refi'd last year stretching my 15 year term back out to 30 to increase cash flow thinking i would eventually rent it as well. However, in my opinion the numbers just don't look appealing to go that route. As I see it there are three different scenarios. The first being I stay living in my house purchase the property I'm looking at and rent it out. The second being rent my house out and go with a Primary Residence loan instead of the Investment terms on the new property and live in it for a year or so while adding some sweat equity. The third is the same as the second except I'd sell my current house instead of renting it. I don't know if all the standard rules apply to my current home considering I'm already stuck with it.

A quick look at the situation of my current house:

Principle balance: 86k

Market Value: 95k ish?

Monthly Mortgage w/escrow: $613

Estimated rent: $875-975

I'm new to this site, and if you guys need any more info from me to help you give better advice please let me know. Thanks in advance.