All Forum Posts by: Hunter Vigneault

@Miguel Rodas I don't believe Stessa offers a rent collection option, just income and expense tracking

@Michael Feeley Don't eat cash flow on a house you don't like. For most people, long term capital gains isn't that bad - but I don't know your personal situation or how much of a gain you are talking about. As @Dave G. said, if it is a personal residence (it sounds like it is) and you have lived there for 2 years you shouldn't owe taxes on the sale as long as the gain wasn't astronomical. Not sure of the reasoning for your sale - maybe you can stay for the remainder of the 2 years and sell then - and hopefully for your higher projected amount?

If it loses money on a monthly basis as is, definitely would not recommend refinancing into a higher balance because it will be a worse problem.

Why are you selling to Opendoor? I expect you should be able to get a significant premium in a short amount of time in most markets these days, though I do not know yours specifically.

Best,

Hunter

@Todd Barnett

Hey Todd - if you haven't already, check out preservation station. Not sure they have a ton of mid century stuff, but I go there for victorian and craftsman salvage.

@William Eric

It can be a strategy to use, but you should be sure you have a very good idea of your exit. I'm not sure how this $700k property compares to your current cash position or balance sheet overall, but if this is a significant purchase and your first few bank options decide they don't want to lend to you that could get expensive very quickly.

Generally, when investors use hard money it's because they are getting a substantial discount to market value or because it is for a specific purpose - a value add/rehab component with a clear takeout based on ARV for sale or refi. If this is just a market value deal, then paying the excess points to finance the deal twice plus the hard money interest rate that is likely 2-3x (or more) a bank rate could sour the reason you'd want to buy it in the first place.

All that said, I don't know the specifics here so just giving my general thoughts.

Can they seller finance it to you? If they have no debt on it (obviously no idea their holding period or history), they may do that and feel comfortable with you as an operator/borrower based on knowing how you run your 32 unit.

If you have enough equity in your larger building, your lender may allow you to borrow a second mortgage against that and/or cross-collateralize them - it's a better possibility since they are geographically close together and might be seen as a "bolt on" acquisition.

It is advice you will find in a lot of posts (because I think it's good advice) - find a small multifamily (or a large single family) and househack it. It is how I started - buying the cheapest house on the market at the time and using a 203k to rehab it and then rent out the other unit. If done right - or close to right - the savings on your living expenses and the mortgage paydown will put you on a good path and provide the landlord and handyman experience you will need.

Tenants are normally responsible for light bulbs and other minor repairs like that.

As your friend said, the home warranty company "often" responds within 24-48 hours but they don't always. Unaddressed or slow repairs makes for an unhappy tenant. The tenant may decide after a number of unsatisfactory calls to not call them again for something that seems like a minor inconvenience to them but becomes a larger issue to you.

Also, a home warranty will not help with every issue you might face. It might be an ok alternative when compared with a bottom tier property manager, but a good to great property manager will provide you with much more value beyond just scheduling contractors.

@Mario J Perez

You will have a cash on cash return, but it will be equal to your cap rate. There is no positive or negative effect of leverage.

I'd recommend Peter Anderson with Via Real Estate without hesitation. I originally found him here on BP to manage our Norwalk SFR. We're preparing to list it for sale/rent with him now and he has handled a number of small to medium projects very well - including some creative remodel ideas I hadn't considered.

Almost anything can cash flow if you put enough equity into it (as in, if you don't put a loan on it you don't have to cover debt service), but you need to judge it relative to the investment. Especially in Houston you need to be careful about tax reassessments - the current assessment is well below your proposed transaction price. You may not get his as hard because it would be an off market transaction, but you could still reasonably expect the annual taxes to increase substantially post close, making suitable cash flow even harder to achieve.

I have never operated STRs in Houston, so I can't tell you how reasonable that strategy is there. I would caution against stretching for a deal just for the sake of getting started (especially so if you are doing it with other people's money). Start with your own money and on something smaller - smaller unit count, smaller price point, or both. I think you'll sleep a lot better while you learn and build a track record.