All Forum Posts by: Jeff Ronningen

Jarod, for me the primary motivating factor to invest in real estate is freedom and stability. My strategy is developing income streams, I buy properties intending to hold them indefinitely. You appear to be a much younger man and than me. I’m glad you love your job but that may not always be the case. Having children and having family members with serious health issues tends to give you a different perspective on working in corporate America. As you move through your career, you’ll have opportunities for more responsibility, money, and status. But it comes at a price. When the time comes, and your family needs you, will you have the freedom to be there?

@ Brian Pulaski I’m not attempting to defend the landlord and I’m certainly not defending the idea of not paying taxes. I’m simply pointing out that the article is written to elicit an angry response toward the landlord, which may or may not be deserved. You assume he bought the properties below value, I don’t know if that’s true. I don’t know if the valuations for property taxes are in line with the market. I don’t know what the process is to dispute valuations in that county. I don’t know what improvements if any have been made to the properties. I don’t know how many if any were vacant or abandoned when he purchased them. My point in bringing this up is that I don’t know enough to draw conclusions. I can’t conclude if his ownership of these properties has been a net positive or a detriment to the community and the schools. Let’s say he loses it all and it all goes up for auction. What if it sold for 50% on average of today’s property tax valuation? If the property taxes are then adjusted to sale price, the schools would need to adjust to the new tax revenue streams. At that point their revenue impact may far exceed his unpaid taxes. Is that the landlord’s fault? He took a risk and got burned. He doesn’t control property values. There’s certainly a human factor in this story. No one wants to see families displaced. I just resent that the landlord is so easily and readily painted as the bad guy. But I have no sympathy for the bad actors in our business whose actions perpetuate that perception.

This is one of those stories that produces emotional responses. It’s the classic story of the rich taking advantage of the poor. But think about rationally. Did the social unrest in Florence have an impact? Did property values and rents decline as a direct result? Did vacancy increase? Insurance rates? If the owner doesn’t pay, there are mechanisms in place. Bankruptcy, foreclosure, etc. One way or another the tax will be paid. Are the property tax valuations fair and accurate? I just looked this company up in Cincinnati. A quick search shows about 325 properties. On the second one I checked, they paid $4000 for a SFR that is valued at $58,930 for property taxes. Is that fair? Consider Maslow’s hierarchy of needs. A landlord provides one of the most basic and essential needs. So does a doctor. When people can’t pay bills and are forced into bankruptcy by medical costs, are the doctor’s fees scrutinized? Is the doctor’s income or the value of the doctor’s home questioned? And what personal financial risk does the doctor take when he provides his services? I suspect the landlord in this article is facing a significant financial loss. A doctor does not face a similar risk. So being a landlord can be a thankless job, even for the most ethical and generous. We can’t tell from the article if this landlord is treating tenants well or not. He says he’s prioritizing tenants over property taxes. There are two sides to this story but the vast majority of the public will be angry with the owner after reading the article. I’m not looking for more drama. That’s why I limit my news intake.

Brie, your post is full of excellent advice and many inspirational ideas. I like the task scheduling and timer. It’s the opposite of multi-tasking, which is doing several things at once but none of them well. Thank you for sharing and wishing you success with your 2018 goals.

Two red flags jump out. Your before loan amount is $640K, after is $736K, meaning your scenario would pull out $96K. You’re assuming you can do a cash out refinance at 80% LTV, 70% is probably more realistic.

The last downturn it took a few years from the market turning to the bottom. I bought my residence in 2008 during a downturn and thought I was doing well, then the market went into a steeper decline and bottomed in 2011. Timing the market is difficult. Set your investment criteria and stick to it. If nothing fits your criteria then wait, look harder, or both. Don’t go all in, have something in reserve for when opportunity calls.

I borrowed against my 401k to buy investment property. Not sure if that’s an available option for only some plans or all of them. Contact your plan administrator. If you can borrow, the amount will be limited based on some formula, probably a percentage of your current balance. There’s also a cap and other restrictions.

In my experience you can only get fixed rate if you buy in your name, property is 4 units or less, and you don’t own too many. If you buy as an LLC you’re looking at an ARM. The limit on number of rentals varies from 4-10. I think these are Fannie/Freddie rules. ARM’s are fixed for 5 years and based on 20, 25, or 30 year amortization.

My house is worth about $250k. That should cover the equity. However, the PMI can't be removed since it is for the life of the FHA loan. Only way to remove is by going conventional. Right?

As I stated in prior email, you need to do the research and analysis. In about 20 seconds of google searches I found that after 5 years and 78% LTV you can drop mortgage insurance for FHA. Don't know if this is true. Read your loan agreement. Research FHA loans. If you😆're not willing to become an expert then real estate is just a hobby.

It’s a math problem, do the math. You didn’t mention the value of the property or how many years you are into your current loan. If you’re 5 years into a 30 year loan and you refi to a 30 year loan, you just added 5 years of payments. If you’re not at 80% LTV or lower you’ll probably have to pay PMI if you refi to non-FHA. If you’re at 80% LTV maybe your current loan has a provision to drop the added fee. Do the work to find the answers. Do the financial analysis. If you don’t know how, then educate yourself. Plenty of free resources on BP.