All Forum Posts by: Joe Splitrock

I think single family is a different market and they housing market has been strong. I am seeing lots of people get into the business, but also "accidental landlords" are selling houses to home buyers which is reducing rental inventory. I have no percentages, just a gut feel from watching the market. I think even if the luxury apartments sell cheap, it will still be out of my price range. Maybe some day.

It seems most would agree to pay the second mortgage first. General consensus after that is highest interest rate. Then people seem to differ in opinions.

It is interesting that @Charlie Fitzgerald l says highest balance first if rates are the same, @Joe Villeneuve says smallest balance, @Eric Tan likes paying the shorter term first. I would be interested to see them explain their reasoning.

I like the idea of paying off your residence before rental properties. The first reason is that your personal residence is an expense and is not an income producing asset. The second reason is for personal security.

Next I would pay down the highest interest rate first. The rationale is that paying off the highest rate first means you are left with lower interest loans.

A good reason to pay off smaller balances first is the psychological benefit. You can pay the small balances off sooner, so it keeps you motivated to go after the bigger balances. Another thing to consider is longer term loans are substantially loaded up front with interest. Extra principal payments in that case can make a huge difference. For example if you had a choice of paying down a 15 year loan at 3.6% or a 30 year at 3.5%, it would be easy to look at the higher rate as the first choice. Take a look at how much of your payment is going to principal on both loans and you may conclude paying down the 30 year is better.

I don't have the right answer, just an opinion like everyone else. Good luck @Andy Wu!

@John Burtleyou will find different banks have different rules and different things they specialize in. You can check around, but finding a bank that will finance your first building project on a triplex with you doing the contracting and most of the work, will probably be difficult to find. You have no track record. It would be less risky for the bank if an established construction company was doing the project. They are going to want at least 20% down and your sweat equity isn't a down payment. Your income will be a factor too. To lessen their risk, they will want to see income and cash reserves to show you can make the payment until you get it rented. For more conventional financing, my lender wants to see me have 6 months of payments in the bank for a ready-to-rent property. 

Your best bet is to have cash saved up and find a small bank that is willing to take a chance on you starting out. Local banks may take into account the shortage of multi-family and may see less risk in you getting it rented. They are taking a chance because you have no track record, so they will want skin in the game (cash down). Talk to a bunch of banks and you will start to get a feel for what they will require. One bank is not enough to know for sure.

@Brandon Turnerit really depends on location what the best use is. Other posters had lots of good suggestions for end use, but I wouldn't recommend you rehab it. This house is big and old, so there is lots of room for rehab costs to get out of control. I would offer a low price and wholesale it at a price that makes it move quickly. Let someone else dream up a use for it. When you see something that is best described as unique or has character, those are secret code words for good luck selling that. 

I just read an article that vacancy rates for apartments have doubled over last year to almost 9% in my city, Sioux Falls, SD. We had $72M worth of new apartments built in 2015 in a city under 200,000 people! I am not sure if this is a leading factor showing we are about to see a rent pull back. Our home sales market is hot right now, so maybe people are opting to buy homes rather than rent. The huge amount of new construction is a key factor. The question is when will these big developers stop? Will it be like oil, where they are pumping to driving prices down until it runs people out of business?

I am curious what you are seeing in other markets, specifically smaller markets in the Midwest.

Full article:

http://www.keloland.com/news/article/your-money-ma...

My parents had a company come in and overlay single piece fiberglass panels over their tile and tub. The fiberglass panels are single piece per wall, white and look like tile. They even sit over the original steel tub. They did it over 10 years ago and it still looks like new. It is durable and easy to clean. They did it because there was no demolition required. 

Their neighbor chose to remove their tile and during demolition had to rip out some Sheetrock where the tiles didn't come off. It was water damaged behind. Once they broke into the walls, it became a permit job and the city forced them into other updates. It slowed it down and cost extra money. Just a caution before you start trying to take tile off the wall.

Just another option for @Chris Masons to consider.

@Sarah Jane welcome to BP! 

 Great insight. I was just looking at it from a Federal tax level. 

@Julie MarquezI do black appliances. Stainless steel is hard to keep clean and any dent will be very obvious. You can get deals on Craigslist, but I would not get a used dishwasher. They have a limited life of 7-10 years and installation costs money so why put something in that is halfway through its useful life. Black is modern looking and you could upgrade the stove and fridge to stainless down the road, still keeping the black dishwasher. Now days black costs the same as white from my experience, so it would save you money. I do agree you should upscale the look over time at that rent rate. All white appliances are fine for a low end property, but not for a $1450 house in my opinion.

@Mitzi CastiglioneI would do the $20K rehab and try to sell at top retail price. As a backup plan rent it. The reason I would try to sell is you can take the capital and put into two more. If you cannot sell quickly, then you have a nice rental. It works either way.