All Forum Posts by: Ken F.

Hello BP, looking for some perspective/opinion on which route to take with $50K cash with the goal of long term buy and hold:

1. Pay cash for a BRRR - $50K
2. Purchase (finance) two $100K properties - $50K down payment (in total)

For simplicity, assume my numbers/deal are spot on and the cash flow in both scenarios is the same.

Pros of 1 BRR – Left out the R for repeat...as I would hold on to the property - No loan, one property (with same cash flow) – slightly less maintenance as only one set of mechanicals

Pros of 2 financed properties – Leverage, mortgage paydown by tenant, more potential appreciation (2 vs 1 property)

Cons of 1 BRRR – less rehabbed (just rent ready) vs 2 financed TURNKEY properties

Cons of 2 financed properties – lower cash flow per door, paying additional (taxes, insurance)

thoughts?  

Hello BP, I am considering selling my first buy & hold SFH investment for a better investment. I bought my first investment in late 2016 in Kyle, TX. It was a new contstruction - 1400sq ft. After PITI and HOA's, I am only cash flowing $145 per month (excluding cap ex, vacancy, ect.) - so my real cash flow is close to zero. I have since purchased my second and wisely chose a better cash flowing SFH in New Braunfels - $375 cash flow all in. I am comtemplating selling my first to buy a better investment in the same area (New Braunfels/San Marcos). Lets assume I am able to recover my down payment after the sale including closing costs, ect.:

Should I 1) sell now, reinvest and get a better cash flow immediately (after a break even investment over 18 months); 2) hold off until I can sell for atleast some profit, or 3) Sit and wait (buy & hold)...and assume/hope appreciation will come though in a growing market near Austin (keeps some diversification as well)

Id like you hear some feedback. *note - this is assuming I can find the same deal as my second (just to keep it simple). Thank you! Ken 

Hello BP, I am considering selling my first buy & hold SFH investment for a better investment. I bought my first investment in late 2016 in Kyle, TX. It was a new contstruction - 1400sq ft. After PITI and HOA's, I am only cash flowing $145 per month (excluding cap ex, vacancy, ect.) - so my real cash flow is close to zero. I have since purchased my second and wisely chose a better cash flowing SFH in New Braunfels - $375 cash flow all in. I am comtemplating selling my first to buy a better investment in the same area (New Braunfels/San Marcos). Lets assume I am able to recover my down payment after the sale including closing costs, ect.:

Should I 1) sell now, reinvest and get a better cash flow immediately (after a break even investment over 18 months); 2) hold off until I can sell for atleast some profit, or 3) Sit and wait (buy & hold)...and assume/hope appreciation will come though in a growing market near Austin (keeps some diversification as well)

Id like you hear some feedback.   *note - this is assuming I can find the same deal as my second (just to keep it simple).    Thank you! Ken 

Hello BiggerPockets,   Id like to hear some thoughts/feedback on this idea..... while I have not obviously vetted this "idea" out just yet...its intriguing to me.

I sell my primary residence and use the equity ($100K plus) on the purchase of real estate (SFH). I could rent the same type house basically in the same neighborhood for slightly less than the mortgage payment (keeping my children in the same schools). Living in TX, with high property tax, the new tax law maxing out the state and local tax deductions (in this case property tax) @ $10k will impact me (unfavorably)..so home ownership loses some of its long standing tax perks.

What I get in return - a significant boost in my rental portfolio (cash flow) and the pro business tax perks.   

what am I not considering?  ie the loss of long term appreciation (my question is more geared towards the tax perspective...not the personal side of being a renter)

*note - having relocated several times in my career, I am not tied to home ownership...   My long term goals are to acquire investment real estate to retire "earlier".  

Thanks all, ken 

Hello All, Id like to hear some opinions/advice on my current rationale in determining where to pursue my first out of state turnkey purchase.  (I want to keep my purchase under $100K)

My first step - determine my market (narrow done to one).  I am down to three - Memphis, Indianapolis, and Kansas City.  My research tells me Memphis may have the best overall cash flow, however not the population and job growth (or appreciation).    Indy seems to have continued growth; an overall better location for a long-term investment (with appreciation).   Lastly, KC seems closer to Indy...however I have not found anything that makes KC stand out over Indy.

Question - should my price range ($60-$100K) determine the better market for me?  Am I underestimating Memphis for not being a booming growth city, and I am overestimating Indy for appreciation (such that my purchase would be on the lower end and not be overly significant) and I am missing something in KC that I have not uncovered? 

really looking forward to some your opinions...thanks, Ken

Thanks all.  I received a call from the tenants company.  They would like to take over the lease and put another employee in the house (he would stay in the house Mon-Fri) and travel home on weekends.   

Not bad as I would still receive rent, no disruption, no re-renting, repair, etc... I reached out to my realtor for advice - I assume I would need to reassign/redo the lease (to the company) and obtain a background check on new tenant. 

thoughts?  cons of considering this option?  Thanks, Ken

Hello BP,  looking for some advice/opinions

My tenant called to tell me he is relocating out of state for his job. He did not ask to break the lease and told me his company would be contacting me. He is a good guy and said he will "make due on the lease" by either continuing  to pay or possibly his company would pay (sublease?....dont know..I have yet to talk to them). 

He is my first tenant on my first SFH (lease started Jan 17, end Apr 2018).

What to do:

a) Find a new tenant, have him pay until I find one.....move on

b) Find a new tenant, have him pay until I find one, have him pay fees to find a new tenant 

c) Listen to what his company is looking for, then decide (ask for a lump sum as he has 10 more months on the lease??)

d) other?

Balancing between treating this just as an end of lease or trying to get more out of the situation as I need re-rent after only 6 mths (touch up paint, ect...).....newbie (only 6 months into this game).

Appreciate your thoughts, advice, Ken

The lease states that the landlord receives one month rent if I (landlord) agree to a replacement tenant  (basically loses their deposit)