All Forum Posts by: Kurt F.

Thanks, Jeff -- good points. Well taken point as to whether this might actually detract from the overall value.

At some point in my real estate research and study (such as it is), I had read some techniques to maximize your bottom line at a given address. So, just based on that sort of concept of capitalizing on every available asset, I am kicking around the idea of getting another rent out of the duplex and turning it into a triplex.

I think the attic unit can be built well under the 55K number Jeff has pointed out for this specific case.

As Jeff has pointed out, there are many factors. I need to weigh all of these against the obvious appeal of taking in three rents at the same address instead of the two.

Any advice on converting attic space into an apartments?

I have a side by side duplex, and am toying with the idea of converting the attic space into a single studio apartment.

The current duplex numbers are 50K mortgage with a PITI of 595/month and a current value of about 110K. One unit's rent covers the PITI.

I need to verify zoning... however, many neighbors have already done similar conversions. Most of these appear to have been very poorly executed.

The available space after creating proper wall heights yields about an 800 SF studio unit. It would have some interesting character -- there are currently dormers on all four sides, and a large brick chimney within the space that I thought I'd leave exposed. I could likely get 750/month.

One down side: this would require an exterior stair (at one of the dormers)......so I'd also appreciate your thoughts on such stairs as a safety/ability issue. I live in Iowa, so there would be plenty of snow/ice.

From a technical viewpoint, I have a decent understanding of what would be involved with structure, MEP, building envelope issues, finish work, etc. -- I work in the building industry. Still, any thoughts in this area would also be appreciated as well. Some of you have undoubtedly done this before, and I have not.

I can pretty easily create an accurate estimate of all involved costs to build the unit. However, I'm DEFINITELY no expert on real estate financials... I need some advice on whether it would likely even make sense to do this renovation. What are your thoughts on construction budget limitations? I'll be holding this property long-term, and I'd need to see the unit making money after a reasonable payback period.

I welcome all input -- thanks in advance.

Steve, Thom , David, Greg: Thanks for the input.

@ David -- your post lays out a thoughtful approach -- thanks for taking the time to write it...very helpful. If I can ask another question based on your post.... when you say to use the money from my primary as down payments on additional properties -- are you thinking I should look at buying more than one with that amount of money (120K or so)? How much would you want in reserves (as Greg has noted)? I realize there would be many variations and ways to go, but just off the top of your head, how many properties would you put money down on if you were in my financial shoes?

Need some good advice. I have a 150K home that we paid off. I also have a duplex that is nearly remodeled and is worth about 110K with a 50K mortgage.

I have no desire to mess with the duplex situation just yet -- one side is rented, and the other soon will be. The good cash flow numbers are good at that point.

But as for sitting on that amount of equity in my primary residence, I've begun to think about options for putting that equity to work in some way. Granted, I do enjoy living in a nice house with no payment. But, I'm wondering if I'm really doing the smartest thing with my primary equity.

I've considered renting out my primary residence and buying a "new" house to live in and perform some rehab/sweat equity on. After giving the SF rental market a once-over, I believe I could get about 1600 or 1700 in rent for it. It seems like using a portion of that income to help pay for another house could work. My thinking is that getting a tenant in my current house could conceivably pay the mortgage/insurance/taxes on another house. Would that option make any sense?

By the way, I've read the cap gains posts with interest relative to renting out one's primary home... and this might kill my idea right there...?

Any better ideas or input will be GREATLY appreciated....THANKS!

"I'm pretty entrepreneurial and haven't taken a paycheck from someone else since the 1980's."

That is awesome, by the way. Good for you, Jon! That is what I'm looking to accomplish.

Bill and Kyle...thanks for the input -- gives me a lot to think about.

Thanks to you both...

Jon, good nutshell of the return potentials. Would you say that an appropriate cash cushion in the neighborhood of six months rent, as I think I've read here?

Brian -- great point on being able to pay for things if all goes bad. You mention a line of credit from my primary equity-- any general input on those? Never used one before. Is that a decent option for a down payment on another investment property, in your opinion?

I'm fairly new to investing. Currently own a primary residence and one relatively cheap duplex -- of which one side is rented and covers the mortgage, taxes and insurance...I am finishing the other side to get it rented out and some cash flowing. I owe about 50K on the duplex, and when finished it will probably be worth 110K.

I need your thoughts on this: have any of you used equity in your primary residence to purchase investment property? My home is paid off completely. I am typically quite conservative with money, so the idea has not my favorite. That said, how smart am I handling this? Would I actually be smarter to use that equity (if it's even reasonably accessible with the refi expenses, etc.) or should I stay safe with a paid off house and get the money through other means?

Really would appreciate your thoughts on my situation...thanks.