All Forum Posts by: Laura Williams

My aunt & uncle own a condo in Gulf Shores and they rent it out for vacation rentals. They said it has done well with rental income except for the year when the BP oil spill happened. The thing that really scared me was they told me after one of the hurricanes their condo assessed them about 100K. The hurricane damage exposed some part of the building that wasn't up to code (the steal beams) and they had to rebuild that plus other parts of the condo that got destroyed like the lobby and gym etc. and everyone got hit with that huge assessment. They said some owners couldn't pay and lost their unit. I've also heard that some of the condos there have HOAs that are pains when it comes to being able to decorate inside your own unit or rules with kids etc.  So just a couple things to be mindful of when you go to buy there. It is a beautiful place though. 

 If you buy in a good area where you can attract a good quality tenant and you screen them properly you will greatly reduce your chances of having a nightmare tenant story. There's always risk in almost all investments so I set aside money every month for something like this possibly happening at some point. So far the worst nightmare I had was when I rented to a "friend" …never again.

I think something like that she used. She said it wasn't very expensive. She's on BP so going to ask her :) 

@Johanna R. Was this the kind ozone machine you said you used and liked??

My friend had a tenant with a cat that left cat pee smell and said the ozone machine was the only thing that worked and that it was amazing. Might be worth trying before you have to rip out beautiful old hardwoods. 

You probably won't be able to tap all your equity since lenders usually require 20% equity to stay in the property but I don't think there's anything to loose by taking out a line of credit ...most banks do them for free if you keep the line open 2-3 years and you don't have to use it. I've used lines of credit to buy before and didn't have problems. You should probably talk to the bank before just to make sure you'll qualify for the loan after you tap it. 

If you can somehow buy your investment property under market value (fix and renovate, from a wholesaler, etc) for all cash and then after the seasoning period (which will depend on the bank) get a refinance loan on it then that's the best. Banks will usually loan 80% of appraisal so if you bought it 20% undervalued then you would be financed for 100% and then you just pay off the HELOC in full and do it again if you want.

I hired a contractor to renovate my friend's apartment in Manhattan that did nice work and reliable. He finished when he said he would and has insurance  (cause doorman building and strict about that). I'm assuming he wouldn't have a problem working in Queens? His prices were reasonable I thought but of course everything is expensive in New York. PM me if you want his number. Attaching before and after photos of what he did in my friends studio. 

I would say it really depends on your numbers. If it's lower monthly cost to rent verses owning then renting is better. This varies by area and type of place you live. The main benefit of buying your primary home first is the first time government home buyer programs and the fact that you will get the lowest interest rates here plus the tax advantages and lower down payment etc.  It's usually an easier way to get started. But there is no one way to do this business so go with whatever makes sense for you. 

I have friends who have made money flipping in those high priced/low yield markets but for cashflow buy & hold rentals I don't think those numbers work. ...in my opinion. To buy and live in yourself, you might come out ahead verses renting cause of the tax benefits/debt pay down/ appreciation over time. 

@Brooke Gibson I think I'm pretty qualified to speak on this as I have owned a rental in Buenos Aires and properties in South Africa as well as currently the Midwest. I have had almost all good experiences with one very bad. The key is management. If you find the right people to work with they can potentially do a better job managing than even yourself if you lived there. The problem with investing where you don't live is that it's much easier to get taken advantage of cause you can't be on top of them 24-7 if they're being shady or lazy. And everyone knows that this business is filled with a lot of dishonest people and horror stories from the novice investors. The mistake I made was not doing enough research on a person I chose to work with because I had been told by a BP article writer/podcast interviewee that this person was a good guy when I emailed him for a recommendation. Being from New York it's not in our nature to lie and say someone is OK when they're not so I was blind sighted. So the lesson is not take any shortcuts on vetting people no matter who is recommending them and you should be fine. All my other experiences have been very good so I'm pro investing out of area. 

That being said there's lots of good first time homebuyer programs out there with low fixed interest rates and low down payments. That might be worth checking out if it could save you some money verses renting before you take the plunge into long distance rentals. One agent in NY told me of a program where the city will actually give you part of the money for the down payment if it's your first home. 

Are you breaking even or actually loosing money every month?? Just my 2 cents but if breaking even then I would be inclined to keep it and use the equity credit to buy more cash flow properties. You could probably get a line of credit from a portfolio lender and then roll it into several mortgages. I'd look into alternative financing rather than the big banks. If you buy correctly then the rents on your new rentals should cover your additional cost plus cashflow. I'm a bit biased as I sold a place in NYC which is similar market to CA and I still regret it. People like living in these markets and seems that appreciation can be really good.

But if you're really negative cashflowing then it maybe smarter to sell and start in a house or area with better numbers.