All Forum Posts by: Michael Thach

Yeah HELOC would be an option in a non pandemic time. But now a days most lender have removed HELOC products at all.

Hi Marco, 

my name is Michael Thach and I am here in Las Vegas. I am a real estate investor myself, owning 2 SFH in Vegas and 5 SFH in Texas. My girlfriend is a realtor and property manager she has a flipping crew and a complete team for rehabs. What are you exactly looking for ?

Thanks

Michael

If your property tax, insurance, mortgage, interest, maybe PMI, property management fees, hoa, maintenance fees, vagancy is not exceeding your rent income, and you do have a positive cashflow than go ahead. It's a good idea ! Just double check with a realtor that you can rent it out for 1200. And check if the 500 leftover can cover the rest I mentioned above.

The aim is to leverage and now you do it. You find someone else to pay of your house and because the mortgage and cost is lower than the rental income you make a positive cashflow. So overall this is the right approach. 

I can only agree, do and spend only the minimum to push the rent to the top level of your area. You can have the nicest granit countertop and the most expensive light fixture but if your property is in C area you won't attract the tenants you appreciate it anyway. There is no need to change your carbinets from pressed wood to hardwood with dove tails if your tenant are working class tenants. They don't know how to appreciate it and if they do they won't pay you enough to make it a good investment. 

Usually what will give you more value is adding a room. laminate, tiles, hardwood flooring > Carpet , Stainless appliances > Non Stainless  , Granite Countertop > non granite   .... if you rent to normal working class and middleclass renters they don't know if you bought the laminate flooring for $1/sqf  at your local hardware store or $3.99/sqf imported from italy.  

Also don't fix 100% what is written in the inspection report. Many stuff is just bringing outdated codes to current ones and those are not necessary. Don't forget this is a business. Is not your personal home where everything needs to be 100%. 

1031 exchange does not apply for primary resident as I remember right. 

Maybe there is another way, since you only owe 220k on yours and have build some equity in home in Cali. Why not cashout refinance the amount you need for the 20% down on a 400k home, which is 80k. So you would total owe 300k and I am quite sure you can rent your current Cali Home for more than 1300 USD. So You have someone paying your 300k mortgage and make some positive cashflow to help you pay your Spokane property. And no capital tax. You still keep 2 houses and they can appreciate further + cashflow. 

Your file is not downloadable. So difficult to judge. But why not just let a Realtor do the work or check on Zillow under sold with the same criteria and timeframe ? 

I don't want to be biased or in any way offend anyone. This is solely on my personal  observation and conclusion. As many people already mentioned education is key. Many parents struggle with money, so they cant teach, kindergarten teacher , elemantary, middle or highschool teacher are 99% not a good source either. It takes generation to educate and most importantly to change the mindset of those individuals. The source of knowledge and opportunities are out there, now more than ever and especially in the USA. USA is not the perfect country but really on of the best country you can be in. 

I was born in Germany to asian parents. I can consider that I was born in poverty but luckily I had parents educating me the ways to earn money. You can earn by working for someone, for yourself , by employing someone or by investing. My parents started with just a pair of flip flops and a short. Not even a Tshirt did my dad have but now he is a millionaire. But does he live like one ? Def. Not and this is the difference in the mindset of wealth between Europe, Asian and the USA.

The mindset and culture plays a very huge roll. You dont really get into the news when you are talking how you make 300 USD cashflow with your rental property. But you get into the news when you are an professional Rapper, Sportscelebrity and moviestar and you just spend 20million on a mansion and how they bought 500 pairs of the newest sneaker while renting the whole mall for themself. In this culture how can a kid know that wealth is not spending 500 pairs of sneakers and buy a 20million mansion. The society with the less knowledge about wealth are celebrating the " stars " who can waste the most and immitate those behaviour. Once Media is stop celebrating those behaviour there is a chance to reeducate the youth. 

But I understand is difficult to educate the mass because we need this kind of consumption to get our economy going. So is sad to say but we need people who can consume so we can collect.  

If the culture does not understand how to live frugal than there is no way to build wealth. I am 100% sure that a plumber making 80k a year can outperform a dentist who makes 250K in wealth and is not difficult to start from a young dishwasher and become a multimillionaire in his lifetime. In fact there are more millionaires who earn 50-150k than people 150-250k. If you earn more you are expect to dress better, drive better cars, live in a better neighboorhood, send your kids to private school, expensive vacations and so on and so on. Most millionaires in the USA drive not a luxury german car brand but a national or japanese medium size car. We don't see anything about Mr. Smith, who owns a small cleaning company on TV with his paid off home of 300k, having 15 paid off rentals and netting 25k per month.  

People care for the wrong things and media is not helping to correct the wrongful mindset. 

But there is BP and many youtube channels , there is a movement going on and people start to realize. There are some very frugal youtube real estate investors and once this become mainstream we can see a change in this wealth gap.

First off, yeah your cashflow calculation is off, don't forget Property Tax, Insurance, Maintenance, HOA. So your cashflow should not be as high as you think

Let's make it more complex....

If deicde for the 3-4 rentals how much will they appreciate ? If this are little apartments maybe less than a SFH. Also Vagancy knight be higher.

if its a SFH appreciation rate might be higher and demand is higher at SFH during a recession means rent prices can increase but not with apartments or condos.

Beside this you paid for refinancing the SFH, that cost several thousand and now you are not taking advantage of the new cost, so why doing the refi in the first place.

Usually rents at around 2500 gives you an individual who usually is self employed,  is a professional or bachelor/ master degree. If its 2 person both would work an ok job. So I think its more stable and less vacancy. 

69k getting up to 4 properties sounds optimistic, closing cost and LO cost are still expensive.

Appliances have spiked during this pandemic. I would prefer used Stainless Steel appliances. No tenant will really know if you spent 3k or 1k and it will not add 50usd more rent per month when its a new appliance vs old. 

Buy used one and it should hold until the pandemic is over and the prices are back to normal. Maybe you are lucky and they hold couple years. 

is just a rental and enough is enough. No need to go over the top and spoil the tenant.

I bought at offerup. 

If your rate is at 3.00% than refinance it to 2.87% will not make sense because to generate this loan will cost you couple thousand.

Cashout refinance for 3.25% is cheap if this is the rate he gives you without needing you to pay points to buy it down. Be aware that this loan will probably cost you 3-4k aswell. 

Alternatively you can think about to cashout refi and use the 30k as a downpayment for your next property. I don't know about your financial situation but BRRRR requires cash borrowed or not. You can move in yourself in the new property with little as 5% down for conventional loan.

Rent out your current home. Your cashout refi amount is 172k which cost you around 700usd, if your rent is higher after all the cost than you have a positive cashflow. 

While you live in the new property,  you can rehab and fix it up. Pay the new mortgage and once is ready, you look for a new place and rent it out and generate another positive cash flow source. Important to make it work is to buy houses below value or with strong rents. Without a strong rent it can not cover the future mortgage cost.