All Forum Posts by: Michael Wagner

Technically speaking it is considered equipment for tax purposes and would be expensed over the course of years according to a depreciation schedule.  That being said, my accountant might allow me to deduct a tool if it were relatively inexpensive...say under $500 or so....I am not an accountant so check with yours before years end!

Dont depend on Zillow's estimate.  You are much better off talking to 2-3 agents who can give you a market analysis which will include a recommended listing price.

Sometimes the banks will let you bundle some of your other debt into the HELOC. FOr example, if you have 30K in credit cards, they might give you a $100K line but insist that you pay off and close the credit cards with the line. This only works if you are "close" to the debt to income ratio. The best answer is to pay down your debt. Where did the debt come from? Do you still spend more than you make (meaning you are going further into debt) or is the debt situation improving after having incurred it in the past? More details will allow the group to offer better advise!

Now we can make some progress:)!

This is very rough math but looks like a sale will net you about $50K. SO the question becomes, would the Return on LEaving this invested be better than your other options.

If you rent for $1100 and use the ROUGH 50% rule (yours would likely be less as it is new and SFH) so lets go with 30% expenses to be specific to your case. $330 will be eaten up by operating expenses. You will be left with $270 per month or roughly $3200 in profit after debt and operations. Thats a 6.4% return annually on your $50K. But that doesnt account for debt paydown or appreciation or tax consequences. SInce you've lived in it as a primary you wouldnt have a big tax burden on a sale and could take the money and invest elsewhere likely for more than that 6.4% return. Plus a pool in a rental is bad news. Whos gonna maintain it.....? And thats a box of liability that I wouldnt want to mess with personally.

Even more convincing to me, is the fact that everything has been made pretty in the last year or so.  Carpets and floors will need to be replaced after a tenant or two eating into your profits.  The good news is that those same improvements will likely make for a quick sale for you at a better than average price for the market.

Just my two cents but I say sell, take the money and buy an Intentional investment.  You did great to have your primary residence make you money but Im sensing that you might be trying to "turn" it into a different kind of investment (rental as apposed to appreciation play) and it might not be best suited for that.  Hopefully others will chime in with other opinions.  Be sure to keep us posted!

All the Best!

I agree with the above. While you are getting your finances in order, learn all you can from this site, books from the library and your local REIA.

As harsh as it sounds, if you spend all the money you make from your JOB, you will do the same with all the money you make in real estate and so your growth will likely be slow and your wealth will be limited to debt pay down and appreciation which is never guaranteed.  I dont say this to discourage you.  And it is not a judegment against you in any way.  Having been raised by a single mom of three, I know the "bill juggling" thing very well. 

You can build wealth in RE but having your personal finances in order is PARAMOUNT.  Get out of debt, cancel cable, trade in an unlimited data cell phone plan for a Wifi based plan from someone like Republic Wireless, Dial your heat back 2 degrees and put a hoody on, dial the AC back this summer,....you get the idea. Also, check out the book Your Money or Your Life by Joe Dominguez and Vicki Robin.  Its a good one.

Your faith and dedication to the cause are more valuable than you might know.  Take some time to sit down and create a vision for your life.  It sounds cliche but chrystalizing what you want your world to look like is powerful and will allow you to make the Hard decisions and push on when things dont go your way!

I wish you all the best and am happy to answer specific questions you might have.

Mike

We need a whole lot more information to give you any meaningful advice.

How much is your house worth?

How much do you owe?

What could you rent it for?

Whats your principle and interest payment on it?

Are there major repairs that might be needed in the next couple years (roof, windows, etc)?

How far away are you moving?

Do you have experience renting properties?

Would you hire a manager?

I was in a similar situation a year ago (except I do have other debts) and convinced the bank to do a $50K HELOC with the promise of a free extension to $100K after paying down 25K in 0% credit card debt (intro rate that will be paid off as the rate expires).

Can your service business serve as collateral for a Business Line of Credit? Did the bank look at the business financials?

What type of bank were you working with?  I find that the small credit unions or community banks tend to do a better job of working with folks like you and I who dont have meaningful W2 income.

I'm looking to compile a list of possible topics to cover at a local networking meet up. Wondering if anyone can share some unique or particularly Interesting/beneficial topics you've run across?

Thanks

Hello and welcome.

Not knowing you it is hard to give great advise but there are options out there for disciplined spenders. Have you looked into a HELOC on your primary residence? Or other sources of credit like 0% interest credit cards. I built my whole house using private money and credit cards but you have to be VERY CAREFUL. 0% only lasts for 12-18 months so your need to have an exit plan and a plan B. Having multiple cards that you can hop around from one to the other every 12-18 months is a workable plan. If you don't already have the lines in place, though it can be tricky as it will ding your credit in the short term. This is an issue if you are trying to use conventional financing to buy the house.

Before you go too far looking for money, you should get a better grasp on the finances. IF this house needs 30K in rehab and is worth $250 in the end, it seems like a deal. If, on the other hand it needs, $50K in rehab and is worth $200K at the end, its not a deal at all. As a new investor you should stay very conservative. If you think it will cost $30K in rehab, budget $40K plus. And use realistic but conservative ARV too. Don't forget to factor in holdings costs as well!

Hope this helps a little!

You have no control over this.  You could set rules and hope they are followed but thats about it.  Of course you can incorporate that into your screening somehow but your basically going to be operating on the honor system.  Much better to plan on replacing those floors in X number of years with something more durable.