All Forum Posts by: Nathan Faucett

@Zach Rook - Just to repeat for transparency - I have an owner occupied house hack that is my only investment, so take everything I say with grain of salt and definitely do more research and ask other people BUT I think I have some more questions that came to mind. I'm going to send you a PM

Hey @Zach Rook - not an expert by any means but doing real estate in Greensboro, NC. Just a few thoughts after reading your post.

Sounds like you know some of your numbers, but not all of them.

• Do you know what your cashflow would be if your rented as-is?
• Do you know what your profit would be if you sold as-is? 
  • What would you do with your profit if you sold it?
• Do you know what your cashflow if you updated and rented?
• Do you know what your profit would be if you updated and sold? 
  • What would you do with your profit if you sold it?

Some other questions:

• Is this a house hack?
• What do the market trends say? Do we expect to your area to keep appreciating?
• Is the house giving you any other trouble that would force you to want to sell?
• Would you have to finance the updates (do you have the cash to finance the updates without borrowing)?
  • If yes, could you do so with an interest free credit card and pay off the bill before the interest comes do?
  • If no, what is opportunity cost of using cash?

Hello all!

Seeking recommendations for an accountant in the Triad NC Area (Greensboro, High Point, Winston-Salem) who is familiar with real estate rental income. Specifically someone who could help with house hacking and short term rental income as well as the tax deductions/write-offs associated with renovating and renting out our space to tenants.

Send me a PM with any recommendations!

Thanks in advance.

@Bradley Padula - thanks for the recognition and the feedback!

It feels like our home should be worth more (and I'm sure a lot of people feel like that), but I guess it is what it is.

At the end of the day, we aren't going to be within $10k of the 80% LTV no matter what we do or how the appraisal comes back.

I think it's time to just bite the bullet and start paying $150 less per month for my primary residence (which now that I am writing this, I realize that almost meets a cashflow goal if I were to go and buy a single family rental). If anything, I feel silly that I didn't just move forward 2 months ago when I had the appraisal completed.

The PMI will fall off in about 6 years, and then we can do even better than we were before! Maybe it isn't so bad after all.

@Forrest Faulconer - That is a great reminder. Sometimes I forget that people aren't perfect (myself included). 

I do believe it will be a good comp because it is the same exact neighborhood (like there is only 2 entrances to our neighborhood and they are 1/4 mile apart).

I'm tempted to split hairs and try to get a new appraiser altogether, but it's unlikely that our house will appraise for high enough that we will be able to avoid the PMI (our real goal in this whole thing).

@Forrest Faulconer - Thanks for the swift feedback

I honestly don't have a lot of information about comps in the area because our house is pretty unique to our market (a walk-out basement with a kitchen is pretty unique), so it is difficult to use non MLS tools to tell us too terribly much. However, the new comp that would be considered by the appraiser is a home in our neighborhood that sold in August for $284,000 that is pretty similar to our house in a lot of ways (has a basement, similar square footage, similar condition, etc)

According to the current appraiser, he had to go digging to find houses like ours, and those are the comps that he came up with.

There are some pictures included on appraisal report and I don't think we will be able to get much more than that for the comps that he used for the appraisal done in August 2020.

We have had a lot of learning experiences with this home so far and one of them is that while our basement is considering living space, it is below grade square footage, so the 1000 SF of living space is not included in the "above-grade square footage of the home". As a result, our house looks like a 1700 SF home, even though our basement is by far the nicest portion of the house. We didn't realize that was going to be the case, but again, it's a learning experience. 

I'm going to connect with our real estate agent, but figured I would reach out to see if other people had some advice for me as well. I don't mind spending $600 if it's going to give me $10-$15k of value in my home that wasn't initially realized, but I am just feeling pretty confused about the whole thing.

This is truly the school of hard knocks!

Hi -

My wife and I bought a 2700 square foot house (living space) in June of 2019 for $235k in Greensboro, NC (Zip Code:27410). About 1000 SF of that was a below grade, walk-out basement that was in really rough shape. It had 1 bedroom, 1 bathroom, 1 small office, and was completely outdated and gross (Acoustic tile painted black, painted wood-panelled walls, nasty dog-smelling carpet, etc)

We put about $30k into renovating it - It now has 2 bedrooms with new walls, drywall ceilings, a full kitchen, completely new bathroom, new light fixtures, etc - it is essentially a luxury condo that we are now househacking with.

We sought a refinance in July 2019 and an our appraisal came back really low - only $250k. One of the main reasons for this was that time was no "Date of Sale/Time" adjustments made even though the comps went under contract in May 2020, December 2019, and February 2020. Based on form 1004MC2 - Market Conditions Addendum to the Appraisal Report - Median Comparable Sale Price increased from $207,500 to $231,500 over the past year - an 11.6% increase! If you go on Zillow and blindly look at my zip code, the change from September 2019-August 2020, it goes from $248,000 to $262,000 - an 5.6% increase!

We have challenged this appraisal and our bank has told us that we can pay $300 (a $250 discount) for the same appraiser to add new comps (and there are much better comps now), but he seems unwilling to make any changes based on "Date of Sale/Time" OR we can pay $550 for a brand new appraisal to be done.

Is this typical? What would you recommend doing? Why? Any other advice that you might want to provide?

Thanks in advance,

Nathan

@Stephen Diakos - Thank you for your response. It sounds like in your situation it would be better to have 1 lease with 3 peoples name on it and based on NC laws that I have read, you are in the clear with that.

However I am curious about single family homes with 5 or more rooms in them. Based on the information found here under the definition of family, it seems that a single family home, by definition, would have to be a max of 4 people that are unrelated.

So would 5 or more people be able to be on a lease together, or could they rent by the room, or is that just not (legally) permitted in Greensboro, NC?

Hi all - 

I'm curious if anyone in Greensboro, NC or in any other major NC cities (Raleigh, Winston-Salem, Greenville, Wilmington, Asheville, Charlotte) has done a rent by the room model?

Have you looked into the legality of this model?

Is there any other reason that this model would not work?

Thanks in advance,

Nathan

This is such an interesting conversation because it sort of relates to my other hobbies - Tabletop Board Games.

In some styles of games, you build an "engine" - something that generates a resource for you so that you can go and build your engine bigger so you can create even more resources. However, at some point in the game, in order to win, you have to stop focusing on your "engine" and start thinking about the game winning criteria - "victory points". However, other players or just the game itself can "attack" you and if you can't withstand the "attack", then you can lose your engine that you have worked so hard to build.

In the Real Estate Investing World:

Engine = Cash flowing rentals that allow you to generate capital and equity

Victory Points = Cash that can be used however you wish

Attack = Any expenses, whether seen or unforeseen

It's a bit of an oversimplification, but it helps me understand how I should function. I want be prepared for unforeseen expenses and circumstances so that I can mitigate risk, but I should do what I can do build my portfolio, so that when the day comes when I just want to use my cash, I can :)

It's all a balancing act.