All Forum Posts by: Phyo Ko

@Phyo Ko as @Barry O. mentioned, renting it by the room can often greatly improve your numbers (but, it also increases your work).

You can also usually get more if it as a STR or MTR, but that's even more work....

What do your numbers look like if you self-manage it as a LTR, and what do your numbers look like if you self-manage it as a rent by the room?

At the end of the day, it sounds like you were way off on your original analysis of the property, which often means that the only way to salvage it is to put in some work (and frankly, I'd say that anyone who wants to be a real estate investor needs to put in some time self-managing their properties and learning from that experience before handing it off to a PM...so, if self-managing this thing makes it salvageable, I'd say that's a blessing in disguise).

Regardless of what you decide to do with the property, take this situation as an opportunity to LEARN, because there are a LOT of valuable lessons here...

Good luck out there!

What was your analysis prior to purchase?  Can you post what your original analysis numbers were so we can see "what I expected" and "what I have now"

1.2 M for a duplex that requires 100k in renovations to get $3600 for each unit. Even if we assume your went over renovation budget by 20-30%, I suspect your original analysis was not great.

In CA a LOT of properties are not going to cash flow unless you get a smoking deal. CA is more about appreciation in many markets. In any other market I would probably sell it off. In CA I would probably hold and find some other ways to cut cost and raise revenue-- STR, self manage, charge more for garage etc.

Even if you are losing a little $$ monthly, there are other benefits to RE- especially in CA.... sell it now and you lose a LOT of $$.

In CA, I would hold it....

Could you use one or both units as a medium term or short term rental to increase income?

Not sure how involved you want to be in the rental process. But you can rent by room. In IB a room rental is probably 1300-1500 per room. Plenty of military will rent at that on a 1 year lease. Charge electric, internet and water as a 200 plus per room and you have a little more breathing room. It involves a little more hands on. You would need to furnash the common spaces with Salvation Army stuff. But it may let you survive the downturn in prices for the next year or so, when it will level out a bit. IB is currently a declining market with a 2-5% reduction in sales prices over the last 3-5 months.

As people have said "Do the math and decide". Forget the emotion it is a business decision and you should approach it as such. 

If you need info on a rental license for IB:  https://www.imperialbeachca.go..

Market rents minus principle interest taxes insurance and a 25% haircut   what is that loss number? Multiply by 24 months

Current value minus mortgage, real estate commission, $2500- 3000 in title and sales expenses what is that number?

Call your CPA to assist with numbers in making the decision. We don't know your tax situation.

If you have a W-2 job the sale expenses are losses you might use against income in 2023, if you sell fast at low price in 2022.

What is the cost of the worry? How far is subject from your home? Can you move into it and sell your primary? 

Yellow note pad with pro and con list - do it today and decide today. There is no wrong choice. You learned from the work. The market value as a sale will not increase until 2024 or 2026 depending on location. 

Market rents minus principle interest taxes insurance and a 25% haircut   what is that loss number? Multiply by 24 months

Current value minus mortgage, real estate commission, $2500- 3000 in title and sales expenses what is that number?

Call your CPA to assist with numbers in making the decision. We don't know your tax situation.

If you have a W-2 job the sale expenses are losses you might use against income in 2023, if you sell fast at low price in 2022.

What is the cost of the worry? How far is subject from your home? Can you move into it and sell your primary? 

Yellow note pad with pro and con list - do it today and decide today. There is no wrong choice. You learned from the work. The market value as a sale will not increase until 2024 or 2026 depending on location. 

I will have to make that list and call a cpa thanks for advice

How much did you spend on the purchase and renovation total? How much is it renting for? Even without knowing those numbers, I can tell you that holding it is the best answer, long term. Keep in mind that most leases are for 1 year. After that, the lease is up for renewal and you can increase the rent. Also, you can list it for above market rent if your renovations make your property look and feel better than the average place. What about pet rent? You could save 10% by managing it yourself. Selling is a bad option because your only buyer is another investor, and investors never want to pay retail price. 

@Phyo Ko Your hard money Lender will provide the documents They require.

To be clear….a Deed (General Warranty, Special Warranty, Quit Claim, etc)  is the document filed with the county that gives you Ownership.

A Deest of Trust/Trust Deed is the same as a Mortgage Document that places the property as Security for the Note.

As a side note, a hard money lender generally can Not place a loan/mortgage on your primary residence….they are not licensed to do so as this has more restrictive federal/state lending laws/requirements.

Your escrow agent should have all of this information for you and the proper forms/documents to sign.  If you are trying to avoid escrow fees, you are making a major mistake (i.e. like a signing a note before getting the money).