All Forum Posts by: Ryan E.

There’s so much hypocrisy in this thread. A lot of BP members I previously respected sharing some disappointing, and surprisingly, vitriolic opinions. There’s also a lot of ignorance and many extreme generalizations being spewed out. Other BP members have gained even more of my respect. The government employees I know are extremely hard working. I know of many who have sacrificed their lives in YOUR service...attempting to arrest extremely violent criminals. But hey, it’s good to know where people stand.

@Jaiden Olsen what interest rate do you have now? I’m willing to bet it’s sub 4 and that right there is probably reason enough to not refi. 

@Collin Baumann I would recommend you get the whole house tested for asbestos...anywhere where it would likely be and not just the popcorn ceiling area (you probably were planning this anyway). If it has any asbestos then I would recommend going back to the seller and asking for a discount on the price, money back at close, or for them to fix it if  you trust them to do that. This is quite common during due diligence. I've sold a few houses and on every single one the buyers came back wanting me to fix this or that or give them some kind of credit at close. 

The way I understand renovations in a house, you will need to get a permit for the work you want done. So, you'd need to pull a permit from the city. You can probably call the city and talk to the buildings department and ask them exactly what you would need to do. Just a word of caution though...once you get a permit city inspectors may need to come inspect the work and once they are in your house they may flag other things...especially when you open up a wall. I don't know exactly how this works in Salt Lake County but every city is different so maybe ask around for some people who have dealt with city inspectors in the city where you are buying. You can even call the city and talk to an inspector and ask him/her some "hypothetical" questions about a house you may be purchasing. You may want to way removing that wall with the potential for an inspector to come in and tell you that you are going to have to update the electrical wiring in the house or redo all the plumbing, etc. But that is what your due diligence period is for so good work! Don't let any of that scare you from continuing with your purchase...I'm just saying that you may want to look into it further. 

Also, not sure what your plans are or what your family situation is but I'd recommend living in the smaller unit if I was you. I am currently house hacking a house I purchased before I ever knew what BiggerPockets was. I really wish I would have lived in the bottom unit from the beginning...this would have allowed me to have my entire mortgage covered plus a little. Another thing you can look into is AirBnB-ing out one of the units for greater potential cash flow. Anyway, I've rambled enough but good luck!

@Warren Garceau this is a great post. Thank you for sharing. I especially like the running over 130 properties! That’s awesome and motivational. 

@Crystal Cody it’s going to depend on your goals but also the specific market. Here’s some awesome possible upsides to the expensive market: the kind of renter who can pay 3-4K in rent will most likely be very responsible...A class rental will require A class tenants. Also, if it’s a generally expensive market then perhaps we can extrapolate that there’s is population growth and a lot of high paying jobs. If that is true and if it’s likely to continue long term then that house will likely continue to rise in value along with rent rates (long term is key here). Also, a small you scale would you rather have 10 A+ rentals in your own backyard bringing in 35k a month in gross rents or 30 rentals in a market you may have to fly to bringing in that same amount? 

There are counter points to each of my arguments but there is definite upside to the expensive market in my opinion. 

@Martha Michel my wife and I house hack and have two little girls, 4 and 2. It’s been the best decision we could have made. We are actually considering moving into the smaller unit as we would live for free and then some. Also considering house hacking a four plex. We’ll see! It’s a no brainer though. I get why some people refuse to do it but I’m constantly preaching the benefits haha. I don’t even think my little girls notice...but we do have a unique set up and almost never see or hear our neighbors.

@Becca Summers I did NOT know that! Thanks for sharing! I will pm you. 

@Becca Summers are you referencing the MACU program? If not, I’d love to hear more on what you are talking about!

@Ben Le Fort I’m going to offer somewhat of a counter point to the cash flow argument. You mentioned that you feel confident in the possibility of appreciation. Most people would be pretty happy with, let’s say, $600 per month in cash flow, right? If you are confident your rents and values will go up over the long term then I think that changes things. Let’s just say your property goes up by 12% over the next four years for an increase of $60k in value. If you calculate that out it would be an increase of $1,250 a month over those four years. Double the number that most would be happy with on cash flow alone. I don’t think you should discard all of the solid advice given so far but I also don’t think you should decide not to rent based on a cash flow calculation only. Again, if you are very confident in continued rent/value growth I think that’s a big consideration. Plus someone will be paying it off for you. For example, the house I live in (a house hack) would probably have rented for $2700 ish when I bought it. Now, I think it would rent for close to $3700. It has increased in value by about $100k over the last four years. My market is growing a ton...jobs, population, limited land etc. If you do decide to keep and rent based on the possibility of value Increase I would make sure you have plenty of cash reserves for vacancy and repairs and the possibility of rent decreases or higher vacancy in a down market. It really depends on your goals though and there are some very experienced people on here advising you to sell. My point is just that there’s more to it than only cash flow.

@Jake Thompson I think you should keep the duplex as well. $40k really isn’t that much money to start over with. BRRRR is an awesome concept/strategy but I think it’s much easier said than done. I mean think about it. To get all your money back out you have to be all in for less than 75-80% of ARV. With only 40k to your name a huge chunk of whatever equity you create on a BRRRR property is going to be eaten up by hard/private money points and interest. Which means you’d have to find an even better deal, in a hot market. Or you could let that $1k a month keep rolling in with little effort. That’s not even to mention how awesome a place San Diego is. Clearly I know nothing about the specifics of the neighborhood/area of your property but I imagine over the long term (10-15 yrs) that $1,000 a month will turn into 2,000 or more. AND the equity you will gain through appreciation in San Diego should be a very major consideration. The other thing to think about is you could very easily lose that entire $40k on a first deal if you have no experience and no vetted team. Half of that $40k could get eaten up in a rehab estimate error alone.