All Forum Posts by: Sunny D.

You seem to have a very analytical mind. Do you mind if I ask you how you chose those 3 investment home areas? I'm working on my criteria for choosing turn key providers presently.

Jeff

Narrowed down from bigger pocketd research.

The cashflow expectations are higher than what typical turnkey companies offer, so just waiting to get right property.

Sunny

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Mike

Did you feel the pricing was too high on the turn key?

Thanks

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i dont know about gilroy (feel its too far) but i will look in contra costa county

Btw send me a PM, curious on what u r doing on the job site. I did a mba from stern

1 Vote

how did you calculate the 10.27 coc return. My math says its much lower, how much cash are you putting in ?

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Jeremy

For a cashflow investor , all they care about is net positive cashflow, no of doors etc.

For someone like you who has a good job and has a good property in a market like austin that will long term appreciate with favorable demographics, you will need to think of the following positives.

1. Principal amount in ammortizing schedule (equity build up) = 300$ per month

2. Tax break for interest payments (approx $250 pm), depreciation writeoff, property taxes etc. = 350$ (conservative estimate)

3. Good tenant and chance to raise rent

Negatives:

1. Higher property tax

2. Adiitional maintaince and PM costs etc.

I would personally say keep it with the intention to sell and exchange to another investment property closeby in Sacremento area with similar cashflow but lesser taxes and chance to be closer to the property.

Sacremento has gone up a lot but the upside is less than Austin, so would only buy if its a good price. ( if you can pull off a sell higher and buy at a low price here)

Sunny

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Which area you are looking in?

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Hello

I have 2 homes now (primary and secondary-rental). My secondary home has appreciated quite well (purchased at 255K, expected appraisal : 415K, loan remaining: 145K). The mortgage is a 15 year fixed at a very good rate (2.75%) with 11 years left to pay it off.

Let us say I do a cashout refinance for 30 year @4% and take out the equity (say 150K) to invest in SFH homes in other areas, I expect my debt will go up and also take a higher interest loan. Is this a good idea and will this affect my ability to get 8 other mortgages for my investment homes. My credit score is 820+ now.

I am thinking of the following investing strategy options

1. Invest the 150K spread across different crowd funding debt/equity investments. Get a return of 10%, so effectively I am making a spread of 6% against my loan so its 9K extra returns per year.

2. Use it along with other savings to fund down payment on 8 investment home with the following breakdown

Indy area:

a. 3 Homes in Indy area with a reputable turnkey provider around the downtown area that is gentrifying , Aim for positive cash flow of 900$ per month (300 per door) with a purchase price from 60 to 75K.

b. 2 Homes in A neighborhoods of Indy which require min rehab, purchase price around 110K but rentable at $1200 PM , Aim for a positive cash flow of 800 PM (400 per door) and work with a real estate agent and a PM.

Kansas Area/Des Moines/Birmingham

c. 3 homes in these locations that can give me good cash on cash returns (focus and B and A areas)

Without taking the cashout refinance, my savings can only give down payment for 2-3 homes this year. Should I try to get 2-3 first or go ahead with the cashout refinance. Any issues in ability to get financing for the planned 8 if I went this route?

Insights and suggestions greatly appreciated.

Thanks

Sunny

1 Vote

Hi Linday

I finally am in process of moving my long term tenants out and I am so relieved. One thing I can say from experience is that annoying tenants won't stop bothering you. There are some tenants that will feel entitled to ask for more if you are nice and will continue to bother you. I didnt give the info on extent of all the the things I had to take care of but the experience you have posted to is similar to mine and I regret not taking care of it earlier. You need to be firm with them from now on and be prepared to use a PM or get a new one if things dont work out long term. Also just say No and see what they said.

https://www.biggerpockets.com/forums/81/topics/271.

Summary of my experience

* Found tenants with good income - young couple with small family. Pay rent on time.

* After move in gave a laundry list of tiny detail on locations where cleaning was not done to their expectation and sent me a $575 bill that they had to redo professional cleaning and carpet cleaning.

* Deducted $100 in rent twice saying food was spoiled due to refrigerator issues (fixed promptly)

* Rejected the contractors being sent by home warranty company thrice saying they were rude and asked for alternate contractors

* Told me that they found black widow spiders and were concerned that the pests could harm their kid . Made me sign up for a re-occurring pest control service at my expense

* Got a new refrigerator as old one broke

* AC went out few times in summer and they would not wait for home warranty to schedule service. Had to get outside the network contractors at extra expense. Deducted expense for 1 night that they had to stay in hotel and couldnt live at home in the heat. Understandable that it is tough with a young kid but checked into Marriot and even deducted food expenses saying they couldnt cook

* Professional carpet cleaning at lease extension

and .......many more incl things I said No to

At the end of the day, I could have lost an extra $100 per month (~5% of monthly rent) net over a 4 year period doing this extra perks and dealing with the annoyance, at which point I decided to go to a PM company.

I let this continue for this long as we are not local and they pay rent promptly and I was saving on not using a PM. If I would re-do it again, I would not have kept them this long and wasted my time.

Hope this helps

Sunny

Originally posted by @Lindsay Nguyen:

HI i just signed a lease with a tenant husband and wife to rent my singer family home for one year. They came twice before signing lease and checked everything inside and out. I was nice enough to let them move in a week earlier without charging them. They signed the lease for feb 1. And 2 days later they text and said while they was cleaning the kitchen counter and turned the garbage disposal switched on she got shock. I got my handyman to take a look and he said it was fine. I also replaced a new dishwasher for them. So now on Feb 4th they want me to hire a professional cleaner, buy new refrigerator and hire an exterminator. He said that he found roaches underneath frigerator so the frig need to be new. I was nice enough to let them move in a week earlier without charging them also. I can't help to think that they will continue to bother me even more.in the future with petty stuff.

What should I do? Can I just bomb the place and hire a professional cleaner and not buy a brand new Frig. I am trying to be kind and fair but l feel like the are taking advantage of me.

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Just a quick update. Thanks for all the info.

We served a 60 day notice and tenant has agreed to vacate. The tenant is cooperating a lot with the property management company since then and is going to schedule a home inspection which they were stalling on.

I hope to increase the rent by $100 based on market trends and offset some of the costs from turnover and using a PM company.

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All Forum Posts by: Sunny D.

Sunny D. has started 22 posts and replied 237 times.

Post: Cash out refinance on secondary home and credit score

Post: Cash out refinance on secondary home and credit score

Post: Cash out refinance on secondary home and credit score

Post: Should I keep my house?

Post: Questions on Potential Deal in Sacramento

Post: Should I keep my house?

Post: Potential Buy and Hold

Post: Cash out refinance on secondary home and credit score

Post: Annoying Tenant

Post: Long term tenant and new property management company