All Forum Posts by: Tim Delaney

I'm not familiar with your area so can't comment on whether it would be ideal for MTR. But if LTR doesn't work that would be an option to look at. Another thought if you have already been in the house for a year is to continue to work on it, add more value and then sell it after two years so you can avoid the capital gains. Then maybe you are able to roll that money into a downpayment on another primary and an investment property.

As for whether you should be looking for a loan for the work vs. paying for it out of pocket. A HELOC is probably going to be at least 8% right now, so would you be making more than that on your money if you choose to take out a HELOC to fund the work? If not then probably better to just continue paying for it yourself, unless you want to speed up the process and you are constrained by cash.

Your decision to refinance is going to be contingent on what your long term plans are. Run the calculations on the expense of doing a refi at a slightly reduced rate vs. keeping the current loan for whatever period of time you think you will hold this house. If you opt for the live in flip like I mentioned above it will probably not make sense to do a refi for such a short period.

Hope this helps you some.

Find a good insurance broker in your area that can shop the various policies out there. The best way to find an investor friendly broker is at a RE meetup, but you can also just ask around in your local network or google.

 If you are trying to continue holding the other two properties then you should pull out some equity in the form or a cash out refinance on one or both or use a portfolio loan as @Jimmy Murray suggested. Use that as a downpayment on the new larger asset. Just make sure the other two assets can still cash flow with the debt you put on them.

I have an 10 unit commercial property that is basically cash flow neutral because of large Capex expenses that come up every year. I would not necessarily advise being cash flow neutral or negative before you account for these types of things. Mine may be different though because I am still responsible for HVAC and many other large items on the property. That said, if you can afford it and have the reserves, and more importantly think you have a decent chance of increasing revenue with the vacant units then I'd probably go for it.

One missing piece of info here is how much cash you have available to invest at the moment.

My initial thought was sell LLC B and hopefully you have a few hundred thousand available on top of that to buy the new building. If you don't have the extra cash, can you get creative with a private lender or partner stacked on bank debt? The problem is that your debt payments are going to basically wipe out that $400K profit unless there is room to increase revenue or reduce expenses. You say that it is "mostly rented" - is that $400K a pro forma assuming 100% occupancy? Or is that actual so you have the ability to add more to the bottom line?

Sounds like a great strategy David. STRs generally produce more income than LTRs, but they are more work. As for Alexandria specifically in terms of regulations don't take advice from a public forum - look up the laws yourself and make sure you understand them. Also look into whether the city has already set up regulations around STR or whether there are potential changes coming down the line.

Short Term Rental Management with Luke Carl is a good podcast for learning about management.

I would probably replace the fridge or pay a plumber. No matter what you do I think you are going to have guests point out that something isn’t working which could lead to annoyance or requests for refunds or bad reviews.

Plus, providing bottled water over the long term probably isn’t going to save you much money compared to paying a plumber to get the fridge connected.

 As far as I'm aware most credit unions will only lend on properties in their area of operation so not sure it makes sense to join one in a different state.

Sounds like you are in a pretty strong financial position. Instead of trying to actively manage investments in singles and doubles have you considered investing passively in syndications? That may be a better use of your time and resources. Check out Passive Pockets for more info on that. Or J Scott did a great episode on BP Money with @Scott Trench and @Mindy Jensen all about investing in syndications.

Welcome!

It sounds like you're in a pretty good position with some nice options. I would probably start by analyzing the current returns you are getting on the 13 properties. Is there a way to increase the cash flow from those? Are they all maximizing returns? The return on equity is probably very low considering they are paid off so maybe explore refinancing or selling the lowest performing one(s) or your biggest headaches to reinvest in more lucrative deals.

I noticed you also used a metric of number of rentals to attain your goal rather than $$$/month. Why do you need three properties? Could you sell 1-10 of your existing properties and reinvest in one or two more lucrative opportunities?

If you are set on your strategy of just adding 3 more rentals then you should probably leverage your network of lenders and discuss best options with them to free up some cash for more investments. Remember that the leveraged purchases are not going to add significant cash flow immediately and borrowing against existing properties will also reduce their cash flow.