All Forum Posts by: Wes Waggoner

Anyone have experience negotiating with a relocation company? Found a nice 4/2 SFHneeding only about $10K in rehab to get rent ready, but we've only made minimal progress getting any sort of counter from them. Typical strategies like "cash", "as is", or "close whenever they want" seem to have no effect. It's been on the market for 30 days and most in this price range are gone in 3-5 days. (Crossposted to BP FB pages). Thanks!

@Ibrahim Yamini

I hear ya, I want people to truly fell like it is their home. Depending on how (or if) I proceed with the purchase, I’d have to explore some of the options others have mentioned. I would plan on leaving it up to the tenants in terms of honoring their leases (and yes I would see the leases and payment history before sealing the deal). The rents need to go up regardless (when the leases are up), so I’d feel a lot better about making their homes feel new/improved since they’ll be paying more. The least conflict route is just wait til they move out and rehab at that time. That just slows down my new appraisal/refinance option to get my cash back out of the deal.

As for the owners, they are elderly and out of state. I have a feeling they have larger financial problems, not specific to this property. But, that’s o. Me to get that due diligence accomplished.

@Dennis Cosgrave

Thanks Dennis! Very good point about the tenants being observant. Even if they aren’t, I suppose we could show them before/after photos of the rehabbed unit to see if they are up for sticking around with the upgrades/higher rent. Thanks again.

Thanks John. I think that (updating one unit at a time) is overall my default plan, just prevents me from pulling off a timely BRRRR. Can't really complain about the cash flow, more just concerned about tying up my capital for the next purchase. I may look into hard/private money if that's the case.

Thanks Andre, appreciate the insight. I have a few local lendors that I'm hoping would help me avoid the seasoning, but if I can't, ~6 months isn't terrible. The units are all the exact same layout, so I suppose a weekend renovation for each may be possible for an empty unit, but true that who knows how much stuff of theirs would be in the way of getting the job done (rightfully so, it is their home). I'll certainly seek out the lease end dates (if possible) before making the offer to come up with some backup plans. Thanks again.

I'm 100% this has been asked before, but can't find the exact scenario in the search. Looking at a 4plex (distressed seller) that cash flows very well the way it is with the current under-market-value rents. 3 of the 4 units have tenants. The vacant unit will need around $3-5K of rehab which should easily move the rent up ~20% (from $650 to $775-$800/mo). I could do a traditional rental purchase and finance right away, but that'll tie up ~$60K of capital. Preferably, I would pay cash, rehab all of the units, then get a lender to finance ~75% LTV which would get most of my capital back. I've only seen the one vacant unit, but I have to imagine it is the worst of the 4. Primarily the rehab would be pulling up carpets, installing LVP, paint, and potentially replacing kitchen countertops. 1) Suck it up and finance now, then refinance again at a later time after all units have been vacated--ties up capital for at least the length of the leases? 2) Pay cash, wait for leases to come up (<12 months), then non-renew/force move in order to rehab? 3) Try to get it all done at one time (ask the tenants to move their stuff out of the way temporarily and/or compensate them to stay at a hotel for 2 nights)? Appreciate any advice/wisdom,

@Justin Voegele

Thanks for the comment. I’d manage it myself for now as I’ll be in the local area for another 2 years or so. Cash flow would be about $0. With the small kiddos in the house, wouldn’t go the rent a room out route. Renting it would simply “break the seal” for me as a rental property owner. Thanks again for your thoughts!

@Mikael Winkler

Thanks for the insight. I was kind of thinking that as well since it'd be nice to have a relatively safe way to get into my first rental property. That may create some momentum for me and shake off the newbie jitters. If I decide to go the rental route, this would likely be the first property I'd sell after acquiring a few more rentals to free up the DTI. Thanks again!

Frank, thanks for your consultation. We make a decent income, but didn't really consider DTI (just had to Google it actually). Given that I am in the military, I'm not really emotionally attached to material stuff since I move so much, but I hope to eventually be attached to a property or a business as that'd mean I'd finally commit to some sort of permanency. Appreciate your insights,

First time poster. Background, serving in the military, spouse, kids, pets, etc. “Overcorrected” from being stationed overseas in small home for 3 years and bought the big house with a pool in Southeastern US 2 years ago (I just started listening/reading about FIRE and real estate investing ~6 months ago…wish I had done that sooner). We’ve laid down some roots with my spouse’s business, but it is likely I/we will have to move one more time in 2-3 years, prior to fully retiring in 2027 (if I have to move, family will stay here or we’ll leave and spouse will return ~once per month for a week at a time to maintain business). This may be our “forever” area depending on success of wife’s business. I also have a goal of starting small multifamily investing within the next 6 months. For my question regarding our home and whether to sell or rent out…it’s too much house to clean, way more square footage than we need and too much in utilities. We aren’t struggling to pay our bills, it just seems wasteful at this point after discovering the concept of FI. For the details…

Owe $378,712 (just refinanced to 3.25% 30/yr fixed VA); need to put $5,000 into house = $383,712

Updates needed: pool liner $3,000; re-paint kitchen cabinets $2,000 (bad DIY “update”)

Likely sell price $410,000 (up to $430,000…but staying conservative)

$410K: $385,400 (after 6% realtor commission); $382,000 ( after $3,400 towards closing)

$383,712 - $382,000 = $1,712 out of pocket to sell

Rent = break even with mortgage, insurance & property tax

Maintenance, capital expenditures, vacancy = $4,000 annually ($333/month negative cash flow)

$625/month going into equity from rent - $333 expenses = $292/month overall “benefit” of renting out towards mortgage principal

-House is at/above average for the area, so rehabbing/improving not beneficial

-“Gaining” $4,000 in equity per year, not taking into account appreciation/depreciation

-Selling doesn’t really free up any capital

-Selling would allow for regaining VA loan benefit

-If we sell/rent, we’ll likely buy a home for half of the cost of this one, which will be more profitable to sell/rent when we leave