All Forum Posts by: William S.

Thanks everyone. No longer relocating to Anderson.

Due to increased prices outpacing rents, acquiring new rentals isn’t favorable. In times like these what does one do? Rehab existing rentals to increase rents? Still in my growth stage but I do not see anything at all anymore.

@Matt P.

Scale can work against you though too. I had 3/4 properties be vacant in the same month.

Given the condition I think $5k is enough. Plus, I work full-time too. I don't want to much cash. Lost opportunity cost.

The $5k in reserves is for is something major breaks to cover (unexpected). Refi is for long term replacements... Thoughts?

I have a rental in a suburb with some nice modest appreciation. All in for $121k, worth roughly $145k. Nothing needs to be replaced in the near future, more long term expenses. I see two options

1. Set aside $166/m for future CapEx. I did a long term breakdown to get this number of each item

2. Have $5k in reserves. In 15+ years if something needs replaced do a cash out refi to pull out money to pay for CapEx. Basically the house/bank pays for the CapEx cost, I don't

Does anyone utilize strategy #2? Seems to be the best strategy. Option 1, the money would be stuck in the bank getting no interest (losing money due to inflation).

@Marcus Auerbach

I have a case of analysis paralysis in some ways. Many people have told me I over project numbers and say I'm too worried. Well, they were right. I thought this would help people (noobs) who feel this way. My rental has experienced over 1 year of occupancy, and 1 turn over so let's compare.

I bought it below market value and did some minor rehab work. The appraisal is old, and is probably now in the low $140k's. This was bought roughly 1.5 years ago. EQUITY GAIN!

ANALYSIS

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REAL LIFE NUMBERS

Turn over cost was the biggest expense. $551.71. This shouldn't be an issue going forward though. They are more of repair items (new door locks, update due to code on smoke alarm, etc). Also, given the area tenants should stay longer than a year. This was my first go at self managing/finding a tenant and I didn't do a good job. I have a PM now that's great to handle this.

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Analysis $214/m. Reality $166/m. With a tenant for one year and turn over. Also, nice appreciation. Not bad. This is not a C-class area either. SFH in a B-Class neighborhood with good schools in the suburbs.

The Cap-Ex is an estimation. I broke down each item throughout the life of the mortgage. However my mindset is changing on how to budget for this. Instead I may have $5k-$10k in savings set aside for reserves and when CapEx comes up I can do a cash out refi due to the appreciation and still cash flow. Anyone doing this method for CapEx?

Thanks to @Marcus Auerbach for helping me out!

@Alexander Felice

You are right. May be best to hold for a few years before CapEx, then sell if it doesn't this summer.

@Wayne Brooks

Refinancing meaning putting more down, not taking more cash out. However, the rate would be higher.

@Brian Garrett

Interesting idea. It is across from an all girls university. However, I don't think it would result in higher rent.