All Forum Posts by: Will R.

@Brian Cowan You could try just being transparent and see what happens. Just tell folks, I have it in contract for $50k and I want $55k. Then you do not have to try to justify price and risk missing the mark and burning a bridge. The real PITA is going to be that he added footprint which has to be fixed on tax record and such if he did not permit. But everything is worth it at some price. 

@Karen Margrave

I am having an impossible time uploading mine. I upload it and it shows up for a day and then it disappears. Totally quirky. It is a 500x500 jpg in black and white. 

@Jeff D.

You do not need PM but you might want one depending on your personality. I traveled the world for a year with two SFR without a pm and that was my first experience as a landlord. I personally used American Home Shield at the time but I have had some terrible experiences with them since then and do not do business with them anymore. Either way, you can use google voice to find a contractor or to deal with AHS. Just make sure your lease says that they have to be present and let the contractor in.

I agree with @Aaron Gordy on the FHA. That is the way to go. 3.5% down is a sweet deal and gives you cash to clean up the place. You can also do a 203k on a duplex and do some major rehab if needed. 80% ARV is ambitious in those areas but it is out there if you are willing to rehab.

Even if you pay market rate, you can totally live for free if you also have two roommates. It is the magic of multifamily. 

Check out 8101 Dowling CV and 8602 Fireside DR as examples of what might work. 

@Scott Sutherland I do not think this legislation is coming from vrbo folks or even short term rental as a business folks. This is coming from hotel owners. It is not intended to advance alternative rentals but to shut them down. I am not saying that is necessarily a bad thing but it is the objective here. Maybe only large entities should be able to offer a bed to passers through. However, red tape seems like a round about way to get there. The legislation should just declare that you have to have 50 doors to operate a short term rental.  

I personally have abandoned vrbo type rentals because the difficulty of compliance and the taxes associated are too high for my 3 or 4 units. After the costs of:
- Annual city fees
- County Tax
- City Tax
- Income Tax
- Booking fees
- Cleaning costs
- Accountant cost
- PITA from the city
- My time actually booking or cost of someone else booking
- etc.

I end up with less than I get from leasing. This is even counting $30k in SXSW rentals. So I lease. These rules create a scenario where you can only succeed when you have economies of scale which are rare for this type of property. So, in essence, it removes this affordable option from the visitors. Or you end up with house rentals that are strictly underground. Maybe it has the positive effect of creating more inventory for long term renters but that seems negligible. 

The only positive here is that they are not attacking personal residence rentals yet... but that may be coming. 

@Marek Berry you should connect Scott Smith with http://www.biggerpockets.com/users/scottroyalsmith who did a great podcast here http://www.biggerpockets.com/renewsblog/2015/02/12...

Or reach out to Chat Smith http://www.jw.com/Chad_S_Smith/

I think either one could take care of you. 

@Kristina Modares It will be hard to find a friend that good. If they cosign with you, it will cripple their DTI. Maybe you could find a friend that would be willing to split a duplex with you. Buy it together and do a condo conversion. That would be a cleaner transaction and they could later sell their portion and not affect you.

I agree with @Bryan Hancock on zip codes. I have a house in 02 that I cleaned up that has neighbors selling for $2M. That area is long gone and is only good for new construction at this point. Also, check out the area just east of St Eds. There are affordable duplexes over there. 

Hi @Bill Exeter. Thanks for the reply! I would definitely actually live in it 2 years before attempting 121. What I hear you saying is that the 1031 "intent" is judged at purchase and because these two properties were bundled at purchase and I purchased as a house to live in, neither can be considered an investment. Does that sound right? 

@Steve L. This is what my gut was telling me but I have had a hard time finding examples. You seem to have a huge amount of experience with SFH which makes me think you are right. The customization aspect is interesting. I am not sure I want to deal with a buyer that much though.

On the refi, I would still be taking a major hit on my DTI but I guess that does not really matter because I would have cash to work with.

@Peter John K We are finalizing the subdivision now. No digging yet. The profits from the sale of the house (hopefully this summer) should cover the cost of the construction. So, no loan involved. 

@Peter John K  Interest rates... That is another piece I had not considered.

Pros for Occupying:
- No tax (not sure if I would otherwise pay capital gains 15% or income tax 40% in this situation)
- If it were income tax I am assuming it would be disastrous for my w2 taxes as well
- 2 years of appreciation (currently 5-10% in Austin but what does the 8 ball say?)
- Living in a fancy new house and having it paid for by the tax savings

Pros for Selling:
- Selling a NEW house (what is the % or $ value of this?)
- Immediate access to cash/credit for next opportunity
- Low interest rates for buyers
- Market is hot (but will probably remain hot for SFR in central austin)
- No carrying costs/interest payments on a house that is nicer than our needs
- Do not have to fix wear and tear

Anybody out there who has made this kind of decision before that can weigh in? 

@Peter John K I have been in this house for the last 3 years. You have to subdivide in Austin to go bigger than 850sf on a back house. Plus it is easier to sell a standalone in this high end neighborhood.