All Encompassing Mortgage and Real Estate Thread

[Wulaw Horn 19596]

1 minute ago, victory88 said:

I know man.  That’s why I’m asking.  Hard to get any information online and builder and architect keep telling me they won’t give me a quote till after inspections.  I just don’t want to shell out option money and inspection money again to be told it’s too pricey.  That shit adds up quick when you do it multiple times.  Just looking for feedback.  If anyone has done similar projects and what it cost them.

about tree fiddy.  What other answer would you expect on this site?  

[UTPhil2006 3930]

There’s a couple builders on here that can give you a ballpark but that’s prob the best they can do without a good bit more info and not being your builder. My quick eyeball test and after what you wrote your numbers seem a bit low 

[victory88 5765]

Just now, UTPhil2006 said:

There’s a couple builders on here that can give you a ballpark but that’s prob the best they can do without a good bit more info and not being your builder. My quick eyeball test and after what you wrote your numbers seem a bit low 

That’s what I’m thinking too. We were initially looking to tear down and take out a construction loan but there are no lots available in the area and shit homes being listed to tear down are like 500-600k.  I was out at that point but builder then suggested we could renovate with the money we were going to use as a down payment.  Had a realtor call me to show me homes.  So we are out looking and I still don’t know if he can do what we want with our budget.  Which is fine, but don’t want to waste my time or the realtors if it’s not achievable.

[UTPhil2006 3930]

Just now, victory88 said:

That’s what I’m thinking too. We were initially looking to tear down and take out a construction loan but there are no lots available in the area and shit homes being listed to tear down are like 500-600k.  I was out at that point but builder then suggested we could renovate with the money we were going to use as a down payment.  Had a realtor call me to show me homes.  So we are out looking and I still don’t know if he can do what we want with our budget.  Which is fine, but don’t want to waste my time or the realtors if it’s not achievable.

Right and don’t let someone bait and switch you on saying oh yeah it’s 325 and then 3 months later it’s over 400. 

[victory88 5765]

Just now, UTPhil2006 said:

Right and don’t let someone bait and switch you on saying oh yeah it’s 325 and then 3 months later it’s over 400. 

That is my fear.  I’ve been through two construction projects and fully understand change orders and how much more it cost me back in 2019.  The realtor is using the same builder and architect and dumped 300k into his termite infested home he bought that is similar to the one we are eyeing.  We’re going to look at it tomorrow to see what 300k with this builder gets you.  It’s the real estate agent that is telling me more about cost than the builder.  Builder won’t even give me a remote idea of cost.  

[mchookem 16769]

so my dad fell and broke his leg earlier in the summer... with the ultimate result that he decided he was too old/done with ranching, sold his livestock, had an estate sale, and listed his place this week. 

i don't want to post the listing just bc i don't want to completely dox myself 😛...

BUT if any of y'all are interested or have any clients interested in a gorgeous, large, 1887 2/2/study farmhouse (restored with lots of character and very comfortably livable but probably could use some cosmetic updates based on personal preferences) on about 30 acres of woods and pasture, with a barn, in Anderson County for $450K...DM me and i'll share the listing. 

i was just there for a visit... it's a beautiful place with great memories, he's been there about 30 years. i'm feeling a little melancholy about it but i totally get it, it's just too much for him to care for now. i believe the tractor and some other equipment may be included. hit me up! 😊

 

 

ETA just to clarify, 1887 is the year it was built, not the square footage 😊

Edited October 22, 2023 by mchookem

[Wulaw Horn 19596]

9 hours ago, mchookem said:

so my dad fell and broke his leg earlier in the summer... with the ultimate result that he decided he was too old/done with ranching, sold his livestock, had an estate sale, and listed his place this week. 

i don't want to post the listing just bc i don't want to completely dox myself 😛...

BUT if any of y'all are interested or have any clients interested in a gorgeous, large, 1887 2/2/study farmhouse (restored with lots of character and very comfortably livable but probably could use some cosmetic updates based on personal preferences) on about 30 acres of woods and pasture, with a barn, in Anderson County for $450K...DM me and i'll share the listing. 

i was just there for a visit... it's a beautiful place with great memories, he's been there about 30 years. i'm feeling a little melancholy about it but i totally get it, it's just too much for him to care for now. i believe the tractor and some other equipment may be included. hit me up! 😊

 

Sorry to hear about your dad. Good luck with everything. 

[Neonmoon 38130]

It feels like half my job is teaching people how to use a computer. 

[Sbbruin 22144]

4 minutes ago, Neonmoon said:

It feels like half my job is teaching people how to use a computer. 

[UTPhil2006 3930]

17 minutes ago, Neonmoon said:

It feels like half my job is teaching people how to use a computer. 

If I had a dollar for every time I had to have someone take a pic of something, text it to me, email it to myself, and then turn it into a pdf I’d have a couple hundred bucks. 

[Neonmoon 38130]

5 minutes ago, UTPhil2006 said:

If I had a dollar for every time I had to have someone take a pic of something, text it to me, email it to myself, and then turn it into a pdf I’d have a couple hundred bucks. 

I've gotten really good and making step by step screenshots of how to download bank statements and transaction histories. I even have to circle the correct button to click in red because some people are special.

 

[Chewbacca 7830]

On 10/19/2023 at 6:10 PM, Neonmoon said:

Guy getting a divorce had to give up a 2.75% for a 7.99% to refi spouse off the loan. Ouch 

I had to give up my 2.75% loan to remodel my house.  Construction loan rate is Prime +1.

[Mother mopar 3386]

I've gotten really good and making step by step screenshots of how to download bank statements and transaction histories. I even have to circle the correct button to click in red because some people are special.
 

Well damn, I should have asked for this service a few years ago during my loan...kind sir.

[Neonmoon 38130]

1 hour ago, Mother mopar said:

2 hours ago, Neonmoon said:

I've gotten really good and making step by step screenshots of how to download bank statements and transaction histories. I even have to circle the correct button to click in red because some people are special.
 

Well damn, I should have asked for this service a few years ago during my loan...kind sir.

Ha I would have happily provided 

[Gil Bang 26241]

9 hours ago, Neonmoon said:

It feels like half my job is teaching people how to use a computer. 

Heh.  I once had an elderly couple that listed with me on a house close to me, and they lived 40 miles south.    They had no computer, no email.

I literally bought a fax machine, took it to their house, installed it, and programmed my fax number in the "1" spot.

That $100 investment saved me a ton of driving to collect signatures.   

[Incredulity 11876]

Tangentially:

Not sure if it was the title company or lender's mandate, but on one of the first mortgages I ever got the fuckers made me come back a week later and go through the entire closing paperwork and add my middle initial to all of my signatures.  Even though I have never signed my name that way.  Delayed closing a week or so.  Fucking bizarre.

[UTPhil2006 3930]

Probably only applies to a few here but not insignificant..

[Neonmoon 38130]

The house hackers have already picked my region to the bone, but that’s huge for 3-4 unit buyers 

[bluto 4997]

So wait, that means I can buy a quad plex with just 5% down?

[StassneyHorn 6775]

yea just find people to rent it. Same as everything else

[Neonmoon 38130]

10 hours ago, bluto said:

So wait, that means I can buy a quad plex with just 5% down?

Correct. You could always buy a quad plex with 3.5% down with an FHA loan. Now, you buy a quad plex with 5% down without FHA self sufficiency test. 

explained blow 

Quote

For duplexes, FHA works well. But this financing comes with a serious drawback for 3-4 unit properties: the self-sufficiency test. In this test, the property needs to be able to cover its entire payment with rental income after a vacancy factor of 25%. For example, a 4-unit home with a $5,000-per-month full payment would need market rents of nearly $6,700 per month.

With mortgage rates at decades-high levels, virtually no property can pass FHA’s test.

Now that Fannie Mae has rolled out a 5% down conventional option with no self-sufficiency requirement, many buyers could finally get pre-approved for a 3-4 unit property.

First-time buyers, house hackers, and those who just want to offset high mortgage payments could finally get a chance at homeownership and real estate investing.

 

[Gil Bang 26241]

6 month ago I represented a buyer on a condo purchase, about 3 blocks from the beach.  Last night,  she texted me about a condo on the same street, about 50 yards from the beach.    It will be about 2.4 million worth of buy/sell of she can convince her husband.   

Should know by the end of the weekend. 

[jimmyjazz 47209]

So the sell will cost her $70K or more in realtor fees (perhaps a good bit more)?  After 6 months of ownership?  I guess if she has the money, go with God.  Personally, I'd buy a golf cart to bring the beach "closer".

[UTPhil2006 3930]

2 hours ago, Gil Bang said:

6 month ago I represented a buyer on a condo purchase, about 3 blocks from the beach.  Last night,  she texted me about a condo on the same street, about 50 yards from the beach.    It will be about 2.4 million worth of buy/sell of she can convince her husband.   

Should know by the end of the weekend. 

Shit for that commission you can just have the husband wacked

[Gil Bang 26241]

2 hours ago, jimmyjazz said:

So the sell will cost her $70K or more in realtor fees (perhaps a good bit more)?  After 6 months of ownership?  I guess if she has the money, go with God.  Personally, I'd buy a golf cart to bring the beach "closer".

Nah.   I'm happy to do it at 4% for a repeat customer, particularly on a buy/sell.  So, 36,000 in commission, plus title, escrow, and HOA fees.  I think there's enough appreciation there for her to break even.  

There's real upside to the new unit over the old; the new unit allows short-term rentals.  The old unit is 30 day minimum.  That unit in that location is probably worth $8,000/week in the prime summer season. 

[Neonmoon 38130]

1 hour ago, UTPhil2006 said:

Shit for that commission you can just have the husband wacked

He could at least blow him if she’s tired 

[Catpfish 618]

Are we just skipping the ZJs? Isn't that like the sight breach of etiquette when one goes straight to the triple dog dare? 

[Pato del Muerto 53508]

Having some analysis paralysis. 
 

took job in Seattle area. Family still on house in Georgetown, financed at 2.875. 
have 100-140k of equity there. 
 

don’t like the idea of a 7-8% mortgage, plus the increase in principal for the more expensive area.  Am cash poor due to some unemployment/under employment over the past few years, so can’t just buy up here without selling in Texas. 
 

Would sell and then rent in Seattle until rates drop, but am concerned about prices increasing in the interim negating any savings, and if I had bought now i could refi when rates drop. 
 

Just had the idea of maybe taking a heloc or equity loan to convert maybe 40k of the equity to cash reserves, and then rent the house out but not sure about being a first time landlord from 2k miles away. 
 

anyone have any general thoughts?  Is a 5 year ARM or some other product a way to help with the rate difference?  
 

 

[LCHorn 2751]

34 minutes ago, Pato del Muerto said:

Having some analysis paralysis. 
 

took job in Seattle area. Family still on house in Georgetown, financed at 2.875. 
have 100-140k of equity there. 
 

don’t like the idea of a 7-8% mortgage, plus the increase in principal for the more expensive area.  Am cash poor due to some unemployment/under employment over the past few years, so can’t just buy up here without selling in Texas. 
 

Would sell and then rent in Seattle until rates drop, but am concerned about prices increasing in the interim negating any savings, and if I had bought now i could refi when rates drop. 
 

Just had the idea of maybe taking a heloc or equity loan to convert maybe 40k of the equity to cash reserves, and then rent the house out but not sure about being a first time landlord from 2k miles away. 
 

anyone have any general thoughts?  Is a 5 year ARM or some other product a way to help with the rate difference?  
 

 

At risk of this being a little stream of consciousness, two thoughts:

1.  It sounds like the goal is to have the family join you in Seattle at some point; in the interim they are occupying the house in Georgetown and that's not a situation requiring immediate remedy (in other words, you CAN rent something in Seattle, maybe not ideal, but you can afford two housing expenses at the same time).  This is important because if you cannot afford both housing expenses at the time it makes your decision making more clear.  Can you clarify when they'd ideally join you in Seattle?  If it's 6 months from now (say end of spring semester) does that cause problems?

2. If you have any desire to obtain a HELOC you need to make this your first priority.  You CANNOT get a second lien on an investment property and the bank is going to be scrutinizing your occupancy.  As long as your family resides there (and your spouse is on title) then it shouldn't be hard to prove, but once you've lost the elements we might look at for confirmation (address for filing your taxes, driver's license address, etc.) a bank a won't touch it.  I'm a big fan of having HELOC's for emergencies, anyway.  You don't want second lien cash out (your alternative to a HELOC) because there's no reason to pay interest on a debt you might end up not needing (the HELOC is mainly for the flexibility to buy something. 

 

[We’reTexas 1477]

1 hour ago, Pato del Muerto said:

Having some analysis paralysis. 
 

took job in Seattle area. Family still on house in Georgetown, financed at 2.875. 
have 100-140k of equity there. 
 

don’t like the idea of a 7-8% mortgage, plus the increase in principal for the more expensive area.  Am cash poor due to some unemployment/under employment over the past few years, so can’t just buy up here without selling in Texas. 
 

Would sell and then rent in Seattle until rates drop, but am concerned about prices increasing in the interim negating any savings, and if I had bought now i could refi when rates drop. 
 

Just had the idea of maybe taking a heloc or equity loan to convert maybe 40k of the equity to cash reserves, and then rent the house out but not sure about being a first time landlord from 2k miles away. 
 

anyone have any general thoughts?  Is a 5 year ARM or some other product a way to help with the rate difference?  
 

 

What’s the rent/own ratio in the area? In HCOL areas on the west coast it much, much cheaper to rent. I only say that because inventory is shit right now so unless you’re seeing stuff you really like it may be better to wait. 

[Pato del Muerto 53508]

@LCHorn the idea is that they come up by the end of the year. Initially it was before thanksgiving, but the roof and water damage delayed the timeline.  I have a small apt in Seattle (Bothell really but Seattle for ease of understanding) so there would have to be a change here to get a domicile sufficient for all of us. We are kind of able to afford both but it’s not ideal, and is worse with the costs of repair to the house when we are already cash poor, as mentioned earlier.  
 

 

[Pato del Muerto 53508]

2 minutes ago, We’reTexas said:

What’s the rent/own ratio in the area? In HCOL areas on the west coast it much, much cheaper to rent. I only say that because inventory is shit right now so unless you’re seeing stuff you really like it may be better to wait. 

It’s definitely cheaper to rent here. It’s just not my preference to not be a home owner, and the area has had a steady 6-8% home value growth over many years, aside from the PITA that multiple moves is. 

[Wulaw Horn 19596]

5 minutes ago, Pato del Muerto said:

@LCHorn the idea is that they come up by the end of the year. Initially it was before thanksgiving, but the roof and water damage delayed the timeline.  I have a small apt in Seattle (Bothell really but Seattle for ease of understanding) so there would have to be a change here to get a domicile sufficient for all of us. We are kind of able to afford both but it’s not ideal, and is worse with the costs of repair to the house when we are already cash poor, as mentioned earlier.  
 

 

How long you planning on being in Seattle?  

[Pato del Muerto 53508]

Just now, Wulaw Horn said:

How long you planning on being in Seattle?  

Ideally we stay here. But Georgetown was supposed to be for 5 years, and has ended up being 2. 

[LCHorn 2751]

2 minutes ago, Pato del Muerto said:

@LCHorn the idea is that they come up by the end of the year. Initially it was before thanksgiving, but the roof and water damage delayed the timeline.  I have a small apt in Seattle (Bothell really but Seattle for ease of understanding) so there would have to be a change here to get a domicile sufficient for all of us. We are kind of able to afford both but it’s not ideal, and is worse with the costs of repair to the house when we are already cash poor, as mentioned earlier.  
 

 

The HELOC will be fine for helping with the cash-poor problem (presuming you can get enough-max loan to value for both loans will be 80% of the present value).  
 

The real question is one of timing; I’d check with a realtor first on this, but if your house is just “okay” then it’s probably ideal to wait until demand picks up (we may all be living in fantasy land about this but in the industry we are pinning our hopes on rates dropping back into the fives to see an uptick in buyers).  If your family is joining you in 2023 then see if you can get it leased for six months (minimum) and then plan on getting it listed for sale in May or June if the market is better.  If it’s not then maybe you go more aggressive and try to lock a tenant in for 18 months.

[Wulaw Horn 19596]

3 minutes ago, Pato del Muerto said:

Ideally we stay here. But Georgetown was supposed to be for 5 years, and has ended up being 2. 

If you are staying up there buy now. Refinance later. You will have an easier time buying because less people in the market, you want to be a homeowner. 
done. Don’t stress anymore about it. 

[Wulaw Horn 19596]

3 minutes ago, LCHorn said:

The HELOC will be fine for helping with the cash-poor problem (presuming you can get enough-max loan to value for both loans will be 80% of the present value).  
 

The real question is one of timing; I’d check with a realtor first on this, but if your house is just “okay” then it’s probably ideal to wait until demand picks up (we may all be living in fantasy land about this but in the industry we are pinning our hopes on rates dropping back into the fives to see an uptick in buyers).  If your family is joining you in 2023 then see if you can get it leased for six months (minimum) and then plan on getting it listed for sale in May or June if the market is better.  If it’s not then maybe you go more aggressive and try to lock a tenant in for 18 months.

Doing this with another guy. He was going to sell below value. Me- rent it out for 9 months dummy and you will be fine and qualify for your new house. His last mortgage guy couldn’t unlock that scenario for him so I ended up getting the gig. 

[Pato del Muerto 53508]

Just now, Wulaw Horn said:

If you are staying up there buy now. Refinance later. You will have an easier time buying because less people in the market, you want to be a homeowner. 
done. Don’t stress anymore about it. 

Are there loan products to help with affordability and dti qualification?  Other than spending 12k to buy the rate down?  (And no balloon) ARMs?  Interest only?  I don’t mind deferring some cost at this time. 

[Wulaw Horn 19596]

1 minute ago, Pato del Muerto said:

Are there loan products to help with affordability and dti qualification?  Other than spending 12k to buy the rate down?  (And no balloon) ARMs?  Interest only?  I don’t mind deferring some cost at this time. 

You shouldn’t have dti problems if you are renting your place out for FMV I wouldn’t think. 

[Neonmoon 38130]

Don’t try and time the market. Yes, rates should fall in 2024/2025. What if they don’t? What if you rent for a year and rates are still 7.75%? What if they’re higher? 

Make decisions based on known data. Rates are high. If they don’t fall, you own a house you and are building equity. If they do fall, you refinance. 

Three options

1. Bridge Loan: Basically cash out refinance to pull 140K of equity out of current home, no monthly payment on bridge, balloon payment in 12 months. Use the 140K to put down on Seattle home with non-contingent offer. Qualify without including bridge loan in DTI. Pay off bridge when sell current home. 

2. Get a lease on current home to offset mortgage obligation. Get a HELOC for down payment on Seattle home. 

3. Sell current home. Move to rental until you find a home to buy 

[UT_OB1 2266]

You’ll lose about $100-200 cash flow per month, but just get a manager for your house and let it go on auto. Utphil or wulaw may even know someone in the area. Someone will pay your mortgage AND in 5-10 years you’ll also make quite a bit in equity increase. 

[UTGrad98 2341]

To piggyback off of pato,  there is a greater than 50% chance my family goes to stay next summer  for 1-2 years at my wife's parents estate in mexico city. We would be looking to rent our home here and we want to have a property manager to look after it. What is a fair price for them to charge monthly?  Houses in our area of flower mound around our Sq footage go for about 3k a month. Does anyone know any property management companies who do a good job and won't gouge me. When do I need to get the ball rolling if we want to leave to mexico next july.

Edited October 30, 2023 by UTGrad98
...

[LCHorn 2751]

11 minutes ago, UTGrad98 said:

To piggyback off of pato,  there is a greater than 50% chance my family goes.to stay next summer  for 1-2 years at my wife's parents estate in mexico city. We would be looking to rent and we want to have a property manager to look after it. What is a fair price for them to charge monthly?  Houses in our area of flower mound around our Sq footage go for about 3k a month. Does anyone know any property management companies who do a good job and won't gouge me. When do I need to get the ball rolling if we want to leave to mexico next july.

That sounds lovely, I’m jealous.  

I last shopped for property managers pre-Covid (and this is in Austin); I wouldn’t be surprised if the cost has gone up like everything else, but I was mostly seeing $125-$150 a month.  Also, based on talking to other landlords, pretty much everyone dislikes their property manager, both on the landlord and the tenant side.  
 

I’d probably look on Reddit for Dallas area property management and/or start talking to realtors that might know someone (some realtors pull double duty and that’s probably your best bet if you want to keep the cost low).  

[Gil Bang 26241]

6 hours ago, Wulaw Horn said:

Doing this with another guy. He was going to sell below value. Me- rent it out for 9 months dummy and you will be fine and qualify for your new house. His last mortgage guy couldn’t unlock that scenario for him so I ended up getting the gig. 

 

[Muny_Tex 315]

Pato,

Although the lending information above is sound, I think it's a big mistake to take on additional leverage (in the form of HELOCs or whatever) just to become an out of state landlord. 

As someone who is cash poor with recent employment disruptions and significant family/childcare obligations, you already possess a lot of risk factors that could be drastically worsened by an income disruption and/or rental situation gone awry.

Furthermore, you have to be extremely rational (if not outright pessimistic) when penciling out your cost/benefit analysis on the sell vs. rent calculus.  The recent emergence of 5% risk-free savings rates has completely transformed the upside potential (and downside risk) of landlording; especially in places like CenTex that already got their moonshot appreciation from COVID and are now tapering off (and some cases trending back down quickly).

I don't know the SFH rental market in Georgetown, but my glance at Zillow shows tons of newish-built stuff all around $2k-2.2k per month.  Let's say you have a nicer place that is in the $2,500 range, these are the key questions that must have very compelling, ironclad answers for you to override your risks:

1.) How much are your TX property taxes going to increase in Year 1 (and continue to climb) once you lose your homestead exemption? (Hint: It's likely gonna be massive)

2.) Good property manager is gonna take 50-60% of 1st month's rent, plus 8-10% each month going forward; how does that impact your margins?

3.) Let's say it takes anywhere from 4-8 weeks to find/book payment from your first tenant, how does that extra/needless mortgage payment(s) affect your upside?

4.) Shit happens, and people also tend to break shit when it's not their responsibility.  Let's say typical maintenance/upkeep runs another $500 per year, but potentially multiple thousands if you have a big-ticket issue....how quickly/comfortably can you write that check without dipping into interest-bearing funding sources?  And how will that impact your cash-flow margins?

5.) Nightmare scenario of non-paying tenant:  Are you in position to float all mortgage/expenses indefinitely while eviction gets sorted out?  Do you think the property manager making a $200/month off you will really care that much about timely/swift justice in addition to all the other shit they're dealing with at a given time?

Now based on that framework, you need to calculate the other side of the equation which has immense benefits on a variety of fronts:

1.) Your $100k equity position is already tax free based on your 2+ years of occupancy as a primary residence.  This benefit cannot be overstated.

2.) Said $100k instantly becomes a $400/mo of risk-free cash the moment you park it in a high-yield savings account, or can do even better with CDs or get other tax advantages via T-Bills. 

3.) Said $100k can be utilized as down payment onto new home in WA to offset impact of higher interest rates, lessening the urgency for refinancing.

4.) Said $100k can be used to clear other debt (cars, credit cards, student loans etc), strengthen kids' 529 plans, and maintain a 6-month emergency cash reserve so you don't have to panic if you have another employment problem.

5.) Said $100k enables you to focus your time/effort/headspace on making the most of your new life in WA rather than potentially dreading every time your phone rings because it's got something to do with the damn house in Georgetown that you likely don't care to ever see again.

BOTTOM LINE:  Investment properties are great/useful/strategic if you are an investor (and are bankrolled accordingly).  They can be catastrophically bad for finances, marriages, quality of life if you're a regular dude riding it all on leverage in the midst of the most uncertain housing/lending climate any of us have seen in at least two decades.  In the super long-run renting out (and chasing long-term appreciation) may be advantageous, but I just don't think you have the money to make that gamble.  As such, keep renting in WA until you close on the sale in TX and know exactly what your proceeds are.  Then buy a house that you can afford even if interest rates never go down again (note: make sure you hire Wulaw as your lender).  If you can't find anything that fits the criteria, keep renting/saving until you do.  

As an aside, I owned 3 properties (managed them all myself) when I was living in TX.  Took my own advice when we moved away and am more glad I did every single day.  Debt-free peace of mind is invaluable.  Best wishes to you and your family.

Edited October 31, 2023 by Muny_Tex

[LCHorn 2751]

1 hour ago, Muny_Tex said:

Debt-free peace of mind is invaluable

Certainly no harm in playing the devil’s advocate.  

I think all of that is really beside the point, however.  Question #1 is should he be trying to sell into this market if he doesn’t need to, and I think most home owners in the Austin MSA would prosper most by waiting.

Also, just in regard to the HELOC, it’s not leverage unless he needs it; it exists to provide flexibility and as a Plan B to needing to sell otherwise to provide down payment funds.  Otherwise, the only cost to him is an appraisal and whatever fees the lender might charge him upfront (most likely under $1k).  

[Wulaw Horn 19596]

10 hours ago, Muny_Tex said:

Pato,

Although the lending information above is sound, I think it's a big mistake to take on additional leverage (in the form of HELOCs or whatever) just to become an out of state landlord. 

As someone who is cash poor with recent employment disruptions and significant family/childcare obligations, you already possess a lot of risk factors that could be drastically worsened by an income disruption and/or rental situation gone awry.

Furthermore, you have to be extremely rational (if not outright pessimistic) when penciling out your cost/benefit analysis on the sell vs. rent calculus.  The recent emergence of 5% risk-free savings rates has completely transformed the upside potential (and downside risk) of landlording; especially in places like CenTex that already got their moonshot appreciation from COVID and are now tapering off (and some cases trending back down quickly).

I don't know the SFH rental market in Georgetown, but my glance at Zillow shows tons of newish-built stuff all around $2k-2.2k per month.  Let's say you have a nicer place that is in the $2,500 range, these are the key questions that must have very compelling, ironclad answers for you to override your risks:

1.) How much are your TX property taxes going to increase in Year 1 (and continue to climb) once you lose your homestead exemption? (Hint: It's likely gonna be massive)

2.) Good property manager is gonna take 50-60% of 1st month's rent, plus 8-10% each month going forward; how does that impact your margins?

3.) Let's say it takes anywhere from 4-8 weeks to find/book payment from your first tenant, how does that extra/needless mortgage payment(s) affect your upside?

4.) Shit happens, and people also tend to break shit when it's not their responsibility.  Let's say typical maintenance/upkeep runs another $500 per year, but potentially multiple thousands if you have a big-ticket issue....how quickly/comfortably can you write that check without dipping into interest-bearing funding sources?  And how will that impact your cash-flow margins?

5.) Nightmare scenario of non-paying tenant:  Are you in position to float all mortgage/expenses indefinitely while eviction gets sorted out?  Do you think the property manager making a $200/month off you will really care that much about timely/swift justice in addition to all the other shit they're dealing with at a given time?

Now based on that framework, you need to calculate the other side of the equation which has immense benefits on a variety of fronts:

1.) Your $100k equity position is already tax free based on your 2+ years of occupancy as a primary residence.  This benefit cannot be overstated.

2.) Said $100k instantly becomes a $400/mo of risk-free cash the moment you park it in a high-yield savings account, or can do even better with CDs or get other tax advantages via T-Bills. 

3.) Said $100k can be utilized as down payment onto new home in WA to offset impact of higher interest rates, lessening the urgency for refinancing.

4.) Said $100k can be used to clear other debt (cars, credit cards, student loans etc), strengthen kids' 529 plans, and maintain a 6-month emergency cash reserve so you don't have to panic if you have another employment problem.

5.) Said $100k enables you to focus your time/effort/headspace on making the most of your new life in WA rather than potentially dreading every time your phone rings because it's got something to do with the damn house in Georgetown that you likely don't care to ever see again.

BOTTOM LINE:  Investment properties are great/useful/strategic if you are an investor (and are bankrolled accordingly).  They can be catastrophically bad for finances, marriages, quality of life if you're a regular dude riding it all on leverage in the midst of the most uncertain housing/lending climate any of us have seen in at least two decades.  In the super long-run renting out (and chasing long-term appreciation) may be advantageous, but I just don't think you have the money to make that gamble.  As such, keep renting in WA until you close on the sale in TX and know exactly what your proceeds are.  Then buy a house that you can afford even if interest rates never go down again (note: make sure you hire Wulaw as your lender).  If you can't find anything that fits the criteria, keep renting/saving until you do.  

As an aside, I owned 3 properties (managed them all myself) when I was living in TX.  Took my own advice when we moved away and am more glad I did every single day.  Debt-free peace of mind is invaluable.  Best wishes to you and your family.

All of those are really good points. Talking to a lady this weekend wanting to buy a rental bike across the street from her and ineqs like- yeah- you know this isn’t cash flowing right?  Her- my kid is going to move into it when he gets done with blah blah blah. Me- carry on then.  
I think he wants to sell in June of 24 or April of 25 not November of 23 if he’s looking to maximize. That would be the only reason I’d have him be a renter. You just don’t want to sell during a down time if you don’t have to.  Have to be strategic with your biggest asset. 

[Esque 135]

Wow.  An actual thoughtful, well formed response by @Muny_Tex.  I had to double check to make sure I was on Shaggy and not some other forum.

Question for all of the LO out there.  How does your compensation work?  More specifically, seeing home builders buying down rates and being told LO are contributing to those rate buydowns.  Wouldn't that completely destroy your compensation?  For example, at closing paying 6 points to buy down the rate from 8.00% to 4.99%.  Builder comes up with 4 points and LO comes up with 2 points.

Does that make sense / is possible?  What am I missing here?  Would not think LO have enough room to pay that amount for the business.

Edited October 31, 2023 by Esque

[Wulaw Horn 19596]

43 minutes ago, Esque said:

Wow.  An actual thoughtful, well formed response by @Muny_Tex.  I had to double check to make sure I was on Shaggy and not some other forum.

Question for all of the LO out there.  How does your compensation work?  More specifically, seeing home builders buying down rates and being told LO are contributing to those rate buydowns.  Wouldn't that completely destroy your compensation?  For example, at closing paying 6 points to buy down the rate from 8.00% to 4.99%.  Builder comes up with 4 points and LO comes up with 2 points.

Does that make sense / is possible?  What am I missing here?  Would not think LO have enough room to pay that amount for the business.

I seriously doubt that is coming from the Lo. Most builders Lo’s close what comes in front of them for 25 to 40 bips. 

[UTPhil2006 3930]

Yeah builders comp plans presumably are way different. At least that’s how most of those LE’s present themselves