Id like to start off by saying I found this site last week and am absolutely amazed at some of the stories here. To say that I'm inspired would be the understatement of my life.
So here is my situation
Age:24 years old
Job: Alaska Air National Guard
Pay: 48k take home
"Assets"
20k cash
4k Roth IRA
4plex Loan amount 530k
Last year under the advisement of some coworkers I purchased a 4plex, Ive run into nothing but headaches with this place starting in January and it has definitely made me question my decision. Best case scenario it generates 1000/monthly with no vacancies, I've had 1 empty unit since Jan 1, 2016 and 2 empty units since Feb 1, 2016. Im strongly considering selling as soon as I have enough equity which all my DIY remodeling should help with just to get away from the stress. So far it has been absolutely terrible for my mental health and I don't think Land lording is for me.
Tentatively, I have a plan to finish remodeling 3 of the units costing no less than 10k and attempting to sell the building for 600k and get rid of my headache and make 20-30k depending on final sales price. Thoughts?
Car loan(be prepared to shudder) 2015 Toyota Tundra 1794 a.k.a. Im a big bad landlord and can afford this, edition
Loan amount: 49,000 @ 1.9% vehicle Trade-in value 40,000. Monthly Payment 795. Insurance 114. Fuel Cost $200-300 monthly
Obviously I need to get out from under this vehicle.
Here are some options Ive considered:
Pay off inequity and refinance
Pay off inequity and trade in straight across for a wallet friendly Prius
Keep truck as it has occasional utility use for transporting tools etc. and purchase commuter/get-around-town car with cash or at a minimum finance with monthly payment paid for by gas savings.
My goal is to within a year be at a 64% savings rate with a retirement goal of 2027, I feel like I've dug myself into a huge hole and not sure of how to get out and get started on the right path.
I didn't know airlines had their own national guard!
Regarding the fourplex: vacancies like that are unacceptable in landlording. You either need to fill them right away, or get a property manager to do it for you, if you are unable to for some reason. Vacancies exist most commonly because the asking rent is too high. It may also happen if the property is not up to snuff when people see it, or if it's just in too remote of an area there aren't enough tenants. There are other reasons, but those seem like the main ones that would affect you.
Why do you think 3/4ths of it is empty? What is going wrong with the property?
Regarding selling, why do you think you'll be able to make such a profit on a place you just bought (presumably at market price--yes, lowered because needing repairs, but once you pay those repairs, it should bring it back in line with market price)? If/when you have a hard time selling, keep in mind that no one owes you a profit, and you may have to drop your price to break even or worse.
The people buying a place like that will likely be landlords (you might get lucky and get an owner occupant wanting to live in one unit and rent the rest), meaning they'll often want it occupied, or wonder why it isn't. They'll also drive a harder bargain.
If you can't make it work as a rental (keep it rented and cash flowing well), absolutely sell. Even at a loss. With a situation like that, it's like finding yourself in a hole... when you do, stop digging.
Ditto the car. At some point you just have to cut your losses. If you have the cash on hand to pay off the negative equity (9k?) and buy something used (10k?), do that. It looks like you have 20k cash on hand, but that would bring you really low, considering you have a rental and should be holding healthy reserves. So I'd wait and build up a bit more cash (and paying down that car loan a bit more). But that monthly payment sucks.
All you can do, whatever situation you're in, is move forward. Doesn't matter how you got here. Yours isn't terrible (I'm sure, browsing the sites, you've seen some rough stuff with 80k credit card debt, hundreds of thousands of student loans, etc.). You have some clear moves to make, and you've found the site, and hopefully the mindset, at a young age. You're primed to do well, if you have the discipline to start ignoring the external influences (the coworkers telling you to buy a rental, when you don't know what you're doing with real estate, the impulses/influences that got you purchasing the car for your "image", etc.), you'll do great.
Good luck!
Welcome to the forums. :)
