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Finance vs. Credit cards? And AW: new duplex
Yay! Closed on a new duplex about two weeks ago. It was $68K and it is a 2 bd/1 ba on one side and 3bd/1 ba on the other side. The repairs will be $12K-$15K, but the house will be worth around $120K when I'm done and will rent for $1800-$1900/month (total).
Long story short, had to buy it with cash instead of finance. The bank I was going to use had their underwriting department in Baton Rouge. The flooding there put it into "we have no idea when we could close because we don't know when we can underwrite", which was going to blow the deal with the seller (a bank, was a foreclosure). So cash and now strapped for it. That part is not yay. At all.
In the end, I'm going to do a cash-out refi once I fix it up and get it rented out. To make a huge dent on my HELOC. This is where most of the original money came from.
But, in the meantime, I need to fix this place up PLUS put a roof on another rental I own.
Here is what I'm looking at:
--$6K-$8K new roof (other rental). Technically, it is isn't leaking and I could probably put it off longer. But, if I put it off longer, I'd need to do some work anyway to put some vents in the current roof. I'd rather just get it done and out of the way. Completely unrelated, but I dislike dealing with this tenant and am not looking forward to having to work with her to coordinate getting estimates and then the work being done, lol.
--$4K-$5K for new windows. For the new duplex. They are in BAD shape. Some of them totally broken out. Most of them can't be saved. So, new it is. Ugh.
--$3200 for 7 A/C/heat window units. One for each bedroom and a slightly larger one for each living room. It's not unusual to use window units in NOLA. Though this house is new enough it would have originally been HVAC. I thought about replacing the HVAC units, but that would be a $10K-$12K cost (total). Plus, HVACs can be maintenance PITAs.
--$5K for the million other little projects/tweaks the new duplex needs.
Here is my question, specifically for the roof and windows. I have enough credit available on my credit cards to pay for them that way. The main one I am thinking of is NOT low interest, but I'd hopefully only have the charges on there for a few months until I either refi'ed or could cash flow it down.
I could also finance those items through whatever companies I use. Most of them offer a 6 months or 1 year same as cash special. I could pay it completely off in that time. BUT, I HATE having my credit pulled. It gets pulled much more often than for most people because of the real estate investing I do and is something I always get "dinged" for. If they'll allow me to only have my credit pulled for my LLC, that would be a no brainer. But if they want to pull my personal credit also, which is usually the way it works, I just dread having yet another hard pull or two. My credit score is 723. It's not so much dinging the score a little, it's the worry of future bank "freak outs" when I have over a dozen pulls in two years.
Other asides, I'll have about $5K cash I can use towards this over the next month, but I'm expecting that to be eaten up primarily by the incidentals category. I'll already be using my HD card for the A/C/heat units. Believe it or not, I thankfully still have credit available on my HELOC, but I'd rather pay even high interest than touch it any further. What I have left is a bit less than the minimum I am comfortable with for if the "s**t completely hits the fan and a major emergency happens".
Suggestions? Thoughts? WWYD?
Re: Finance vs. Credit cards? And AW: new duplex
Based on what you have said, my thoughts:
1. Ask the companies if they will only pull for the LLC. If yes, negotiate zero/low financing with them.
2. If #1 doesn't work and if the HELOC is a lower rate use that and reserve the CC for if an emergency happens....instead of "saving" the HELOC for the hypothetical emergency.
3. Call your CC and see about getting the rate lowered. This is good for just overall but also if you need to use it during this spendy time.
Also, ask the companies who they use for their 0 interest offers. Wells Fargo is a big provider of those home improvement credit offers, so maybe you could go direct through Wells Fargo to get a line of credit arranged?
Thanks @csuave and @julieanne912, for the CC advice. Asking to have a rate lowered is always a great idea. I don't usually carry a balance, so I hadn't thought of it, lol! I already have so many credit cards (too many), but that is a good point that many new ones have a zero percent rate.
For clarification, I would pick the companies I am using first, and only then have them run my credit. If I go that route. For the windows, I already know I am going to use Window World. I think they are a national chain. They have the $189 windows (installed) with lifetime warranties. They replaced all the windows in my own home, though I did half the house one year and the other half the next to spread out the cost. They were about the cheapest I found and I was very happy with the workmanship and quality.
I just looked at Window World's website to see what their current financing special is. You have to talk to your salesperson about that (rolling eyes). But they do indeed use Wells Fargo for their financing.
Did you apply with them directly or through your all's A/C company? On that same note, could you all have used the line available for anything with the home or only for the A/C work?
I'd love to apply once and have a line at 0 interest to both repairs, but I feel like I'm dreaming on that.
I am pretty wowed by the pricing on the a/c window units vs. a new HVAC system. We had our system replaced (new a/c unit and new heat pump) about a year and a half ago for...$4k? Granted, we did it in the off-season and I think we got a better deal because of that.
Thanks! Good to hear on the HVAC unit! I am going to shop around again because, if I can get more in the $3500-$4000 range (per unit), I might go that route. It would be better for resale and some tenants prefer that. Not that I plan to sell anytime soon, but you never know.
I had one of my HVACs go out over the summer (it was on its last legs). That unit is only 800 sq ft., so it didn't need a big system, but my lowest quote was $4500. However, that was in the middle of summer and there were two companies, who advertised low cost units/installation on Craigs List, but didn't even call me back after multiple attempts!
Fortunately for me, I put in two A/C/heat window units to tide those tenants over while I was getting quotes. After a few days, they told my H they didn't mind the window units and didn't care either way if we fixed the HVAC. Awesome! So we didn't. At least for now.
I'm hoping since we are starting to get into cooler weather, I'll find more reasonable offers...and/or the supposedly "value" people will call me back, lol.
I called my Chase Freedom card to see if I could get a lower rate. Supposedly my account is "reviewed" ever so often and that is the only time they might lower a rate. However, it is not something the reps can do.
BUT, he did tell me something very interesting. He told me, although Chase doesn't usually advertise it, there are often offers linked to my account that essentially allow me to do a "balance transfer" for 0% interest for 12 months.
Except that "balance transfer" doesn't even have to be to another credit card, it could literally be into my checking account. There is a 3-5% transfer fee depending on the offer at the time, but it is not treated like a cash advance and would still have that 0% interest for 12 months. Unfortunately, I don't happen to have any of those offers on either of my Chase cards at the moment, but he suggested I call back next month because they do pop up fairly frequently.
I'm also thinking, if Chase does balance transfers like that, maybe my other cards do too. It could be like the old credit card "shell game" of opening a new credit card to move another CC's balance at a 0% interest...except you don't have to open a new card.
Something else you might want to try. We replaced our upstairs A/C unit and also had some additional work done (single zone converted to dual zone, extra lines run for an unfinished room) for about $5800. Quotes from the normal players were about $8000+. I found a guy through someone I worked with who works for one of the local HVAC companies, but does his own stuff on the side, but all the equipment is still registered and has all the warranties intact.