Wind and Rattlesnakes

[William C.]

I'm going to start keeping an account of my adventures here.  I am still new to investing, but a lot has happened in the past year.  I'll do a recap of 2017 first, then try to update every month or two going forward.

Cheers

Bill

[William C.]

February 2017.

My sister has been in the REI world for quite some time, and has often encouraged me to look into it as well. I've been investing in the stock market for 20 years, and had just sold enough stock to pay off my car loan. I've always liked crunching numbers and working on spread sheets, and have always had an eye on the future, and I knew how much money I'd save over 5 years by paying off my car loan early. My sister walked me through some numbers showing my financials after 5 years if instead of paying off my car, I used that money to purchase an investment property.

The thinking is this:

Option A) pay off 2.75% car loan of $35000 five years early. In 2023, five years from now, I would have saved over $2000 in interest charges, and had a car worth about $1000 in equity if I was lucky.

Option B) put $35,000 down on a $121,000 duplex. (monthly PITI = $608). Rent one side for $625 (to cover the PITI). Rent the other side for $800 (which would cover my car payment and let me put about $300/month aside for repairs/capex/vacancy). Fast forward to 2023 and what do I have? Instead of a paid off junker car, I would have a cash flowing duplex worth +/- $120,000 upon which I owed less than $81,000. My tenants would have paid off my car, and paid the mortgage down. My $35,000 down payment is still there, in MY net worth, instead of in the auto-lenders pocket.