Am I speculating too much?

[Robert Mendenhall]

Hey BP,

Looking for a little advice on this property. Its in east Columbus where a lot of investors seem to be focusing. I'm curious if I'm speculating too much or if my lack of experience is showing. My plan is to use my VA loan for a no money down multi family.

That being said I’ve been trying to get seller credits for a 2-1 buydown on my rate. I’m afraid I’m speculating too much though and the numbers might not work in the future. I’m more concerned with wealth than cash flow at the moment with 0% down, but my biggest fear is not having the flexibility to continue my stack or get out if needed.

I’ve ran the numbers as if I was getting current rents at 4.25%, BP suggested market rents at 5.25% in the second year, and the upper range of current market rents at the 6.25% which would kick in year 3. With the hope of higher rents and slightly lower rates for a refinance before the cash flow gets too negative. What do you think?

4.25% : https://www.biggerpockets.com/analysis/rentals/5988a2bd-bb09...

5.25% : https://www.biggerpockets.com/analysis/rentals/c93994fc-0c1a...

6.25% : https://www.biggerpockets.com/analysis/rentals/b806596f-d4ad...

[Zac Mckenzie]

Hi Robert, unfortunately there isn't a right or wrong answer when bringing speculation into the picture. We usually look at speculation as the furthest out variable for our investing, as we prioritize cash flow. The VA loan offers some advantageous benefits, and rates are predicted to continue to fall. With the capital influx entering columbus I am predicting a continuing rise in values across the board for the next 10-20 years regardless of what the rest of the nation is seeing. How much and how fast is above me so I would recommend Honing in on your short and long term goals. Be conservative and make sure that you have an exit or at least a plan for things not going perfect. Make sure you have capital to weather any issues and to take advantage of any great opportunities that move you closer to your goals.