All Forum Posts by: Claudio Golia

@Steve Katuska Everything you point out is valid and my contributions to my retirement accounts between my 401K and Roth would still total just about 10%.  I try to keep my contributions around that number if not more. 

My preference would not be to cut my 401 K contributions at all, but being I'm still at about 10% I can live with it. Especially if the cash I'm diverting will be aiding in building capital for an investment property.

In addition to the above, I am making changes to my spending and have begun managing my finances under a microscope. There are savings to be made there, so any cuts in my 401K may not have to be as much as previously mentioned.

It's not that I'm missing out, I haven't even really begun making legitimate offers on any properties, because I want to have that capital for a down payment.  Alternatively, if I did employ a creative financing technique, I would still need a cash reserve of some sort starting out to handle the unexpected.

Appreciate the feedback. 

Good afternoon.

Just wanted to get some opinions regarding raising additional capital for REI. I'm pretty new to the whole REI adventure, been here on Bigger pockets for 3-4 months and learned a lot.

My biggest barrier, is raising capital to dive in and give this a real shot. I'm trying to boost my savings so I can get in the game quicker, when I came up with the idea of redirecting some of the funds I allocate to my 401K towards REI.

Admittedly, the stock market craziness is what got me thinking, but in addition to that my employer matches up to 5% and I'm putting in 10%. I thought I would keep investing the 5%into my 401K, but redirect the additional 5% to an investment account where I can save for a potential down payment on an investment property.

I understand there are ways to invest with little or no money down, and yes I have read Brandon's book.  However,if I were able to do that, it's still vital to have a reserve fund for repairs, unexpected fixes, etc.

Interested if others have gone this route, or can share what roads they took to raise capital for their investment properties. 

Thank you, 

Claudio

@Noah N.

 Trulia does a nice job of providing rental maps of the areas your interested.

Good afternoon.

I wanted to share my current financial situation, and see if some of my conclusions make sense to those who might have walked in my shoes. 

I currently own a home that I have little equity in, bought in 2008. Hard to say exactly how much, because I haven't had the home appraised, but at the most I might have is 7-10K. I might sell my home next year if everything works out how I’d like, so I’m trying to take that into consideration in my plans.

As far as cash to invest is concerned. I have a little over 20K in what I would deem my “rainy day fund”, so I normally don’t touch that cash all that much. It’s not earning any real interest, so although I’d like to use some of that $ to invest, it’s there in the event I lose my job or some unforeseen catastrophe takes place (knock on wood)!

I invest quite a bit in my 401K and my Roth. I also have a separate brokerage account that just sits there and earns interest. It's a collection of 401K rollovers from past jobs. I thought maybe I might consider using some funds from these accounts. However, there seems like a lot of red tape in doing so, and for a first time investor probably doesn't make sense in the event that REI doesn't work out.

I bring all this up, because when I started on this idea of real estate investing, I knew very little other than the experience of buying my home. I’ve only been on BP about a month and I’ve learned so much and it’s opened my mind to the realities of actually investing.

I don’t necessarily have “extra” cash set aside to invest with, so that’s an issue considering most conventional mortgages require 20-25% down for rental property. Also, even if I could secure a property, then you have to consider cash reserves in the event the unexpected occurs.

I like the buy and hold strategy and would like to pursue it, but I may need to be a bit more patient and creative in my investment pursuit. I’ve read Brandon’s latest book, regarding investing with little or no money down and there’s some great information in there for someone in my position. I'm not looking to "get rich quick", I'm looking to build wealth passively over the long haul.

I’m thinking I could look at some of the following options to at least get started:

• Properties that are being offered with seller financing.
• Partnering with a family member or friend (Need to be careful with this one).
• Private investor who would put up the cash, but I would manage the property (This of course would mean I need to invest close to home vs. at a distance to start).
• Sell my current home and buy a multi that I could live in and rent the other unit (FHA or 203K Loan).
• Wait on investing altogether, maybe get another job to increase my income and hence my rate of savings.

Just trying to figure out how I can do this in the near rather than the long term. I’m 41, and I don’t want to wait 5 or 10 years to get going.

I'm financially responsible and handle all the finances in my home. I invest where I can to the degree in which I can.  Always looking to decrease expenses and turn those liabilities into assets.

Am I way off in my thought process? In your experience, have you tried any of the items I mentioned?  Any suggestions/recommendations you might offer?

Thanks in advance for any feedback.

Just looking for some clarification on these terms. 

Are Cap rate and Cash on Cash relatively synonymous, with the exception that Cash on Cash factors in financing details?

Thanks, 

Claudio

@Karin Crompton Point taken. You make you're money when you buy. 

@Vincent Grant Managing the VR sounds like a nice option,  but here in the Northeast the places where I'd  insider purchasing are 3-4 hours away.  Making this difficult. 

I'd like to have a VR in an area that is attractive year round to provide rental cash flow.  NH,  VT,  ME are locations that could do that,  but I couldn't manage the property myself.  I would most definitely need  some outside help.  As you mentioned, your cash flow is now impacted. 

That said,  I would really need to take a look at properties in those areas,  and do a compete analysis to know for sure. 

In my limited exposure learning about vacation rentals, a common theme I have observed is that they don't cash flow very well, and their are often more expenses than initially realized.

Although, they may not cash flow well it seems that using the property for your own vacation may be of some advantage, and a way to still benefit from owning one.

I'm realize there are a lot of factors that influence the success of a vacation rental, but in general do most feel like the positives in this type of investment outweigh the negatives?

Interested in your thoughts.

Thanks!

@Karen Margrave Happy to see the birth of this forum. 

Thank you!

@Michael Noto

Thank you for the prompt response and feedback.  The realty agent definitely crossed my mind.

Welcome @Tracy Killian!

@Michael Noto has pointed you to a great resource to get started. The Ultimate Beginner Guide (UBG), does an admirable job of getting you familiar with REI at a very high level, which then will spawn more questions.

Ask those questions out here on the BP forums and listen to the BP podcasts. They are both informative and entertaining. 

I myself have been here just under a month and those resources have proved vital in my education thus far.

It also helps to read books on REI and business in general. Here is a list of some of the more popular ones: http://www.biggerpockets.com/forums/12/topics/1701...

Best of luck!

Claudio