All Forum Posts by: Andy Grabis

@Kyle McCorkel

Hey Kyle, great post and something that I have been putting a lot of thought into recently. 

I do have one question though, and it might be kind of long so I will try to use easy number. Lets say the following is true (also these numbers are indicative of my current situation):

-Purchase price/Property type: $300k for a 3 unit (3 bedroom/1 bathroom each). 

-Financing: Purchasing w/ FHA financing. Approx $11k down (excluding closing costs). Comes to about $2400 in Mortgage/PMI/Tax/Insurance

-Rent: $1300/unit is middle of the road for this type of property. Gross rent $2600 while living in the property and $3900 after moving out (not accounting for vacancy rate). 

-Again, rough numbers, but as you can see this should work out to cash flow pretty decently. This leads me to my actual question...

If all of the numbers are true AND we assume that the house does not appreciate, then with an $11k initial investment and holding for the entirety of the 30 year mortgage, the property would have cash flowed $180k (based on $500/mo cash flow average) and would hopefully still be worth the $300k, but lets say that I made a bad choice and overtime the market I am in goes down 30% and the house is worth $210k.

All in all, my initial $11k investment would now be worth around $400k after the 30 year life of the mortgage (assuming I save cashflow and sell at $210k). Again, not accounting for other expenses and vacancy, but just using rough numbers. 

Wouldn't this be better than putting $11k into a low cost index fun (assuming 8% interest rate) which would be worth around $111k after the same 30 years? Even though the property in this example did not appreciate, the return on my initial investment seems far superior with the investment in real estate. 

Apologies for the drawn out question, but looking forward to your thoughts here. 

@Jeff White Awesome, thanks so much! Totally missed that aspect of the description, but greatly appreciate your response. 

@Jeff White

I am in a very similar situation to Jonathan regarding my plans to move to Denver and house hack (aside from the fact that I am about a year out and not a few months). Regardless, I have been spending a lot of time trying to get a pulse on the market and what types of properties would work for me once moving out there. 

In doing so, I actually was taking a look at this property that you mentioned (https://www.redfin.com/CO/Denver/1580-Trenton-St-8...) and thought it looked great, but can't see how it would work for a house hack. Granted, I am very new and still learning to analyze properties, but it says in the description that it rented for $1272 and is listed at $375k.

Not sure if you were just looking at houses in the price range that Jonathan mentioned and not too deep into the numbers, but how could that work for a house hack? Thanks! 

@Paul Allen Thank you! That thread is pretty much my same situation, I appreciate you pointing me in the direction. 

@Steve Bracero

Would you recommend keeping the money I am saving for the first deal in an Index vs. actual cash? This is the main issue I am struggling with. Thanks for the response!

Hello BP Community!

My question today is surrounding the accumulation phase of the FIRE journey. I am about ten months into my first job since graduating college in May of 2017. I live in Boston and have a pretty decent salary that allows me to save around 40% of my income while still allowing me to live comfortably and have some fun as well :).

I would assume that most everyone here is at least familiar with Scott Trench's Set for Life, but if not, simply put it is broken into three different phases of achieving financial freedom. My goal is to buy a duplex (3.5% down FHA Loan) within the next two years. Right now, I would characterize myself in the accumulation phase, as I am essentially stock piling cash to be able to put down the down payment and have plenty left over to account for any unforeseen expenses (repairs, vacancy, etc.).

My question is, where should I be keeping this cash? I am torn between something safe (traditional/high interest savings acct.) vs. opening up a Vanguard Index and withdrawing the necessary amount when needed. Am I missing out on serious compound interest effects that will hurt me down the line, or is it smart to make sure I have the necessary cash if house hacking is the ultimate short term goal? Or some combination of both?

Thank you for taking a look at my questions and I look forward to the discussion!

Hello BP Community! 

My question today is surrounding the accumulation phase of the FIRE journey. I am about ten months into my first job since graduating college in May of 2017. I live in Boston and have a pretty decent salary that allows me to save around 40% of my income while still allowing me to live comfortably and have some fun as well :). 

I would assume that most everyone here is at least familiar with Scott Trench's Set for Life, but if not, simply put it is broken into three different phases of achieving financial freedom. My goal is to buy a duplex (3.5% down FHA Loan) within the next two years. Right now, I would characterize myself in the accumulation phase, as I am essentially stock piling cash to be able to put down the down payment and have plenty left over to account for any unforeseen expenses (repairs, vacancy, etc.).

My question is, where should I be keeping this cash? I am torn between something safe (traditional/high interest savings acct.) vs. opening up a Vanguard Index and withdrawing the necessary amount when needed. Am I missing out on serious compound interest effects that will hurt me down the line, or is it smart to make sure I have the necessary cash if house hacking is the ultimate short term goal? Or some combination of both?

Thank you for taking a look at my questions and I look forward to the discussion!