All Forum Posts by: Greg P.

And not to belabor this... But a few more relevant points to consider:

1. Availability: Fannie Mae will allow borrowers who haven’t owned a primary residence within the last three years to qualify. Freddie Mac’s program will be limited to people who’ve never owned a home, those with moderate incomes or buyers in under-served areas.

2. Past Risk: The study concluded that allowing loans with down payments between 3 percent and 5 percent is likely to have a negligible effect on mortgage risk. These loans made up only about 1 percent of Fannie Mae originations when they were previously allowed.

We will see... :)

The GDP number is interesting.  Coincidently I was just reading an article on Bloomberg about ownership rate for older households (80% which is 2x other groups).  It's worth nothing that ownership rates for all other groups peaked in the 80s.  

Not to derail the thread, but here's the bloomberg article.

I think the inaccuracy is the last statement "nothing left at the end." The numbers seem to be referring to the 4% rule which is the "Safe Withdrawal Rate" for retirement assets ($133k / 4% = $3.34M). The safe rate (a) adjust for inflations and (b) has a very high probability of NOT depleting assets through volatility. So, it's a portfolio that is VERY UNLIKELY to have "nothing left at the end" after 30 years. In fact, in 95% (99%) of back tests there will be assets after 30 years and it should last much longer. Of course, caveat emptor! :)

@Rob Thanks for the detailed feedback.  I am going to start building in a buffer for management and, as you suggested, additional cap ex funding. 

I viewed a portfolio of 6 SFRs today, 3 diamonds in the ruff and 2 hell holes and 1 small gem.  The numbers work (really well) but the two hell holes really scare me.  The 'hoods are on the edge of the gentrified area.  The other challenge is that bids are due on Monday and the owner will give preference to bids for the whole portfolio.  What an adventure. :)

Funny... I just posted a similar topic asking for feedback on my goal and plan.  It's similar to this OPs goal but smaller: $5k-$8k in 10-15 years without touching cashflow in the interim years.  In other words, I want to build a portfolio that gives me the option to generate an inflation adjusted $5-$8k in ~10 years.

My strategy is to buy use 15 year mortgages to houses whose rents are (at a minimum) enough to cover the PITI and maintenance (and allowances).

I'm working with an experienced REI agent and we seem to be able to find solid candidates... I expect to make my first offers in the next few weeks. My goal is to close on one this year and at least two in 2015.

I believe! :)

PS - My other thread: http://www.biggerpockets.com/forums/88/topics/153870-rental-portfolio-goal-and-structure-feedback

Thanks for the quick response!  :)

The PITI is confirmed via my mortgage lender for a specific property I'm considering. 20% down using a 15 year fixed rate of 3.75.

I'm allocating 10% for maintenance and 7% vacancy.  The numbers for this particular property are low because the previous owner occupant replaced the roof, HVAC and flooring all within the last 5 years.  Vacancy is low because of the location (visible and central).  I will self manage.

Hi All!

I'm interested in getting your feedback on my objectives and how I plan to achieve them.  I'll be terse.

Goal: Generate inflation adjusted free cashflow of $8k per month in 10 years. Minimum goal is $5k per month in 15 years.

Portfolio Design: Acquire multiple properties that generate rents high enough to amortize loans in 10-15 years and cover all costs.

Example: $100k 3/2 property; PITI $733; Allowances $196 ==> Minimum Rent $903 (15yr amortization) Target Rent $1122 (10yr amortization). I am finding properties that meet these requirements. To meet the optimal target ($8k/10yrs) I would need about 7 of these properties.

I'm looking forward to your feedback and creative ideas based on your experience.  

Thanks!

G

Hi @James Judge ! We live in Durham and agree with you.  Welcome aboard.  Let's stay in touch.  

Hi,

This place is great!  I've enjoyed reading the forums and guides and listening to the podcasts.  My family and I live in Durham, NC where we've resided since the late nineties (including stints in Chapel Hill and Raleigh, maybe one day we'll make it to Cary!).  

We have always been aggressive savers using a prudent but not risk averse investment strategy in the markets. I'm a working professional (ok wage slave) but my wife runs an unrelated business. We've always wanted to add REI to our portfolio (for returns, diversification and entrepreneurial pursuits).

We have specific objectives:

1. Cashflow before taxes high enough to amortize loans in 10-15 years.

2. Build a portfolio that yields inflation adjusted income of ~ $8k per month AFTER mortgages are paid off.

These objectives will help us identify potential properties.  Of course the expectation is that some properties will under perform, others may over perform (just like any other diversified portfolio).

Looking forward to chatting with you!

Thanks!