All Forum Posts by: Bob Avery

I second Stuart. Is LBYM long enough for a full down payment really worse than the stress on your family? 

If this whole thing is your spouse's plan, and you are just executing it, then I think you are fine. If your spouse is reluctantly agreeing to this... I'd probably just wait and save.

I think mine cost 1800 for a 400,000 LOC, but I'm a noob and may have got a bad deal.

@Andrew Slezak I'm working through the Sec8 process for the first time so take this with a grain of salt, but my understanding is they will pay the lesser of the following two prices:

1) the market rent of your property, determined by comps, and

2) the FMR minus any utilities you don't include. In my county they post online the utility allowances they use in their calculations.

I'm a beginner as well, but have been reading this site enough to see the recommended (over and over) approach is to leverage your presumably un-tied-down youth to move every 2 years, each time using 3.5% down payments to buy multifamily buildings / house hacks. 

You'd need to find good deals to have rent pay the mortgage when 96.5% leveraged, but that fits with your wholesaling aspirations.

Put it in a short term treasury fund while you take a few months to read a dozen books from both the biggerpockets.com and bogleheads.org websites. You may lose 1% (in expectation) from being out of the stock and/or RE markets for those few months, but that's less than you are going to lose making a hasty decision.

Thank you Nathan!

Hey folks! 

I'm working on my first rental and trying to understand the best practices for how to use the template leases I can find. For example, below are three sections from the BP landlord forms lease. For (C) (ii), if parking spaces are "0", is "Identified as _____ and containing _____ parking spaces" left blank?

For (D), if I don't have a management agent, do I leave it blank? Put myself and my own address there? Delete it entirely?

For (G), what is the appropriate way to fill in those fields? Check marks / X's seems too ambiguous. Am I misinterpreting the purpose of the ___ fields, and they just mean "modify this in some way", and in the (G) instance the correct modification would be to delete the payment types which aren't accepted?

I understand the safest option is to have a lawyer review the lease, but I figured I'd try to answer my beginner questions here and not waste the lawyers time (and my money) on the "for dummies" explanation.

Thank you!

(C) As used in this Lease, “Premises” means that certain private dwelling residence situated in ________________________________________ County, Minnesota and having an address of ____________________________________________________________________________________. Along with the dwelling unit described herein, the Premises include the following: (i) _____ Storage Locker; (ii) _____ Parking space(s) (Identified as _____ and containing _____ parking spaces (also see Section 9 below); (iii) _____ Garage (Identified as _____ and containing _____ parking spaces and _____ transmitters (also see Section 9 below).

(D) As used in this Lease, Landlord’s “Authorized Management Agent” means ______________________________, address:___________________________,who is also authorized to act on behalf of Owner for the purpose of Service of Process and accepting Notices

...

(G) Acceptable forms of payment of Rent (including Additional Rent) are ___ personal check, ___ cashier’s check, ___ bank check, ___ money order, and ___ the following online/ACH payment methods ____________________. No other forms of payment will be accepted by Landlord.  

I'm a REI newbie, but just from a personal finance point of view $500k income + "Wouldn't mind becoming a millionaire from this as well...." is a red flag. Unless the bulk of that income is very recent you should already be a millionaire, otherwise you are probably spending too much.

Investing creates long term wealth. Savings rate creates short term wealth.

First, obviously leverage is the MVP, but this isn't my first interneting, I know controversial titles get more attention.

Second, I’m a recent convert to Pocketarianism. Bogleheads was the source of most of my formative personal finance education (for ~14 years), and it’s relevant because the SWR discussions there are typically in the 2-4% range.

Third, I was reading Small and Mighty (thanks Nathan Gesner) and found myself doing a "Wait a minute..." when he lays out that for B-ish SFHs he wants at least 6-7% rental income (after expenses), 3% appreciation, relative to the house price. Up until then I was cheerleading the earlier thought experiments about supporting lean/regular/fat income with ~$1000 / month per paid off SFH, thinking "I could bang that out in 5 years". Kind of marveling, in the back of my head, at how well REI supports retirement income, but not really groking it. Seeing 9-10% return On Paper, I couldn't help but connect to the long term RoI of stocks. Yes, I know Vanguard's recent-ish medium term projection for Large Cap Blend is 3-5%, but please; I don't want to lose, in the weeds, this narrative momentum I've worked so hard for. So I say, I say "Wait a minute… How come REI supports income streams so much better than Stock / Bond portfolios if it has the same return as stocks?" Eventually I realize that when I think about living on post-expense rental income, I'm treating the income as the "withdrawal rate", in Boglehead parlance. A withdrawal rate of 6-7% there would be laughed out of the room.

I suppose here is a good time to ask you all, the “more expert than me-s” in the thread: on a scale of “5% return standard deviation bond market” to “15% return standard deviation stock market”, where would you put the unleveraged, post expense rental income of a well managed (aye, there's the rub) SFH portfolio?

And if 6% is on the Safer-Withdrawal Rate side, is that the real secret sauce of unleveraged SFHs?

I didn't realize this post had a revival, thank you all for the specific feedback!

@Nathan Gesner that was a joke, Brandon has ~3 pages in Rental Property Investing on the appropriate way to find a mentor. I thought it would be funny to cite his book and then do an outrageously bad job of asking. Also, you are totally right, I will approach this one rental at a time to both improve my skills and check is this is for me.

@Tim Swierczek, my current plan is the target $10k/month from paid off rentals. I've been playing with amortization calculators and have seen you can pay off 1/3 of the mortgage and reduce 2/3 of the duration. Another $500/month on top and I can bring the payoff down to ~6 years, which matches my retirement horizon. As Nathan suggested, I'll learn a lot more as I go, but what currently resonates with me is minimizing tenants rather than maximizing RoI.

Tim and @Adam Tafel, I will be reaching out to you.

Thanks again!