All Forum Posts by: Bryan P.

Ok-now that I understand the 50% rule, what is the 2% rule?

-Bryan

Liberalism is a mental disorder.

JScott-

I guess I am viewing freedom from the perspective of not living paycheck to paycheck, or close to it. Right now we're close to it with only cash flowing 700-800 a month beyond expenses. It's scary and we both have masters degrees. It's nuts, actually.

If I made enough money not to live paycheck to paycheck, I would highly doubt that I'd raise my expenses dramatically. My personality doesn't allow me to buy luxurious things. Trust me on that one.

I just want to not be scared anymore. I'm sick of worrying whether or not an emergency is going to occur and I won't be able to afford it.

I have a 4 month old daughter and it'd be nice for her not to live like I did as a kid, worried about money. It would also be nice for her to have a decent start in life, unlike me who started with nothing.

-Bryan

I'll have to learn operations as I go. I don't know what to expect-I just know that passive income isn't really passive. It's going to take work and effort.

As for a plan-I know that I want freedom. I want to grow my money and stop living paycheck to paycheck. I'm really only cash flowing 800/month after expenses. It's hard to get anywhere in life with that little cash flow coming from my job.

Is that a well enough defined plan? Be honest, please...

What should I look at when making a plan? Should I have time limits and concrete goals?

I meant to say I talk alot with my father-in-law who is a successful business person in our town. He runs a paving business, the leader in the county. He's teaching me about business management and the rest I have included above..

He talks alot about aspects of business management. He says there's more than numbers to managing a business. There's:

1. numbers/finances
2. operations
3. sales

He infers to me that I really do well with the numbers, but I need to consider the operations and sales aspect of the business. The problem is that he has no experience running a "buy/hold" real estate business, so he doesn't necessarily know what to say when it comes to operations and sales.

Can any of you shed some light on these aspects of the business model? I bought my first rental property and the numbers are working out very well. I want to continue in the business but I need to educate myself on these various aspects. If I don't, I will fail. It's a must.

If you have any wisdom about the various aspects of the business and managing them properly, please advise! I know it's a broad subject.

-Bryan

Ok-so the next time I walk through a 25,000 property how do I figure out if I'm at 50%?

Tell me what I should go through in my head the minute I'm in the property looking at it.

Is there a general consensus among this forum to not include the debt service in the 50%? I thought MikeOH included debt service but I might be wrong on that.

Purchase Price: 22,000
Closing Costs: 2,200
Rehab Costs: 3,500
Total Investment: 27,900

Mortgage (P and I) and Prop Taxes Escrowed: 293
HELOC Payment: 180
Total Expenses: 473

Did not include vacancy rate and maintenance costs.

Again, I'm on a 10 year mortgage loan which screwed me up.

I think the reason I'm not at 50% is because I put no money down. I used a HELOC on my primary residence and I also took out the mortgage for 10 years. I made a mistake by doing a 10 year loan and should have went with a 20 year loan. I'm still cash flowing 150 a month or so.

If I didn't have a 10 year loan, I probably would be around 50%.

-bp