All Forum Posts by: Bryan P.

Ok-what do you do with those lists? What's the rule? I'm way over 50% when it comes to expense to gross income.

MikeOH and some others talk about this 50% rule. I just bought my first rental property for 22,000. When I add up all of my expenses (tax, insurance, mortgage payment), I come up with 78% expenses compared to gross rents. Your first response might be that I paid too much for the property, but 22,000 was a cheap buy (dont know how I could get a cheaper place) and the rent is 600 which is above average for this area. I don't understand how 50% would work. I would have to be charging 800 rent which seems outrageous.

-Bryan

Part of me says it's a risky move but the numbers are just there in front of me.

Put it this way...if I work for 30 years I will have invested 170,000 into the pension, not including accrued interest. (I don't know how the pension plan sustains me for 20-30 years but that's another subject.)

At age 59.5, the pension will pay me around 2700 a month. Welcome to reality...if I could invest 170,000 into down payments for real estate I will make MORE than 2700 in cash flow. Much more.

The numbers are there. But is there risk I'm not accounting for? Are there issues I'm not addressing?

-Bryan

I am 29 years old and a teacher in a rural PA public school. I've started investing in real estate. I had 34,000 in equity in my house so I took out a HELOC for a 22,000 property. It's working out well. But soon I won't have equity to use to buy a few more properties.

The Ponzi scheme pension plan bothers me. I know we're going to soon hit a pension crisis. You have to be living under a rock not to know it. I'm looking at the numbers, and even with the 10% penalty plus income tax, I'm thinking I can make more by withdrawing my pension and investing in rental properties in the 20,000's.

For example I have 7,500 in my pension currently. If I withdrew and took the 33% hit (taxes plus 10% penalty) I could make that money back in 3 years based upon my current rental property numbers. Cash on cash return would be around 20% per year. After I made the money back from the 10% penalty, those numbers look decent.

Any thoughts would be appreciated, is this good or bad thinking?

-Bryan