All Forum Posts by: Brad Jacobson

One trick I've used in the past is simply stating that your land lording policies will cover anything over XX dollars, say $50 or whatever you think is fair.  Any routine maintenance under that amount should be covered by the tenant. 

I agree that things like bulbs, loose handles, squeaky hinges, whatever, aren't safety concerns and can be the responsibility of the tenant.

What was the pivotal piece of information that you learned from someone or read in a book that kicked off your investing journey?  Is there a specific nugget of info that you can trace your investment career back to?  

$50k saved in your 20s is great!  If you're willing, you should totally house hack.  

I started with about $20k at 24 and bought a 4/2 house in a neighborhood I really liked.  I rented out the three extra bedrooms to my cousin and friends and lived for free for a few years.

Then I turned that property into a rental with about $600/month in cashflow and bought the home I currently live in.  It's a large 5/3 and we rent out the basement and my wife and I raise our little family in the 3/2 upstiars.  We also live for next to nothing thanks to the rent income.  

I bought both homes with just 5% down on conventional loans.

If you're not willing to house hack, you can still buy and owner-occupied property for the 3-5% down, live in it for 12 months, and then turn it into a rental.  That's called the nomad strategy.

Good luck!

One things I've learned over my seven-ish years in real estate is that it's always better to own real estate than not. Just make sure the properties can at least break even.  

I passed up several properties years ago because they didn't meet all the cashflow rules that all the gurus demand.  Looking back, that was a million dollar mistake.  

Remember that you make money in four ways as a buy-and-hold investor: cashflow, loan pay down, taxes, and most of all appreciation.  

If you're getting these properties under market value (and based on that PITI and conservative rent estimate, I think you're in a good spot) and there's enough cashflow for them to sustain themselves, I say do it!

Be aggressive.  Owning real estate is better than not!

Based on current mortgage rates and your family history with the debt-free property, I'd definitely lean towards the HELOC.

The HELOC is nice for a few reasons including the fact that you can access and replace the funds at will and at whatever amount you need. With a refi, you get a set lump sum once and have to go from there. Also, HELOC rates are still low, mortgages are not, so take advantage of that intro rate while it's there!

Good luck,

I think the Covid housing boom really messed with nasty property margins because rates were so low and demand was so high that the nasty properties were selling almost as quickly as the nice properties.  I sold a few of my long term holds last year and almost felt bad that people were willing to pay full market price for more run down homes.  

However, now that properties aren't moving and the good ones are starting to stand out more and more, I can totally see the nasty property profit centers becoming valid once again.  Personally, I'm really looking forward to a more stable market even though I'll miss the life changing appreciation!

Sweet man!  I think the books and gurus often focus far too much on cashflow and it impedes a lot of newer investors from buying anything at all.  I firmly believe that owning real estate is just simply better than not.

One concept I learned a few years ago really blew my mind and instantly converted me into a buy & hold investor. It was the ROI on home appreciation.

If you own a $350,000 rental property and it appreciates a boring 3% per year, that's $10,5000/yr in appreciation.  That's almost $1,000 per month!

Holding on to property, even without big cashflow, is always a win.  I would recommend to always be buying as long as you have at least $10,000 in reserves for each property you own.

Good luck!

Hey Breland,

I would recommend getting quotes from all of them!  I've found that investment property insurance can vary widely, much more than owner-occupied.  

Go get quotes from them all and have an honest insurance agent help you compare coverage rates.

Good luck!

Unless your LLC is well established, it won't qualify for a mortgage. You almost always have to use your personal standing and credit to qualify, purchase, and then you can simply move properties into the appropriate LLC and/or trust.

Qualifying on your own and moving properties into an LLC will have the same lending effect as if you just kept them in your personal name. I believe most lenders count 75% of the rent amount as income so if your mortgage is around that same percent, they'll have little effect on qualifying over and over.

Good luck!