All Forum Posts by: Carl Miller

Hi Andy, I totally get the position in which you find yourself. Just for full disclosure, I love Dave Ramsey and his approach toward finances. Having said that, I recognize and respect the legitimate arguments against his hard line on debt. So based on my own experience with student debt, I would take the Ramsey approach and kill that debt as quickly as possible. I still have student loans hanging around 12 years after graduating law school (we can debate the wisdom of law school another time though). I am now hammering down on those loans as fast as I can and every time I make an additional payment, I feel great. For me, consumer debt has lost it's appeal. I want to be free from personal obligations forever. If you pay it off quickly, you may never feel the weight of it. If you let the student loan hang around making minimum payments, I guarantee, when you have some financially skinny months, you're going to wish you had been more aggressive when times were easier. That has been my experience.

I know that Bigger Pockets participants talk a lot about taking on debt for investing. Dave would probably frown on that. As for myself, I would say that carefully managed business debt that I don't personally guarantee is the only kind of debt that I will ever take on in the future.

So, to answer your question directly, I would create a personal budget and build up a 1 month savings for emergencies before doing anything else. Second, I would follow that budget religiously and make the student debt go away in the next year or two. I know that will put your house on hold but that's what I would do. Finally, I would save up for the house because buying a house locks in your housing expenses for the rest of your life. Then I would start putting money aside for investments. I know this is the conservative, play-it-safe approach but I know that if I had behaved this way 12 years ago, I would be a different person.

How do most landlords track tenant security deposits and refunds?  Do people just use a pencil and paper or is there specialized software for this? Or is there a third hidden option?

These comments have provided me some valuable questions to ask and also some insight into the investor's way of thinking.  To be frank, I don't trust myself enough to make real estate investing a full time pursuit at the moment.  My education is in law, tax, and accounting and I expect it to be valuable as I move into investing.  My professional career has been tax compliance so far and I want to get established and confident in taking on legal issues more than I have done so far.  I planned to use this time of a hot market in Denver to get to know the market and make a habit of analyzing properties.  I believe I can find the occasional one-off deal and get money (some of my own and some investor) to make it happen.  I think, especially after these comments, that I don't bring enough to the table to make it full time with investor money.  I'm satisfied with that conclusion.  I'll be working over the next six to nine months to find opportunities and get established in my day job.

I'm going through a career transition at the moment.  I've been working as an accountant for seven years but I'm a licensed attorney.  I've begun my own law firm in the last few months.  As the reader will imagine, I can't show stable income.  My law school loans push my debt to income ratio into unfavorable territory for traditional lenders.  I want to get started finding properties to rent but I wonder if right now is the best time for that.  So here's a hypothetical scenario.

Suppose I find a property that would be a great rental property.  I would plan to talk to private money investors to go in on the property.  However, I envision the following problems:

If I find a private money investor, what is in the deal for me?  I don't have a lot of money to put into the investment, what cut would the investor be willing to part with?

How long does the private investor want to stay in the investment?  If the investor wants to get out in 6 months, I don't think a bank would be willing to do a refi because of my debt to income situation.

Is now the right time to try and find a rental or should I focus on establishing the law firm and paying down debt and get an education so that when I'm ready, my finances are in order?

Wow! Good work.

Wow, great replies.  Thanks all.  It sounds like I'll hold off digging deeper on this sort of thing until I have more experience under my belt.

Hi all,

I live in Denver and my wife and I have found that there is a shortage of affordable rentals for permanent residents in ski towns.  We are considering whether to find some cheaper housing to rehab with dorm room quality construction (i.e. highly durable with no frills) and cater to the people who are focused on smoking pot and skiing.

I'm not concerned about finding renters but I am concerned about whether the renters are going to remember to pay.  Is this a genuinely underserved market or are people staying away for good reason?

Great work, Mike. A previous comment asked about doing business out of state and I had the same question. How did you get comfortable with deals that were nowhere near where you live? The reason I'm asking is that I have an out of state connection who wants to pick up some SFH and rehab them and is asking about my helping to finance some deals.