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All Forum Posts by: Charles Marshall

Charles Marshall has started 5 posts and replied 75 times.

Post: Hello from the Boston area

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Welcome @Alicia R.

Post: Newbie in Lowell, Ma looking to network

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Post: New to real estate, Albany, Saratoga, NY

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Welcome @Bennett V.

Post: Puerto Rico (New Potential Investor)

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

@Erica S. - Welcome to BP.

Post: Looking to get started in MA

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Welcome @Adam Hedio!

I ran a few scenarios to see what drives a non-cash flow property at fully leveraged to perform better than a positive cash flow property that required a down payment.  These scenarios assume that you have cash available for a 20% down payment.

Assumptions:  

$260,000 purchase price

5% / 30 year fixed rate mortgage

$2000 rent

Expenses are equal to the net cash available from rent less mortgage payment (0% down).  Expenses are fully inclusive of vacancy, operating expenses, repairs and maintenance, capital improvements.

What I found is that the investment return and the desired exit year are the two factors that drive the decision of making a down payment or not.

As an example, if your exit year is year 30 of the mortgage, a 2.198% return on investments will yield the same net worth if you put 0%, 20% or 100% down, but ONLY at year 30.  If you're exit year is before year 30, it's better to put down as much as possible.

If the investment return on spare cash is more than 2.198% (let's say 4%), your net worth is greater at any point before 9 years with 20% down.  After 9 years, your net worth is greater if you put no money down.

Any investment return less than 2.198%, you'll have the greatest net worth at any point by putting the most down you can.

Remember that this is dependent upon the other assumptions.  What I'm trying to show that if you take out the mantra that "positive cash flow is required" and you're measuring your success on your net worth, it's possible to have no cash flow yet end up better than if you put money down just to get your positive cash flow.  But keep in mind that it depends on your investment return and your desired exit point.

Just food for thought.  If anyone would like the spreadsheet I used to determine this, please ask and I'd be glad to share.

Post: New member from Boston MA

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

@George White.  Welcome!

Post: Newbie Intro

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

@Lisa Bryant - Welcome!

Post: New member from Massachusetts

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Welcome @Felix D Menendez Jr. Show up to a REIA club meeting or the BlackDiamond meeting and start to network. Nothing like face to face networking.

Post: Massachusetts

Charles MarshallPosted
  • Hingham, MA
  • Posts 78
  • Votes 21

Welcome @Maxwell Lewis.  Since you're interested in coursework, don't forget to look at the free courses that MIT offers on real estate.  Hard to beat free.