All Forum Posts by: Account Closed

@John Audi Right I'm not assuming appreciation, so it would be a nice added bonus!

@Chris Purcell

Hey I've been battling over the same issues. It comes down to this..you don't want to be over leveraged..so don't! I used google drive sheets to outline picking up properties and how long the pay down takes. I overlapped properties based on the years of accumulation and figured out how many mortgages I would have outstanding at any given time. Now, I figured out what I can withstand.. I even looked at 6 months of pure vacancies..where would that leave me. Once I accounted for all my worst case scenarios (with reserves or other income streams) I felt much better moving forward! I can share it if that interests you.

Also, something to always remember..if you buy right (20% discounted or more) you can withstand a 20% correction even with low money down and get out. Something I like to remind myself of. I think if you are buying right, you can mitigate risk in the event of a correction.

@Maliko Kaona 

I wish I would have started investing at 18, you have 10 years on me! 

If you are planning on going to college, save up 9 more thousand buy a property using an FHA loan and rent out 2 to 3 rooms to your buddies! This will give you a great chance to 1, collect rent and pay down that mortgage and learn what its like to be a land lord.

BUT make sure you buy the right property - do this buy either religiously  listening to the BP podcast or get the book on investing in rental properties from Brandon Turner..not a plug its just awesome information!

Look for that 2% deal!

@Nimit A. 

We're in the same boat! Although I'm in Arizona I'm having difficulty finding 1% deals in my area let alone 2% deals. A couple things! You will most definitely qualify for an FHA loan with a credit score above 700. With the FHA you only have to put 3.5 % down, but consider closing costs etc. Also until you cover 20% equity in the home you will have to pay some type of mortgage insurance..you may know about this but just wanted to mention.

Also, with that FHA you will have to live in for some period of time before turning it into a rental property.. That brings me to my next point. If this is solely a rental property and not meant for a live-in that will turn into a rental, I would advise moving away from .5% deals. It seems that's based on specific area dependent circumstances 1% can cash flow but anything less will cost you money (from what I've learned here on BP).

That being said you may want to look at investing outside CA for buy and holds (I have seen some pretty fantastic flip stories in the the hot areas of CA). 

IF you're set on investing in a .5% prop do note that there are depreciation write off benefits for properties!

https://www.biggerpockets.com/renewsblog/2014/07/3...

So looking at this property you may capture 3 out of the 4 rental property investment perks

1. mortgage pay-down

2.Tax advantaged

3. Appreciation

(Although its never advised to depend on that appreciation while making the decision to invest)

@Adam Petterson Whoops looks like you already hit on the 203k loan..hope my input helps anyways!

Hey @Reaz Alli 

Good question! I'm in the same boat so I've been looking into the FHA loans..

So, from my understanding if you buy a home with an FHA loan you have to live in for a certain amount of time...I want to say around 6 months. From there you can move out, turn it into a rental property and now you have a rental with that 3.5% down (if that's something that interests you)

Another option is the 203k loan. This loan is similar to the FHA (backed by the govt) the difference being you can roll he costs of a renovation into the loan and still put down 3.5%.

Picked this tip up from The book on investing in real estate for no (and low) money down by Brandon Turner himself.

Lastly, I have head of 1% loans in AZ but they require a high credit score (above 700) so as not to produce sub prime loans..still a little worrisome with that kind of leverage in my opinion ..but I digress.

Hope this helps!

@James Watts I'm feeling inspired just reading this post! I will turn on that podcast tomorrow on my commute. The reason my margins are so small in my example is because I'm going to move from apartment living to my first property..take advantage of that FHA / 203k loan... But! As I expand, this is something that's been in the back of my mind for a potential strategy building a portfolio. I'd like to connect if you don't mind.. It may be down the road but I'd love to pick your brain about your experience investing long distance.

Thanks! 

@Jad Boudiab I wish I could find multi family in Phoenix! Duplexes especially have been tough to come by..then again I'm only searching loopnet. If I can network with some brokers I'm sure there are some off market duplexes I could find. 

Honestly, very good point - since I'm factoring in mgmt. I can spread out and let the price/income ratio work to my benefit.

Although a big factor for me starting out is starting as an owner occupied and then converting it after a year or two (take advantage of that fha)

Thanks!

Hey @Chris Purcell I've been using that as a rule of thumb based on what I read in The book on rental Preoperty Investing and from the BP Podcast! Have you found different results based on the performance of your rentals?  

Great! Thank you for sharing your insight and the calculators. Distinguishing between an area with flat appreciation versuses areas with historical appreciation needs to be considered. 

Thanks