All Forum Posts by: Darius Ogloza

If you are interested in a long-term buy and hold situation and the property genuinely promises to throw off $2,000+ cash monthly, you will be fine in a downturn so long as the rents hold up.  In fact, a downturn will provide an opportunity to have the taxes reassessed downward and possibly reduce other costs.  In short, short term asset price fluctuations should not concern long term investors looking for cash flow.  The appraisals do provide you with a good faith basis to ask for a lower purchase price so I would continue to try to negotiate price.   Have you proposed that the seller get its own appraisal (at your cost) from an appraiser they trust?        

Sell!!!!!

To echo Jake: how else are you going to beat a 16% cash on cash return?  

$27,000 in a bank at 1% will yield $270 per year.  In a 4% bond $1,080 per year.  In short, think in terms of alternative uses for your money rather than the absolute value of the cash you will be receiving in order to evaluate an investment.       

Yeah, what does that extra $135 mean to you?  Is it putting bread on the table right now or is it just beer money?  If the latter, by all means double down and strive to increase your total cash flow from the two properties.  

I should have mentioned that at this point we are receiving $26,400 in annual free cash (rent in excess of our PITI payments) + about $14,000 in annual mortgage principal pay down. In essence, we have bought ourselves a modest retirement plan for the 10% we put down to buy our first house. Seriously, go for it.

Your PI should be about $535/month.  Add in your monthly taxes and insurance costs.  Now you will need to add in the interest cost for the equity loan/line (you might be better of getting a line than a loan and using it for the down payment and repair costs).  These are your baseline recurring costs.  They should be substantially less that $1,600/month.  Keeping the house is a no-brainer unless there are other exigent factors.

My wife and I employed this strategy in Marin County California.  We bought in 1997 for $445,000, liver there for 12 years and then rented it out.  We have not paid an expense except for a couple of capital improvements since 2009 and today the property would sell for $1,500,000.     

I do not live in Texas but if the tenant shows up at the hearing with cash in hand to pay the rent due in full, it would take a stone hard judge to issue a warrant of eviction.  You will be wasting your time if she has the money is my best guess.  

Historically, there were 7 financial panics in the U.S. in the late 18th/19th centuries, 2 in the 20th century (1907 and 1929) and thus far 1 in the 21st century (2006/7).  The trend line is good as our financial markets stabilize.  There will always be folks perma-bears who believe the sky is about to fall.  That said, buying on dips is how money can be made.        

There's not enough information here to conduct a meaningful analysis.  How much are you borrowing to purchase the property? (necessary to assess whether holding cost is realistic)? What kind of repairs are contemplated? (necessary to assess whether 90 days is realistic).  

Do you have equity in your condo? You might be able to get a HELOC.