All Forum Posts by: Dave Friedman

Hi, all. I'm brand-new to this whole thing, and am about to buy a pair of properties that will require a total of $15K work done.

Property A needs a new roof and some other work. Probably to the tune of $10K. This work is basic livability stuff, and won't enable me to increase rent.

Property B needs smaller stuff, maybe a total of $5K. That should enable me to increase the rent by about $100.

I could just pay for this stuff out of pocket. But I've already drawn on my cash reserves for the two down payments, and I'm not eager to draw them down further. And I like the idea 

So I could get a home equity loan. Pen Fed's calculator suggests I could get a $15K loan at 20 years, 5.25%, and pay it off about $100 a month. I'm not eager to go to take on new debt, either, though. And that $100? Basically wipes out the entire cash-flow improvement from Property B (see above).

So...One thing to keep in mind is that money tends to become less valuable over time. For instance, our primary-home mortgage doesn't hurt nearly as much as it did when we bought the place 12 years ago. This is due both to inflation and increased earnings. So, that $100 a month is likely to feel like a pinprick some years from now.

Still...it's 5.25%. If I pay out of reserves (and then "repay" myself, of course), the effective interest rate is a scant 1% (the interest that money would be earning in the bank).

Anyway, I'm torn and would be grateful to learn other people's thoughts.

thanks!!  -dave

@Abhinav Agarwal: We're about to make our first two purchases in the Atlanta and Indianapolis metro areas. We were also quite interested in Memphis and Knoxville, but I lucked into a good broker in ATL, and the Indy property was a turnkey that kind of fell into our laps.

Please keep us posted on how you do.

Hi, @Robin Boyer. CA's too rich for our blood. :-) We're looking farther afield.

Hey, Mike.

I'm in San Jose, too, and also starting to invest in the Atlanta area.

Would love to keep up with you and share info.

I'm currently working with a RE broker whom a work friend recommended to me. I can tell you more about him if you'd like.

Welcome, Abhinav!

I'm a noob, too. I'd been curious, actually, about investing in Nashville, but it seemed a little pricey to me. (Maybe I didn't look hard enough at it.)

Looking forward to hearing about your adventures. :-)

Welcome, Raina!

I live in CA now, but was born in Queens and lived in/around the City 'til I graduated college. Dad is Bronx-born-and-raised, so we're Bomber fans. :-)

My local market is too expensive, too, so we're investing OOS. Looking forward to hearing about your adventures. :-)

dave

Sorry, @Ben Kunzel , I should've mentioned: OOS. One in Atlanta metro area, the other in the Indianapolis metro area.

Hey, @Ben Kunzel--welcome!

I'm also new and in the Bay Area, but at the opposite end of the peninsula (SJ). :-)

I'm completing my first two deals now. They're both SFRs, but I'm also increasingly interested in multi-family properties. I'd love to keep up with how you're doing. (I'm also glad to share whatever learnings I manage to accumulate. :-) )

Thanks, @Mike Dymski . Those are great points, and good things to keep in mind. I should've said, "constantly be socking away money, whether or not a particular month needs it." Thanks, too, for the encouragement. :-) I really am trying to get this as right as I can from the get-go.

Hey, @Virgilio Mateo. Welcome! I'm also new and in the Bay Area (San Jose). Also like you, the crazy market here has me exploring distant opportunities.

Looking forward to following your journey! :-)