All Forum Posts by: David Garrison

Renter's insurance is super cheap. I'm in banking now but I worked for an insurance company just out of college. I've seen basic policies as low as $9/mo. If they have more expensive possessions or need riders for specific items (one guy had a few high end musical instruments) it can end up higher.

Speaking as someone that had his place broken into by 'friends' while young and renting, I wish I'd have had a renter's policy. I had pretty much everything they could carry and seemed valuable taken. $10/mo and I would have had all that stuff replaced!

I haven't started yet but I will definitely require my renters to have a renter's insurance policy.

Hi Carmen,

I'll share what I'm doing while I'm getting ready to buy the first property.

I've created a business plan and have set out goals that I believe are realistic based on my income. I have it saved on my computer and I revisit it every few months. The plan started with me working toward paying off debt, then it was based all around savings, and now I'm getting ready to buy the first property (hopefully in the next few months).

I've outlined what my goals are for each year and I've based this solely on my income. My fiance's income will be an added bonus that will accelerate the plan but she's just getting back to work after taking care of our daughter the passed 6 years. I've used rental figures that I've purposely placed below what I expect to actually rent units for to add another layer of conservatism to my plan. I know the rent will be higher but I'm not banking my entire plan on a perfect scenario.

My goals are based on a 10 year plan (starting from the first purchase) as a reasonable time frame and purchasing 1 property a year at the beginning. I've taken an ultra conservative approach to start and the plan accelerates around year 5. I purposefully did this because I assume I will learn some hard lessons through the first part of the plan.

I constantly reference my plan and adjust things accordingly based on future circumstances. I think getting your plan written out is an incredibly important factor. As I continue reading and learning more, I make adjustments.

The adage "Failing to plan is planning to fail" is one that I keep in mind regarding this (or any) process. For me, having the written plan is a concrete template I can follow. Also, putting together my plan has come almost entirely from reading biggerpockets and other real estate books as well as these forums. Devour the information and see how it will fit into your written plan and make adjustments accordingly.

I help people with this question all the time as I work for a bank. Get the 30. Pay it like a 15 if you feel like it. You never know what expenses you'll have come up.

Let's say you don't end up with any surprises. You've already worked the numbers, you're cash flow positive, your emergency fund is on lock, and you're looking for the next deal. You can use the extra cash to find new investments.

 If you do have surprises (repairs, etc) and you need to pull back on paying your 30 yr like it's a 15 yr, you'll still be ok.

My whole thing is this. If you've bought well, you aren't paying that interest anyway. Your renter is. That's the whole point. Finding the next deal and another cash flow positive rental is going to do more for you long term. That 30 year is going to leave you with more cash to buy the next one.

Edit: If you'd rather do the 15 and get a HELOC later. Fine by me. If you're in my company's market, I'd be happy to get that HELOC application started!

Hi BP - Apparently, I opened a floodgate by starting with my first post. I'm determined to have every angle covered. After all, I have nothing better to do while I save my $$$ for the first purchase. I apologize in advance for the formatting on this. I was hoping it would automatically format from word. Maybe my version is outdated or maybe that just doesn't work here. While working on my business plan, I'm trying to create something basic that will allow me to have a template to follow. This is based on the books I've read and information BP has taught me. You will definitely see similarities so please don't take this plan as my own creation. I've just modified it to fit what I'm thinking. The $750 rent figure is well below what a 1BR unit would rent for in this area. I just want to be extra conservative on the numbers. I feel like $1000/mo in this area may even be low. I'm aware that no strategy can be perfect. Real life will effect the timeline. I'm also only considering my own income as a means to save to make the first purchase. I don't plan to quit working until my properties provide at least 2-3x my current income. This also doesn't include my future-wife's income or financial assistance family members have suggested they'll offer. Also, any potential pay increases, windfalls, inheritances, etc are not included. Essentially I'm trying to save to buy the first place and then use the investment to seed the other purchases. If necessary, I would potentially use any other income sources to speed up, stay on target or address pain points. I'm suggesting a 10 year time frame as a ball park because I will use any additional income to speed this process along. Overall though, I view this process as a 10-20 year plan which allows me to retire and just run my properties. This plan assumes that I stop at the 10 year mark and immediately begin paying everything down as quickly as possible to then live off the rental income and help my future wife's dream of owning her own restaurant come true. Also, I may be having so much fun with my dreams being a reality that I'll just keep buying. Is this plan realistic or too ambitious? Why or why not?  What should I be researching and concerning myself with to make this plan actually happen? Feel free to school me. I won't be offended. Learning where I'm wrong will ensure I find success when I get started.

• 1.Purchasing Plan + Time Frame (10 year plan)
• a.Year One
• i.Purchase Quadplex
• 1.Owner-Occupied
• ii.Roughly 2019
• 1.Greatly depends on Savings Plan success
• b.Year Two - Five
• i.Purchase Quadplex
• 1.Refinance Year One Purchase
• a.Cash Out to buy Year Two Quadplex
• ii.Rinse, Repeat Strategy of Refinancing
• 1.By Year Five own 5 Quadplexes (20 units)
• c.Year Six - Ten
• i.Purchase 2 Quadplexes per Year
• 1.Refinance Strategy
• 2.Earned Income from Working
• a.Only if necessary to stay on pace
• ii.Results in 15 Quadplexes
• 1.60 units
• a.Rent Each at $750
• i.Gross - 45,000/month
• ii.Gross - 540,000/year

Even if I pare down to 1 property a year through Years 6-10 that would result in 40 units

40x750x12 = 360,000/yr Gross Income.

Hello BP!

I've been doing a ton of reading and started forming a business plan. After working through the first few steps of my business plan, I started to realize that I'm at stage 1. I NEED TO SAVE! I stopped the business plan and will come back to it later but right now my focus is getting the cash needed for an FHA loan. My plan is to put as little down as possible on a quadplex while also getting the allowance for remodeling efforts. I'm hoping some smart remodeling will allow me to rent for a higher figure and increase my cash flow. I will be house hacking, then refi-ing asap to purchase the next place. So there's my plan... Here's my situation:

I've been on a journey to make myself debt free and I'm a paycheck away from doing so. I probably should have been putting away money while paying down my debt but I've been ultra focused on simply paying off anything with an interest rate.

With my debt handled, now I'm going to start saving money. I have my personal emergency fund squared away so I'm good there. The only problem is that I'm essentially starting from zero. I'm changing companies to one that will be paying me more with a higher commission/incentive potential. Overall this change will almost double the amount I can save. I also won't be driving as far for work so I'll have lower expenses and more time to read, research and study real estate. I'm using Mint to set budgets and monitor all my spending. My raise and any commissions will all be going into whatever savings vehicle I choose. My question is... With interest rates incredibly low (I think the best online savings I've seen is about 1.25%), what opportunities may I be missing?

If a 1.25% savings account is what I have to work with then so be it but I'd kick myself if I learned of something better later on.

Thanks in advance!

EDIT: My ideal timetable is 1 - 2 years. Saving approximately $1700/month. @ 1.25% would $22 @1 year 43k @2 years.

I'm in a similar situation as you Sam. I'm just starting to save to buy a quadplex, possibly a triplex if the numbers work out. I'm actually right about to switch companies with a sizable increase in my pay so I'm hopefully only 1 to 1 1/2 years from my first purchase. I'll be house hacking and I'll most definitely be using an FHA loan. Hopefully, I'll be using the ability to get extra funds added to the purchase price for renovations so I can force some appreciation right away. My thought is that a recent remodel to the rented units will allow me to ask for a higher amount and 3 units to rent and top or close to top dollar should make the cash flow easier. My income will suffice if I lose anything to a vacancy here or there so that part doesn't worry me.

I really think it's all about finding the right deal that will properly cash flow. Next, making sure I lease to good tenants. If I find the right property, I shouldn't be paying PMI for very long. From what I've learned here, my goal is to put as much of that income as I can toward the loan so I can refinance asap, pull the cash out, and buy the next place.

Which ever unit garners the least amount of rent is the one I'll live in so I maximize the rental income. After that it's rinse and repeat until I get to whatever point I decide is good enough for me.