All Forum Posts by: Devlin Harding

Well find out what his investment goals are.  I just helped a client from California invest here in the DC market. They wanted to invest here...maybe your California guy wants to invest in MA for whatever reason.  Or you can refer him out to an agent in his location and get a referral fee. Although I only do the referral fee thing when I actually have a working relationship with the other agent. I do not just refer someone out to some random person.

seems a little circumspect how did they find you .. .40k is not much these days for investing.  other than a down payment or working in low value asset territory which I did not think MA had any or much of.. can you buy ghetto dogs in MA for that price are there in Ghettos there.. I would imagine the worst areas of Boston are like SF 500k and up. 

@Devlin Harding

How long have you lived in your primary residence? If you have equity built up as @Shawn Mcenteer has stated you can refinance in to a conventional mortgage. (75% LTV for a conventional rate and term) and then use your FHA mortgage again, and repeat doing this up to 4 mortgaged properties total as this is the limit for FHA. You must reside in an FHA property for a year or sell it.

Have you created any equity in your current property? You may be able to move out and owner occupy a new property as long as you have enough equity to refi out of FHA. Speak with lender but I believe once you have 20 or 25% equity you can owner occupy another property with less then 10% down possibly FHA.

In my calculation, the -30% is for vacancy and maintenance, long term. Most beginners think that cash flow is everything left over after you pay PITI. That just isn't accurate for a long term buy and hold. You will have vacancy, you will have bad tenants, you will replace expensive items. If this is a long term hold then you should use long term numbers.

Also, remember that setting aside some percentage of rent for maintenance is just a rough average.  There isn't anything that directly ties the amount of rent you collect to repair costs.  If you have 2 identical homes, one renting for $500 and the other $1000, replacing the roof is going to cost the same it won't be cheaper for the lower rent home.

If the buy, live in, fix-up, then rent out works for you and you are comfortable with that strategy why not stick with it.  Do what you know and enjoy, getting creative doesn't necessarily make you more money, it likely means you are taking on more risk and playing a game you aren't prepared for.

Everyone's goal in real estate is to create a machine, where in, you stick $1 in the front and it spits $1.20 out the back.  Once you have that machine built, tested, and working consistently, the problem becomes how do I get more dollars to stick into this machine.

But, you are more likely to be successful building that machine, doing what you know and enjoy.  If you master your own strategy, you will be much more successful than the guy that executes many strategies marginally.

Whew! Man I ramble.

@Devlin Harding Your last sentence is exactly my perspective.  If my deal/need for the financing is what it should be, then all of the rest of the dialogue is moot.