All Forum Posts by: Doug French

Sounds like a bad idea. CC companies are brutal and real estate is full of unknowns. Too much risk IMHO.

I think it all comes down to personal preference. One can argue either way. If you loose sleep at night worrying about how you are going to pay the mortgage all cash is the way to go. Personally, I have about 40% equity in all my deals. I do 15 year fixed notes typically. My goal is to eventually have ten free and clear and from the CF they produce by one additional SFH a year. My primary business is very risky so I am trying to balance that with free and clear SFH.

I was always taught leverage magnifies everything. If things are bad leverage makes them worse, but if things are going good (appreciation) leverage is great.

Not a professional and this is just the 1000 mile view. IRS taxes you on the gain on a property when you sale (sales price minus basis equals gain). You basis is your original purchase price plus major improvements minus depreciation. You can not choose to take deperciation against your basis. The IRS will make you take the deduction from your basis whether you take it yearly on your taxes or not. My plan is to defer taxes as long as possible through 1031 exchange and estate planning.

Again, this is the 1000 mile view. Calculating basis, depr, & taxable gain is much more complicated.

Thanks for the feedback! Seems I am on the low end of what most suggest but my properties are brand new and I have very little vacancy...so I feel comfortable with my position. Just wanted to make sure I was not way out of line. Thanks again!

How much cash do you keep on hand per property? I am involved with a risky family business, and consider my side REI as less risky...so I tend to be more conservative with my rentals. have kept a small reserve for rainy days, but wanted to see others thoughts...

Thanks!

Sounds like you are concerned about only being able to purchase one adjacent parcel when you really need two. My suggestion would be to attempt to get both UC at same time. Include a lengthy option period in the first contract you execute so you can back out if you can not get other property UC. Otherwise, just evaluate the other property like you would any other rental/investment. Does it make sense if you can not acquire the 3rd property?

On another note, given I am from TX and it is a different market, but it seems you would be going backwards converting from multi family to SFH. In other words, you would be decreasing value with the re zone.

One last thing, I would set up a meeting with city staff to discuss the re zone before moving forward. Just to check their level of support for re zones in the area.

I would also say 50,000 sounds high but not unheard of.

To address your question: plumbing, sheetrock, interior moldings, exterior masonry, tile or hardwood, flat work, & landscape/irrigation.

Also, keep in mind you will have to disclose foundation repairs when you go to sell. Thus, reducing the marketability of your home.

I stay conservative with the goal being long term principal reduction plus property appreciation...minimal CF.

From a small regional tx bank
20% down
15 year fixed @ just south of 6%
OR
5 year arm at 5.5%

Both 15 year amoritization