All Forum Posts by: DJ Cummins

@Jon Wimmer i wouldn't let the location dictate where you decide to start investing.  Since you are just graduating, i would probably go where my degree takes me.  Once you get your feet wet you can always try longer distance investing, or move your operations to another location.  

I don't get much appreciation in my investing here in the midwest, but i get descent cash flow, and i am near my family, which is the most important thing.

My recommendation is to write down a list of priories, (family, career, real estate, friends) and use that to help with your landing spot.  In real estate investing, there is always a way if you want it bad enough, so you could make it work anywhere.

Congrats on the degree, and being debt free!

DJ

Sounds like a great deal @Clint S.  congrats and good luck with #2!

Hi @Kristie Hurst.  I agree with what Joe said above with letting your money work for you.  My opinion is that buying the rental property will produce cash flow, and you can use that extra cash flow to start paying down your mortgage if you are really wanting to pay down your mortgage.  Then, you will have a tenant paying off the other 80% of your mortgage for you.  That was similar to the plan i had when i first started, but once i got a little cash flow, that plan changed, and i pay the minimum on my mortgage to keep reinvesting :).  

congrats @Jeff Boardman! My first purchase a few years ago was a four plex as well. It has done pretty well, and we have built in quite a bit of equity. We have switched our focus to SFR for the last couple of purchases, but plan on getting back into mulitfamilies in the future. In my opinion, the hard part is just about to begin for you, but you will learn it and love it! Wish you all the best! This forum is awesome. Do not hesitate to post any questions you have, or any successes that occur. Both help not only yourself, but others too!

DJ

Hi @Metodij Marinceski,

will you be renting while you are traveling for work?  Personally, i like the idea of keeping the condo and letting someone else help pay it down until you are ready to buy for yourself again.  That extra equity you build from the mortgage paydown would be very beneficial in the future. 

DJ

Hi @Mark Gabriel,

I wouldn't get to concerned with the rules of thumb like the 1%.  That is more of a quick-n-dirty eye test to see if further evaluation is worth it.  To me investing is like working a story problem backwards.  I look at what a property can rent for, then decide how much i would expect to make monthly, and then use that to come up with the offer.

If something rents for $1,000 per month, and i want to make $150 in cash flow, my monthly payment would be $850(1k rent - $150 cash flow) -$210( 7% vacancy, maintenance, and cap ex) - $225 (estimated monthly taxes and insurance payment) = $415.00 mortgage payment.

100k purchase price with 20k down payment = 80k mortgage at 4.75% for 30 years = $417 payment monthly.

with that scenario: $150 cash flow x 12 months = 1800 divided by 20k investment = 9% coc.  So i am making what i aimed for in C.F., but the overall return is still a bit lower that i would like, so i would adjust the offer slightly downward.  

@Jon Roland  The post above nailed this for you.  It depends on what you want to get out of this and what your short and long term goals are.  

@Gabriel Benavidez - I don't see a problem with it.  Its not like you were cashing it in to buy a speed boat, or a vacation home.  Your are using your money to invest in you.  That is how i see it.   I changed jobs a couple years ago and decided to cash in a small $7k 401k (i took the penalties) and used that money as part of a down payment on my 2nd rental.  Sure, i lost some in penalties, but i also have a property that cash flows $350 per month and has some descent equity.  Money well spent! 

Good luck to you.

DJ  

Congrats @Zack Clopper!  Looks like a great deal/roi!  Get that cash flow snowballing towards number 2!  good luck to you!

DJ

@Joshua Fowler -great.  good luck to you!  Triple check your numbers and you will do great.  Getting started is the biggest hurdle!