All Forum Posts by: Dominick Johnson

Not necessarily seeking any advice, I have already done a ton of research and signed up for a solo 401k plan, just want to hear about people using retirement funds for REI and what kind of experience they are having with it. It's not talked about much compared to other investing strategies.

Is anyone using a Solo 401k or other retirement vehicle to purchase REI? Let's hear your success stories and advice.

I like the tool kit idea! I also include a pet toy if they have one, small bottle of champagne, and some snacks.

Yes, I did this method on one last year and close on another next week doing the same. My DTI is low and have high income, so that may factor into it. I'm not using HML, all conventional so far with Gershman Mortgage. Market I invest in is SFH in St Louis, MO area, where I live.

Closing costs are something that should be already known if you are this far in the home buying process. It's like knowing that there will be sales tax when you buy groceries. Typically they are around 3% of the purchase price. Your lender, or even realtor should have mentioned this, but they aren't trying to rip you off by including these. 

Sounds a bit too late to do any shopping around for the best rate, but if it's a reputable lender and a large company, they will be competitive with their rates. Smaller lenders like local banks and credit unions will typically have a better interest rate or less closing costs, but in this market it's not going to be much of a savings. Also, if you haven't shopped around for home insurance yet be prepared to be shocked. Home insurance is 2x-3x times what it was last year.

How many hours does it take to change a few lightbulbs and an air filter? Surely not 60 days, that is on the landlord for taking so long. If I were in this situation, I'd offer the tenant back their full security deposit and be done with it. Not worth the headache and chance of having to pay even more plus court fees. Consider it a $1500 lesson learned.

I am doing option #3 right now, and close on a rental next week. I'm using conventional loans, with a HELOC on my primary for the 25% downpayment. It's a slow and steady process, but cashflows a lot in my situation, and I'm able to payoff the HELOC in about 6 months. My units cashflow $600/month minimum, so 7 doors will fund the downpayment of $50k for a new one each year. Once I reach enough SFH equity, I'll 1031 those into an apartment building or some other small commercial property.

Taxes is one of my favorite subjects when it comes to REI. Here are some books I highly recommend reading in this order. Also, a great CPA/Tax Strategist is worth their weight in gold. They can save you more money in taxes than any book ever could.

- Rich Dad Poor Dad (great mindset shift if you are just starting out)

- The Book on Tax Strategies for the Savvy Real Estate Investor

- The Power of Zero

- Tax Free Wealth

1. Is it in the locations I invest in

2. Can it rent for 90% of the purchase price. If not, I don't even consider it. Quickest metric for weeding out ones that won't cashflow enough ($300/month min.)

3. Does the house meet my set parameters (ie. 3 bd/1.5+ bath, basement, flat backyard, less than $15k in renovations)

4. Is my all in CoCr 10%+ (this gives a good idea of how long it will take to break even on cash invested. You would need around a 12% return to break even in 8 years)

After searching the market basically every day this year, direct marketing attempts with no results, and writing multiple offers that were not accepted, and a cash cow 5 property seller financing opportunity that the seller backed out on, I am under contract on an investment! Our search perimeters are pretty tight for SFH in the 8 mile radius we invest in, so that on top of interest rates and lack of inventory has made for an unproductive year. This one checks all the boxes, is in excellent shape, and I already have a long term tenant lined up to move in right after closing. My wife is the realtor, so she also gets 2.7% commission back on our purchase. Here are the numbers:

3 bed, 1.5 bath - 2-story, 1152sf

list price: $180k, purchase price: escalated to $200k (comps at $215k+ in same neighborhood)

downpayment (20%): 40k

closing costs: 6,500

repairs: 3,500

mortgage/insur/tax/hoa: 1,335

Rent: 1,775 + 50 pet fee

Cashflow: 490* (repairs/vacancy/cap ex fully funded for year 1 out of purchase commission, then use profits when needed for year 2+)

CoCr: 11.76%