All Forum Posts by: Don Spafford

@Joshua Seward You have started out on the right path using the podcasts and books. They are an amazing resource. Thank you for your service to our country.

@Joshua Machen Welcome to BP! Sounds like you are off to a great start. My knowledge of REI has infinitely grown over the past 6 months all due to BP and the podcasts and webinars and asking questions on the forums. Keep doing what you're doing and you'll be well on your way to maybe even quitting both jobs within a few years. Good luck!

@Mansoor Fazel East Idaho is still a good bet for me as well. Large and growing student populations between Pocatello (Idaho State U) and Rexburg (BYU-Idaho). My wife is an agent here and could help as well. I recently was looking at a few medium-large complex opportunities that I was trying to partner with an outside investor but then he just "disappeared" and stopped responding. There was an amazing opportunity recently here in downtown Idaho Falls to turn a run down hotel into a 22 unit loft building. I was trying to acquire an experienced person to help with that but in the process it got snatched up by somebody else that did exactly what I was planning. Average cap rates in this area, after expenses, are between the 7-9 range, some can get a bit higher, up to 12 I've seen but they go fast. I recently bought a 4 plex that had below market rents and since increasing rents with no problem, the cap rate is at 9%, COC at 32% because I got it with 10% down. I'd be glad to help in this area.

@Melvin List You seem to be knowledgable on the subject. So if I were to get a second home that is a 4 plex, I can't leave one unit unrented to use as a vacation home while renting the other 3? I had planned to use this strategy to get a lower down payment assuming that as long as one of the units was kept for my personal use, then it would qualify. Is that not the case? So it can only be SFR?

@Jacob Marble @Klay Johnson I am also in Idaho Falls, I have a 4 plex rental near Pocatello. I would like to get more information in particular the terms of your contract but I would be interested in partnering if it makes sense to do so. PM me and we can exchange info and discuss the options.

Thanks for all the fast replies. I plan to stick with my requirements, no wavering on that, I just want to be polite at the same time so I wasn't sure if it is best to just ignore it and wait to see if they research it again and read that or if I should be the one to respond and maybe restate the non-smoking requirement so they can be fully aware that they will not qualify. From @Brandon Turner and Heather's book on Managing Rental Properties I know that smoking is not a protected class so I can discriminate but want to do it in a polite way to not create any bad feelings toward me or my properties.

Based on all your responses, I'll just ignore it and wait to see if they send another message or call and then review the requirements with them.

Thanks again BP community!

I just posted my first "for rent" online and in it set the minimum requirements and even in the property information disclosed that it is no smoking. I got a message from an interested person through trulia and in the thing they fill out online mentioned that they are a smoker. 

Should I just ignore it or do I respond and tell them already that they don't meet the minimum requirements. Or do I still have them fill out an application? I don't want them to pay for the background check knowing I won't rent to them. Or should I just call them and qualify them over the phone and restate the minimum requirements?

Thanks @Deanna McCormick that helped clarify a couple things I needed as well.

Thank you to everybody who has made any contribution to this. From reading all the responses I think it is safe to say that it is a good strategy for someone who wants to reduce their debt or create more equity at a faster pace, but not necessarily the best route to take for an investor who wants to expand their portfolio quickly since those saved funds could be deployed to purchase more properties. It may still be worth exploring to do it at a slower pace on a new purchase. Maybe don't constantly do it every so many months as that amount builds up but once every other year or something to still make a significant impact in getting the loan paid off but not leaving you without funds to invest during that time. Just my thoughts I guess, I see the positive and negative of it but I am still curious to give it a try.

@David Dachtera you say that you have taught this presentation. From your perspective then as somebody who I presume understands it in and out, have you yourself used this strategy on an investment property. Or would you suggest it to a new investor to use on their first or second investment property while they still intend to try to buy more properties? Or would it be better to get those properties established and have dependable cash flow to use toward it before implementing this technique? I still would like to learn more in-depth details about it without having to pay thousands for the training.

@Ned Carey Yes, it still is part of a "guru" type course. I was just presented the method at a local REI group meeting and then the guy took some appointments to have another meeting I went to showing how to save taxes by paying your kids, which I already knew. Then invited those that attended to another meeting saying he is part of a company he works with that can teach more. I looked up some things based on the info given, no company name provided or cost for this information, but found what I believe is the company that shows the quick paydown method and their training is anywhere from $2k-$20k.

And yes anyone can just pay more on their monthly mortgage, but I do understand the reason for doing it in larger chunks because it then puts you farther ahead enough to the point that your monthly payments increase the principal payment and reduce the interest amount so that each monthly payment is therefore also paying more toward the principal rather than at the end of the loan term.

However for me, in thinking about it more, in my case where I want to invest in more properties, the opportunity cost is too great. I would rather use those funds early on to acquire more rentals than just pay down one. Granted, once that one is paid down you have a much larger cash flow which can also be used to save up faster to acquire more properties as well. It comes down to your priorities and goals.