All Forum Posts by: Dr. Jordan E Smith

@Anthony R. Those sound like pretty great returns. Do you plan to hold on to your properties long-term? Of course then once your mortgages were paid off those will returns will increase significantly, I assume. Thanks for the response and congrats in your success! 

@Steve Miller I see what you're saying about the cap rate vs cash flow. That's part of what I was curious about.. the best way to determine a "good deal"

This topic is currently what I'm focusing on, so I think the reference book you gave me will be very helpful! I hope it's on audiobook. If you have any other books you recommend, I would really appreciate it! 

Thanks so much for your response! 

I have been reading a lot of books on rental property investments and have heard varying opinions on what qualifies as a "good" rental property investment based on monthly cash flow. 

I've read anywhere from $80 to $600 net monthly cash flow. I am in the north Georgia region and realize there are varying expenses based on region. 

For any experienced rental property owners: Obviously more is better, but do you have a minimum monthly cash flow amount that you require in order to purchase a property?  If so, what is this figure for you? 

Thanks so much for any feedback. 

@Josh Engelhart

Thanks so much! You're reply makes a ton of sense. Thank you for the additional information on FHA loans. I agree with you on eliminating credit card debt first.

I like what you discussed about weighing out the interest rates on student loans vs the profit from rental properties. I did consider this when initially deciding to begin our real estate investment plan and if we can qualify in 3 years and keep paying the loans down at the same time, it will be profitable still considering our consolidated interest rate even including anticipated maintenance and repairs and such. 

Another issue we have had to consider is that my husband's loans qualify for forgiveness sooner than mine and we may have to pay our tax bracket in taxes on the remaining balance if our assets outweigh our debt at the time of forgiveness. Otherwise if the debt is greater, the entire amount is forgiven. But by then I should hope we are not still in a greater debt-asset ratio. 

I'm happy for you to hear you paid your loans off that must feel nice. We are potentially partnering with a non-profit group as well which could cut the forgiveness time to 10 years rather than 20 as well. 

I just get disheartened at waiting 10-20 years to begin acquiring assets! 

Thank you so much for the reply!

@Jon Holdman 

Thank you for your reply. I appreciate you breaking down the tax percentages for me and clarifying the total percentage. The new tax laws seem like they will benefit us at this point as well. Still ridiculous, but I have learned a ton about how to keep up with deductions and take advantage of tax benefits this past year. First year filing as a 1099 and not W2. 

Thank you so much for the information on the DTI. I honestly had not heard of it until reading your message. I am scheduling a meeting with my local bank to discuss our financial statement, so this gives me a head start in discussing how they process loan applications.

I just used the information you provided to calculate our current DTI. At this time, we are right at 48% including an approximate 3 bed 2.5 bath avg mortgage in the area. However, we are waiting until we have paid down $59,000 in bad debt (credit cards, car loans, my husband's IRS debt, etc.) before purchasing our first rental property (in less than 3 years). This will take our DTI down to 24%, again including the proposed mortgage and also not accounting for any increase in income, so it may be even lower in 3 years.

We would probably be able to qualify after paying down only half of the miscellaneous bad debt we discussed, but I was planning to save for a downpayment on the rental property as well. 

Do you have any information on how lenders calculate downpayment requirements?

I'm also researching tax law regarding passive income through real estate (i.e. what percentage must be paid on the income after the 2 year experience as landlord that you mentioned). I'm hoping Brandon Turner discusses this in his book on rental properties. I'm only on chapter 4. 

Again, thank you very much for taking the time to read my lengthy message and reply to it. You seem to be very knowledgeable on the topic. 

I'm new to the forum, just heard about it in Brandon Turner's book on rental properties and signed up today. 

I have been learning about real estate primarily through audiobooks and several real estate agents and investors I know locally. I am currently getting my real estate license and am very new to the field. 

I am interested in slowly accumulating rental properties over the next 10 years for eventual passive income (the government takes >50% of a high earned income, which of course I learned about AFTER becoming a doc. Screw that.). So I am very interested in additional passive income now. The one thing that keeps concerning me is my potential to qualify for a loan even once I've saved up a 20% downpayment. 

I'm concerned because my husband and I are both recently graduated doctors and still have a very large combined student loan debt (approx 575,000 combined - I know, it's insanity) plus car loans (about 32,000 combined) and credit card debt (about 11,000). Our credit scores are 650 and 690, and we are rapidly paying down our debt using Kiyosaki's strategy, but it is obviously going to take us a while. 

However, both of our incomes are increasing and our cost of living has significantly decreased recently due to other fortunate circumstances. We do not currently own the house we are in, but do not have to pay rent or mortgage, thankfully. We are saving 10% of our combined income (currently 80k after wretched taxes) for a downpayment on a rental property (either a single family home or a duplex) and should have a substantial amount saved in 3 years (>24,000) as well as all other debt except student loans paid off. Obviously our income will increase but I'm being conservative. We estimate our credit scores to both be >750 at this point if not higher.

I'm curious if anyone else has qualified for a house loan despite having massive student loan debt and what credit score was required, if so. 

I've also just basically put our whole financial statement out there because I'm open to suggestions on the best way to get started. Should we try to pay down the student loan debt before investing in real estate? Has anyone began investing while still in debt? Does our plan sound feasible? What suggestions do you have on our situation? 

I'm a little nervous having put all our humbling financial info out there but I'm excited to be a part of this forum and learn as much as possible! I'm 27 by the way and hoping to turn our situation around by age 36 :) 

Thanks for any help!

-Dr. Jordan Smith