All Forum Posts by: Elliot Marszalek

According to the FIRE ratio I'm extremely close to 100% but then I have to consider things such as insurance when I no longer have an employer and it pushes that percentage back quite a bit. I'm wondering if there's any other expenses that you don't really think about to consider before you're finally at FI without the perks of having an employer? This is what I've come up with so far.

Insurance: provided through employer at a much lower cost than it would be on my own.

401k: Currently getting company match of 3% added along with my contributions. Do you still contribute to 401k after FI and if so what % do you continue to contribute? The amount you had been adding or your amount+ what the company match was?

Food cost: My employer has a market inside where we can get our groceries fresh and lower cost than at a normal grocery store. I'll have to either increase my budget for food or learn more ways to eat for less since the market is only for employees and their family.

I don't plan on leaving my job until I'm up to about 150% of the FIRE ratio or higher so I can continue to build my wealth rather than stagnant at 100% but these were just a few things I thought of.

Thanks for all the responses. I think I'll do a combination of all the suggestions.

@Stephen J Davis Currently I'm looking for a multifamily that I can house hack and either live for free or ideally get some cash flow while I'm there. Once I've got everything in check as far as renovations, reducing expenses, and raising rents I'd like to find a single family home to live in flip while renting out the unit in the multifamily I had been living in as well.

@Matthew McNeil 2% is much better than 0% so I'll definitely look into those banks.

@Randy Bloch That's a great point. Previously I've put away enough cash to last 6 months worth of bills just in case I'd ever lose my job or decide to quit and find a new job so I wouldn't have to worry while I was in between jobs. Having another portion of cash in reserve for when a good opportunity arises sounds great.

@Watson Hilaire My plans are to be mostly buy and hold with real estate and stocks but I always look for stocks that pay a dividend so I can get cashflow while they grow long term. I'm currently at at 83% stocks held being dividend producers and the rest were speculative buys when I first got into stocks that I haven't decided to sell off yet. You make a great point about the stock possibly dropping and then taking a loss before I take the money back out for a down payment and I appreciate that input.

I've been saving up cash for a down payment whenever I can find a good deal but it bothers me to see the money just sitting there and not being put to work making more money. Normally I'm investing as much as I can after each paycheck into stocks and with the market being down it looks like a good time to buy in on some reliable stocks that pay dividends. If I invest the cash I have saved up in stocks and then find a deal I'd be breaking one of my main rules which is once money goes into my stock portfolio the money is untouchable and only the income generated from it via dividends is allowed to be taken out. (Normally even that is reinvested through DRIP programs and such). What would you do? Do I invest it and then break my rule to pull it back out when I find a deal or just keep letting it build up as I continue my search for my first house hack/investment rental property?

@Lee Burns Thanks that helps, so even if you don't ever plan on selling the property it would be good to have these exits in place in case your math was off or some other unexpected variable arises and makes the deal go sour. I appreciate the quick response.

I remember Brandon mentioning in one of the podcasts that it's important to have multiple exit strategies for your deals. My question is how important is it to have these exit strategies assuming you're a buy and hold investor looking for rental properties? Newbie assumption makes me think that since you're buying with the plans to keep the property you wouldn't really need an exit strategy at all.

@Frank Patalano

I recently made a post describing my situation which I'm hoping to hear some responses to. I'm always listening to podcasts/audiobooks and trying to expand my knowledge. There's so much with real estate that you don't know that you don't know until you run into it and its these unknowns that are holding me back the most.

Full disclosure I haven't even made my first real estate deal; but I've had similar situations with other negotiations. In my experience the seller is either hoping you'll throw out a number that's way higher than they were expecting and will jump at it or they really have no clue what the value is and will just fish around to get a feel for what they might be able to get for it. If you're genuinely interested in making a deal you'll have to figure out which type of seller they are. Try explaining to them the numbers you've got (ie purchase price-renovation costs) and see if they'll even entertain your price and possibly give you a counter if they feel you're too low. It can be tough throwing out the first number but if they keep avoiding it and you never try that's one way to know the deal will never happen. Hope this helps.

I'm in the process of looking for my first RE deal and found a multifamily that I believe has potential but have some questions. The building is currently a 3 unit but has building plans to renovate and make it into a 4 or 5 unit. First I'm not sure if there's anything from a legality aspect that would prevent me from living in the 4th unit that's currently gutted and needing renovation. I don't mind sleeping on the floor in a sleeping bag right away but if It wouldn't be allowed I'd have to live in one of the 3 finished units while renovating which would cut into the profitability due to the loss of rent income. The overall goal with this property would be to live in it for the minimum required time to qualify for the loan while renovating and as soon as all 4 units are finished and tenants are in line  I would either move out or start renovating the basement into a 5th unit which there are plans for but because it switches it from residential to commercial I can't do initially to my knowledge.

Background info: Currently working a full time job 40-60hrs a week, making ~$500 a month in dividends from stock investments reinvesting it with a DRIP program. This is my first home purchase which is why I'd be living in it; avoiding the 20-25% down payment and if I can live in the unit that needs renovation while I do it I would be just about breaking even on the mortgage and expenses (assuming I can't get it for less than list price).

I'd love to hear any feedback good or bad so I can keep learning. Analyzing deals with variables like this one unit not being renovated yet is tricky.

Property Numbers
Current Income: $23,400
Current Expenses:$10,896
Profit:$12,504
List price:$220,000

Projected After Renovations(renting all 4 units)
Income:$40,800(includes Laundry)
Expenses:$18,160
Profit:$22,640
ARV:$240,000