All Forum Posts by: Federico Morales

Wow! Thanks, guys, I really appreciate all this wisdom. I was already thinking to hold on to the property and pull out equity. I figured I need a one year track record on paying the loan as a rental to accomplish this. Two very valuable prices of info you all have given me: (1) it's actually a terrible investment cashflow wise. I hadn't thought of it this way, because I always thought of my capital cost as $100k for the renovation.but you guys have made me realize the REAL cost is roughly 600k equity that is stuck there, due to opportunity cost. (2) what appeared to me to be a good loan term is actually not that good. I will review this and get in contact with some of you about how I might improve that (3) $100 per month csshflow on a property is acceptable cash flow. Since I was unaware of markets outside California, I didn't think this would make sense. But now that I see some of you guys are doing this, I will consider this type of setup. Many more important tips I got here, but I need to review more formally and get back to you all! I've been absolutely slammed at work (in international financial consulting no less. Shows you how short-sighted we can be about our own finances!) Really appreciate your advice and the power of bigger pockets! Thanks, guys!

Thanks for all advice guys, I'll have to think on it and start looking at other opportunities :)

cool thanks for advice @Nick C. By cheaper i mean that it would be easier for me to get into the investment. i am living abroad now on a lower salary, but will be making a position change soon and start saving up a fund for a return to USA and to start investing. plus, by that time, I will have a track record on the san jose property that i guess i can use to get into other properties. 

Thanks!

@Jon Holdman, good point about reduction in limit. 

Hey @Nick C., I am wondering if florida is a place you are active investing in? My dad has some family out there and bought MANY properties. unfortunately, he did this just shortly before the 2007 downturn and ended up losing them all. He just didn't understand the market, went on the unprofessional advice of our family members, and ended up with a bunch of rentals far from job centers and unable to use internet at the time to manage it. therefore, vacant. 

However, I imagine there are attractive markets in FL and much cheaper than CA. 

@James Ma, thanks for letting me know the situation near you. 

I understand what you mean by cashflow and appreciation leading to profits. 

However, I don't get "equity paydown of a mortgage"... can you explain that?

Thanks for advice guys.

I am totally safe on this, as the cash flow is far more than enough to cover the costs. My folks gave me the property (I took over the mortgage). 

The mortgage was about 320k, then i added about 180k in student loans (80) and renovations (100). The 320k is in a fixed 30yr and the 180k is in a HELOC 1% + prime.

So the rent is at 3800 and the cost is roughly 2700 a month. 350/mth prop management, but i think i will start doing that myself soon (remotely... i work in france just now).

because appreciation still seems strong in the San Jose area, not to mention the added boost of Google's recent buy, i definitely want to hold on to it. However, the idea is to refi and pull out some equity to acquire other properties in cheaper markets (so that i can diversify and expand the cash flow). 

just reading online it seems like it should be a matter of months, not years. but i am not educated in the topic... perhaps it is very complicated!

yes, i guess this is the situation. 

So it seems that the tax guy has reached out to IRS to get this corrected and then i supposed my parents will have to pay some back taxes or penalties or something. however, the process has gone on so long now, which makes me think the guy is dragging his feet. 

so im wondering if it sounds normal that it should take IRS so long to make a response. 

Hello guys,

I am curious if anyone else has had this experience: I have a property (SFR, 3bd/2bth, 1300sf, recently remodeled) in the Sunol neighborhood of San Jose which rents for about $3,800 per month.

Now, if I take a reasonable valuation of about $1.1m (the slightly smaller, less nicely renovated house literally two houses over sold for about $1m a year or two ago) and throw that into a mortgage calculator with 20% down and comparable taxes/insurance, I get about $4,500/mth. How paying a mortgage be more expensive than the rental rate?

Does that sound normal? Is it an indication that the rent is too low? Or else is it just the crazy SF Bay Area market with overvalued properties that naturally sell higher than the rental market can bare? Is it an indication I should sell that property and pick up other properties in cheaper markets?

I am hesitant to even consider a sale, as Google has just bought up a big chunk of land not ten minutes walking from the property and plans to build a campus, shopping, restaurants, etc. Also, there are plans to develop the train station into a transport hub (including eventual high speed rail). 

thanks for your advice :)