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All Forum Posts by: S B

S B has started 6 posts and replied 18 times.

Thanks Jon.

I was trying to apply the rule post-facto to my current place, owner-occupied. And I bought it with 0 down so I have to carry PMI.

So how does the landlord insurance apply to the 50% rule then?

thanks Mike.

Just to be clear - "insurance" covers both Homeowners insurance AND PMI?

Trying to wrap my head around the 50% rule. I have the following items built into my financing. I know Principal&Interest are not operating expenses, but what about the other ones? I want to make sure I don't end up counting them twice.

Principal
Interest
PMI
Taxes
Homeowners Insurance

Post: Making the deal happen

S BPosted
  • Posts 18
  • Votes 0
Originally posted by Norm Chrostowski:
Sorry (one more thng).

As far as offer price. I usually look at comps, obviously. But my offer is based on RENTS too. I generally work backwards from the GR (gross rents).

Example:

I looked at a Triplex yesterday. Owner figured it was worth 90k..

I br $360
2 br $450
2/2 $550

Total of $1360 in rents
Operating expenses $680 (50% rule)
Desired cashflow $300 ($100 per unit)
$380 Debt service (prin & int.)

Offer $55000 (55k @ 7.25% for 30yrs = $375.19).

If they wonder why so low, I tell them exactly what your reading.


Could you expound on the 50% opersting expenses? Is this a common formula? What does it cover?

I work for a large bank, and have access to everyone's personal finance data including information about their current mortgage.

An investor buddy of mine said something like 'What I wouldn't give for THAT kind of priveliged data!'

Now, I know right from wrong, and I would never take the risk of using that data nefariously (awesome salary, beautiful family) but I am naturally curious about what one could do with that info. I can't ask him because he was joking and would tear me up if he thought my questioning indicated that I was seriously considering it.

So what advantage would this info bring you?

Post: horror stories

S BPosted
  • Posts 18
  • Votes 0

Would love to hear some of your worst RE investment horror stories - who knows, maybe someone will learn along the way...

Oh, I'm definitely aware of that... the delay was a mix of procrastination and a little fear of failure. I'm working on it. :)

Post: investment payoff

S BPosted
  • Posts 18
  • Votes 0

Isn't $21k a good sum of money?

(From RI, btw)

Thanks for the quick response Jon.

Unfortunately for me, although I've owned the property for 2 yrs, I haven't rented it out yet (not because it's unrentable, but mostly because I took my time renovating)

I own one investment property (duplex, if that matters) - It was quite an ordeal to secure the financing for it: a million questions about what other debt I have, etc. I ended up getting it because I had virtually 0 debt.

Now I'm thinking I want to buy a second one. But what happens when the lender learns I have a 160k mortgage? That obviously is much much more debt than I had last time when I just squeaked by... how does this work? If I can prove that I have tenants, does the lender then ignore/discount the mortgage debt it when qualifying me?