All Forum Posts by: Francisco Escobar

Hey everyone, I'm starting to analyze houses on the market and I'm curious if the 1% rule applies to the purchase price or if we should throw add the estimated cost of repairs?  I'm seeing some homes where rents, say 2000/month (after repair) would be about 1% of the purchase price 200k.  But they seem to require tens of thousands in repairs, say 25k.  So when I add the two, 2k monthly isn't enough to meet the 1% rule on 225k spent to acquire the home.  

Am I looking at this the right way? 

@Christopher Hauser I'll be there! Look forward to meeting you. Alex

@Michael Needle thanks!

@Marc Winter, @Russell Brazil, @Shadonna N. Thanks again for the help. My current home is 2bed/1bath. It's perfect for just the 2 of us, but will need more space as mother in law may be coming to join us in the next year or so. With prices and interest rates rising, I feel pressure to jump now rather than later. Of course finding the right deal will make all the difference.

Thanks Marcus!  I appreciate the sanity check.  I'll get started looking for a live-in flip right away!

Hey Biggerpockets Community,

I'm a new member, a soon-to-be investor, and a realtor in the Washington DC area. I have a dilemma and thought this would be a great place to get some feedback. Essentially choices that I see are to A) sell my house in order to buy a bigger one we need or B) keep my current home as a rental and get a HELOC to buy the second home.

Background:
I have about 120k in equity on my home, it's 2 blocks from the yellow line metro, 10 minutes from Amazon's recently announced "National Landing" so I expect it to appreciate.  I have an interest rate of 3.125% and my monthly costs on the mortgage are about $1500.  I think it could rent out for 1800 monthly pretty easily.  That's some cash flow, but it's not as good as some of the deals I'm hearing about on biggerpockets.

If I decide to sell, my next door neighbor has already offered to buy the house from me, and I expect I'd get to keep most of that 120k in equity.  It'd be enough to get to 20% down for the next house.

The HELOC might get me to 10% down, it has its own cost and my monthly payments would be more expensive for the new home.

Next Home: For the price range I'm looking at for my next home, my down payment will make the difference (in principle and interest rate) between a comfortable monthly payment around 2500 or a stretch at over 3000. This isn't a luxury home, it's an average, middle class single family home in the area.  

So from a financial independence perspective, I think I'd be better off selling my home, and keeping my mortgage payment more comfortable.  But from the perspective of an investor, I think keeping my current home is pretty attractive.   

Should I be agressive and try to hold both?  This is the easiest way I could be an investor and landlord now (which is a goal of mine)

Should I be defensive and keep things easier on my budget?  

Thanks!