All Forum Posts by: Frank M.

Neither the $250K nor 'reinvesting into next house' come into play here.

The next house was a provision on personal residence, but that changed over a decade ago. For investment property, the 1031 exchange still exists, but if you read through the article, it doesn't apply to your situation.

The $250K exclusion is for homes you live in, for 2 of 5 years prior to sale. A great way to buy, live there, renovate, and sell, but only in 2 year cycles.

With only a $25K profit to split, there's a good chance you will take the entire amount as income between the two of you.

Interns are paid nothing at many companies.

And a young person looking to enter a field long ago (such as furniture making) would apprentice for a years to learn a trade.

I paid to go to school at night to get my MBA. I paid to sit through the 40 hrs class time to sit for my real estate license.

If you have a day job, and you're in this for the long term, is 2 years part time education worth it? Say it were zero income. An expert offers to take you on and teach you this skill at no risk to you. Only the 2 year commitment. If these people have a proven record, the deal might be great. I've listed to a few BP podcasts so far and hear about the 'gurus' who will upsell to keep taking your money. It sounds like these people might be giving you a great opportunity at no cost to you.

Just my opinion, as others here have the opposite view.

100 apartments? You only plan to net $150 per unit?

I hope you keep us posted. As a newly licensed Realtor, I'm interested in situations like this. And I'm sure your state board is as well. You described facts, not opinions, that legally need to be disclosed.

I am a newly licensed realtor. If I were approached by someone who was a serious investor, it would be worth my time to help them, as it would bring the commission to my office. As long as their target wasn't an area I was committed to work with someone else, if it were, I'd pass.

J Scott - Much thanks, I'll update after I'm up and running. The first few years expenses should be lower, as I'm already starting by putting in new roof and appliances. The seller replaced the heating system about 3 years ago. The video set me straight. The remaining 50% goes to debt service and profit. Makes sense.

Bill - I already ran the numbers, overestimated expenses, underestimated costs, and the cash flow projected positive enough to move forward. I wasn't using a rule of thumb, per se, but worked backward from the projected rent. I know the area well enough to know the going rate for the apartments I'll rent.

Thank you both.

I've read through most of this thread. The 50% rule sounds good, conservative enough that an unexpected expense won't kill the profit for a year.

Question - is the math using a 15 or 30 year mortgage? I'm looking at a $120K mortgage, and the difference is about $300 between the two terms. If the rent is about 2% of the house cost after rehab or $2400/mo, the $300 is a 25% swing on expenses. On the flip side, if the answer is 30, how do you feel about pushing the 50% higher for the sake of cutting the mortgage term?