All Forum Posts by: Gary Love

Quote from @Suresh Patibandla:

I am doing the same and happy about the plan. Few points i do in your case.

1. Take the HELOC when you are still living in it, it has no upfront cost, pay per use like credit card. Its laways great to have extra cash available with this way.

2. Look for homes required fixes and Do some improvements for forced appreciation on every home you move to remove the PMI and increase rent possibility later, two birds one shot.

3. Take as many as homes allowed this way with only positive cash flow and repeat the same process with spouse to have enough funds for retirement.

4. Acquiring the best property with this is tough and difficult, I wouldn't sell one unless really need. Instead try  to pay off the properties after step 3 with cash flow or buy with cash.

I know its slow but really good plan.

Thanks

Suresh P

Hi Suresh,   Thanks for the great tips. This place is just a wealth of knowledge. I really love the advice. I'm definitely going to look into the HELOC just to have like you said, its' better to have and not need than to not have. I also love your #2 idea and have been looking at those homes a little more figuring we can make some improvements to increase the value while there. Don't really want to get into the big issues like a roof etc. but updating certain things like flooring, kitchen, bathrooms etc. can help with rent and appreciation just like you said. Thanks very much for taking the time to send this. All this information is incredibly helpful and building my confidence. Have a wonderful day!! Gary

Quote from @Josh Young:

@Gary Love

I like the way you are thinking, I did this same thing. A few things to consider are: you can use 75% of market rent on your current house to help you qualify for the next. Conventional 5% down payment loans are great. I used to think the same way as you on the not tapping equity, but you should calculate your return on equity to help make this decision, I would consider taking out a home equity loan or HELOC while it's still your primary residence, you probably don't want to do a cash out refi if your current rate is super low, but do the math. Have your lender price out prepaying instead of monthly on the PMI on the new purchase (I did this once because it was half the price, I didn't another time because it was basically the same price), or you might just plan on doing a refi on the new purchase in a couple years to remove pmi and possibly a lower rate or consider doing an ARM. When buying a primary residence, buy in the best neighborhood that you want to live in, this will help with appreciation, but also run the numbers as a rental so it will at least be close to cash flowing. Good Luck!

Hi Josh, Thanks so much for the time and tips. We did refi when it was low to 2.75% so that was good. I have done some number crunching and so far anyway the PMI is the better choice but still when the the time comes I'll definitely run numbers again as well and talk to my lender to verify my options. There is no harm in double and triple checking. I think anyone buying now has hopes of doing a refi with lower rates. In regards to the best neighborhood I completely agree with you. Its tougher to find the great deals in the good neighborhoods but since we're going to live there its what we're going to need to do. Plus will most likely get a higher quality renter as the rent will be higher. I've seen some good deals but wouldn't live there for anything. In the long run the value will appreciate higher in the better areas like you said. Thank you again. I really appreciate you taking the time to respond. Have a great day!!

Quote from @Kyle Tom:

Quote from @Gary Love:

First, thanks in advance for any advice. Love this site!! We live just outside of Columbus, OH in a duplex we bought seven years ago. Would like to move to the Jacksonville, FL area. Maybe the Tampa but not relevant to this question. We have 100k equity in our place and 50K cash on hand. Would rather not tap into equity. We were thinking put down 5% on a new home, move in and then do the same each year and rent out the previous house. In hopes of accumulating many properties faster. The Ohio place cash flows 1k per month after everything including property management which gives us some cushion. Besides the PMI and higher payment, is this a bad idea? If so why? It may be tough to cash flow these first few houses until rent goes up some of course but if we can get it close we can absorb that for a while. Again thanks for any tips and just taking the time. Still learning so much. Gary

 I think that's a great plan!

 Thanks for the vote of confidence!!! Much appreciated 

Quote from @Joseph Stern:

Gary, this a great idea. It is one of the best paths to wealth, purchasing a new primary residence each year and retaining the other properties as rentals. It is a very calculated and stable way to grow your portfolio, you can even put 3% down. There are still plenty of properties that cash flow in both those markets so you should not have an issue with that, my only tip would be perhaps live in each property two of out of five years to avoid the capital gain when you eventually sell. You can compare if the appreciation on a property every year would make more sense than the tax savings you would get by buying every two years. Either way, if you have enough capex reserves for each property and have the management systems in place to handle the amount of doors, I would go for it. You may start seeing over time it would be faster to scale by buying larger properties but that all depends on your personal investing strategy and lifestyle. 

 Hi Joseph,   Thanks for taking the time to throw some advice my way. I was researching capital gains before you sent this. Still figuring all that mess out. Great tip though! We don't plan on selling them but of course you never know. One thing we considered was possibly selling a few off to maybe pay some other homes off as we near retirement but that's just a maybe. I could see doing that to maybe keep the best rentals possibly. Do you happen to know if for example we did sell one of the rentals to pay off another rental would we have to pay capital gains on that or is that basically like a 1031 exchange?  Thank you again for the advice and time. Hope you're having a great day!!

First, thanks in advance for any advice. Love this site!! We live just outside of Columbus, OH in a duplex we bought seven years ago. Would like to move to the Jacksonville, FL area. Maybe the Tampa but not relevant to this question. We have 100k equity in our place and 50K cash on hand. Would rather not tap into equity. We were thinking put down 5% on a new home, move in and then do the same each year and rent out the previous house. In hopes of accumulating many properties faster. The Ohio place cash flows 1k per month after everything including property management which gives us some cushion. Besides the PMI and higher payment, is this a bad idea? If so why? It may be tough to cash flow these first few houses until rent goes up some of course but if we can get it close we can absorb that for a while. Again thanks for any tips and just taking the time. Still learning so much. Gary

My apologies in advance if this has been asked and I'm sure it has. I was wondering what's the consensus is on whether buying say two homes for say $225,000 each vs one nicer home for $450,000? Not in a particular area and figuring all homes meet the right numbers for purchase, rent return etc. Looking to hold onto them for more long-term investment of at least 20 years. I was thinking maybe better house means nicer area, better quality renters, only one roof etc. rather than two which means hopefully less headaches. There will still be headaches of course. LOL. Maybe it will be too tough to rent a house that would have such a high rent though also. So many thoughts. Thanks so much for your thoughts and advice. It is truly appreciated.

Gary