All Forum Posts by: Geoffrey K.

Thank you for the input! I've been looking at several properties as examples to learn from and have been trying to crunch the numbers, so to speak. I enjoy the analytics of the figures and utilize spreadsheets to "see" how the crunched numbers work (I will even go out of my way to do some of the calculations long-hand; call it a long-lost art). These real-world examples help me better understand what I am getting into as I continue to educate myself for REI.

I'm a numbers guy. In my research, I am at a point where I am ready to see "how" the numbers work. I'm interested in SFH rentals and would like to see if I understand methodology of working the numbers... (I'm going to try and keep this as basic as possible)

Suppose you have a property and you have put 20% down. Your mortgage loan would be valued at the price the property is sold minus the down payment. In the beginning, your equity is the down payment, correct?

After that, your monthly expenses (let's assume there is no CapEx, for the sake of understanding the intial process) would be the mortgage + escrow (including closing cost), HOA, taxes, insurance, property management (if applicable), and investor loan repayment.

Take these monthly expenses and subtract them from a rental payment and you have your general cash flow.

In addition to the cash flow, your equity would grow from the initial down payment via the loan's amortization.

After "X" number of years, you could potentially refinance the property to pull your equity back out for other investments.

Is this correct, generally speaking?

Thank you for all of the insightful responses!

Like many of you, I work in a field which keeps me in an office setting with a regular 8-5 schedule (with the commute, it is more like 7-6). I do enjoy my job and have the best team of colleagues anyone could ask for. I live and work in the Washington DC/Metro region so I would be lying if I didn't admit I am imtimidated by the market.

Regarding the DC market, I have been listening to the BP podcasts and recently listened to episode 210 where Sam Valme discussed his experiences with AirBnB, as he is from relatively the same region as me (about an hour away). I was fascinated when he talked about renting to vacationers, businessmen, military, etc with his property in Manassas, VA. This got me thinking about alternative options I might one day consider when I have to deal with the home my mother currently resides in (where I grew up). Due to the excessive amount of development in her area, I am no longer tied emotionally to the property. It is still "out there" but close enough to the developments that all of your needs can be met with a 10-15 minute drive (shopping, groceries, schools, etc). But until then, I am delving into my research and considering my options with my more immediate financial needs and desires.

I have setup a 2017 to-do list, and certainly I'm open to input with the following ideas/options:

- Books. Audio books. As a parent, I simply don't have time to sit and read, and when I have time, I'm too exhausted to let the information sink in. I do have a long commute both ways and the ability to listen to headphones in the workplace (which is where I've been listening to many of the BP podcast episodes).

- I recently signed up for a local REI club through meetup.com but will need to wait until the next meeting to RSVP. It is my hope to gather more insight on a personal level from people who have first-hand experience with my immediate market. There are several others I am looking at as well, but the locations are a bit far from my home.

- When my wife and I purchased our home, our realtor was referred to us through a mutual friend. I am hoping to touch base with her and inquire if she has experience with REI or knows of someone she could refer me to.

- In the last few years, I have developed a hobby in genealogical research. In my search, I made contact with a long-lost cousin who is a very successful realtor in a prime vacation hotspot (Ocean City, MD). Her son makes their business a 3-generation business. Although it is a dream to own my own vacation home on the beach somewhere (despite knowing and believing in the effects of global warming), I don't feel it is the appropriate direction to go initially with REI. However, she is certainly an individual I am planning on reaching out to, as we have developed considerable dialogue since we first met in person last summer.

Again, thank you for the input and experiences you have shared! I trust I am on the right track of learning more about REI.

Thank you for the responses @Peter Mckernan and @Michael Wagner!

I enjoy taking a philosophical approach to life. I benefit knowing that my choices have more meaning (even if only to myself). The idea of investing in REI really sparks my curiosity, and what drives my desire to learn more is how it can be considered an act of humanitarianism. While not everyone enjoys equal opportunities, those who try to make the effort to better themselves deserve the opportunity for access to a safe roof over their head. And I would like to think one day in the future I can provide that opportunity to an individual(s), a couple, or even family who deserves it the most.

That being said, everything in our society comes at a price, whether it is financially or through blood, sweat and tears. I believe in the idea that hard work pays off now AND later (not either or). What I would look forward to most in REI would be developing conjoined lateral income and retirement planning for my wife and I, along with the potential to fund my children's needs in the future (their pursuance of collegiate studies). I acknowledge that the startup is very difficult to overcome and the time commitments are crucial to the endeavor, but I've never been afraid to roll up my sleeves and get my hands dirty.

My hurdle however is that very time commitment and the "gamble" people who may not understand the investment often claim. I don't have a gambling personality and I don't make life-altering changes without my due diligence. I have kids, so my time is limited to the early morning and late night hours (or lunch at work). I have no direct experience with REI, with exception to providing consultation to a recently concluded family situation between my Mother [the landlord] and my Uncle [the renter] (a life lesson worth sharing later). Yet, here I am.

In continuation to my previous post, I guess what I'm asking is what compelled you to consider this as a long-term solution to your financial needs (or desires), given the scenario (or similar) I presented? How did you balance your time and what financial aspects did you review prior to taking the plunge? What kinds of sacrifices did you make prior and after you moved forward with your plans? And finally, what ultimately made it worth your while in the beginning? 

I have been poking around BP for about a year now, hemming and hawing about what my future investment options are. While I am new to real estate investing and still educating myself on the concept, I have been intrigued by it time and time again from the podcasts, personal stories I read, and the wealth of knowledge answering questions I search for before actually asking.

My question however stems from my personal situation. I would love to hear some stories and experiences from individuals who have decided to pursue this either as an alternative career, or simply supportive to their already existing financial situation. For example, someone who is married, have kids, full-time jobs, and perhaps a little disposable income. I would appreciate hearing what motivated you to pursue REI and how you were able to go about it, despite the time commitments in the home.

Perhaps this could even be a topic for a future podcast...

Thanks!

@Greg WilkinsThank you for the clarification! I tried to research the terminology and ended up rather confused, although I'm new to investing in properties and just beginning to ask questions.

I'm jumping the gun, but I can't help satisfy the curiosity of a quick internet search for homes up for sale. In my research, I came across a statement that reads "properties are sold in-fee (deeded, no ground rent)."  What does that mean?

Note, this is in a community of mostly permanent single-wide, double-wide, and modular homes in a permanent residential/seasonal vacation town. There is an annual association (HOA) fee with this community as well.

Thanks!

Thank you everyone for the warm welcome!

Thank you!

Yes, Frederick seems to be a vastly growing area. I grew up in the eastern part of the county and it is unbelievable how quickly areas like New Market, Urbana, Ballenger Creek, and North/West Frederick has seen growth. In fact, when I was in high school at Urbana, there was farmland as far as you could see from any angle of the school. Now, it is suburbia. And it is only growing with the new Jefferson Technology Park along Rt. 340.

I currently work in Northern Virginia (Ashburn) and even there with the upgrades to Rt. 7 east and west of Leesburg, the area is booming with construction. Unfortunately, the cost of living is very high in Loudoun County, or at least that's my perception.

Hello, new member here...  

I live in Maryland (born and raised) and I'm just beginning to research the prospect of investing into real estate. Real estate has been somewhat of an interest in the back of my mind ever since my wife and I bought our home 8 years ago. As a future investor, I can't bring myself to fully trust and embrace the market (stocks, bonds, trust funds, etc), seeing how my 9-5 401k isn't doing so well, and relying on my company's pension plan isn't for the faint of heart. I really loathe the idea of not being in complete control of my own finances, nor do I have much interest in better understanding the market.. Fortunately, I am hopeful I can change this bleak outlook through the course of 2016 and consider this sort of investment for the future (or as my wife would put it "this crazy idea you have...")

As a father, I determined the most important obligation to my first son was to work hard and get my body into better shape, in order to better keep up with the little scamp. I lost upwards of 30lbs with the expense of one injury rehabilitation. He is now in his terrible 2's and I'm in the best health of my life. And just recently, we've been blessed with our second child. Now, my attention has changed to the future needs of my family  (be it retirement planning, college funding, etc). I'm not afraid of hard work, physical labor, and due diligence with research.

I'm a bit overwhelmed at the moment as I work through the helpful beginner's guide provided by BP and just scratching the surface to the complexities of investing in real estate. My initial primary focus is to better understand this kind of investment as a whole and figure out how to develop a plan that meets our needs. When ready, I'm interested in buy and hold SFR investments initially, but I'm open minded to my options.

Maybe this isn't as crazy as my wife thinks...