All Forum Posts by: Jeff Roth

Hi Rachel-

Great question!

Should you pay off your personal debts before starting to invest in real estate?

In general, it is preferable to reduce or eliminate debt that is not producing cashflow before investing so your personal balance sheet shows more assets than liabilities.

It sounds like you are in a great position being a year away from paying off your vehicle and student loans. Congratulations!

I would stay the course. Pay those off. Enjoy the increased cashflow and look for ways to house hack so you can reduce or eliminate your housing expense which is one of the largest expenses anyone has.

Imagine a lifestyle where most of your personal debt is paid off, you have reduced or eliminated your housing expense and now have the cashflow to focus on making your money work harder for you through real estate investing and maybe can free up some more time to do that now that you have reduced your living expenses and can work less.

To your success!

Hi Jethro-

Great question and position to be in.

You purchased a primary home last year with a substantial down payment at 7% interest rate. 

You want to know if you should pay off your primary house or save to buy an investment property.

My answer has two parts:

1. Depends on your risk tolerance. If you like paid off houses, as I do, paying off your house may make perfect sense as it is within your risk tolerance and will help you feel secure buying that investment property next.

2. On the other hand, if you can get a higher return on your investment property than the 7% you have on the mortgage or the mortgage interest rate on the investment property, then your money will be working harder for you in the investment property than paying off your primary residence.

The choice is personal and unique to you. You can't go wrong either way.

To your success!

Hi Frederick-

Great question!

You just got your Realtor license and are looking to make connections with other Realtors and professionals and want to know the best place to start.

First off, congratulations on getting your license. I actually believe it is useful to have your license as an investor as you can collect commissions from your own deals and search for deals as well as serve others in the same capacity.

I recommend making a connection with a good property manager in your area if you intend to work with investors and to make your own investments as passive as possible using them. They will help you identify areas and properties that are trending favorably and have relationships with contractors to help you and your investors maintain and fix their properties. They should also know other investor friendly Realtors to partner with in the area.

From there, I like to networking with other business owners and community leaders so look for networking opportunities in your area and get involved and contribute.

To your success!

Hi John-

Thanks for sharing this list of Top 10 Real Estate Markets for Cash Flow in 2024.

I too found it interesting to see Flint, MI on the list but as a graduate of the University of Michigan-Flint and Mott Community College in Flint and I am back there often enough to say Flint has done a lot to develop itself and a lot of money has been poured into Flint after the water crisis.

I say good for Flint. They deserve some positive press and love.

Another cashflow market I did not see on the list is Lansing, MI which I personally think is fantastic with low property taxes, strong rental demand, low cost of living and service costs with constant economic development as a result of being the State capital. Lot to like.

To your success!

Hi Angie-

This is a great question that I think many first time homebuyers are facing.

Should you save up to buy a primary residence in an expensive market like Miami, where you currently live and rent, or buy an investment property in a cash flowing, more affordable area?

First off, there are simply some markets, like Miami, where it is cheaper to rent than own. So, mathematically, you should continue to rent.

However, for your longterm financial wellbeing, owning is better than renting and you build up equity and benefit from rent increases from owning investment property plus all the tax benefits you don't get from renting.

I would look at buying a duplex in a market like Lansing, MI. You can cashflow all day there with a property manager and you should always have a rent check coming in with a duplex with predictable linear appreciation.

Pull cash out from the duplex and buy another one or buy in Miami if prices soften there to the point where it makes more sense to buy than rent.

To your success!

Hi Ayyoub-

Great question on where to buy a rental in Michigan.

When I talk to my investors about buying rentals in Michigan, if you don't have the budget for an Ann Arbor, Lansing is a fantastic market for buying income properties.

The price points are very favorable. There is high demand for rental properties so as a result rent growth is strong. It is the State capital so always a lot of economic development and job creation locally. Local government is landlord friendly and taxes and cost of living are lower. As a result, the cost to do service work on your property is also lower than other places in Michigan. Finally, appreciation is predictable and linear.

I always work with my local property manager partner when selecting and analyzing a property with my investors and use them to manage the property after purchase to optimize the ownership and investment experience.

To your success!

Hi Corazon-

Great question on why, if a Realtor says a property is a such a great deal, they don't just buy it themselves?

Agree most Realtors are not real estate investors themselves, number 1.

Additionally, your Realtor may have a different property type they like to invest in or prefer to have more paid off properties than leveraged properties.

You will know you are working with a true advocate and fiduciary if they negotiate hard for you and advise you not to get into or stay in skinny or low profit deals.

To Your Success!

Hi Daniel-

Great question!

The best way to be certain of market rents is to work with an experienced local property manager and have them go through your property and give you the market rents and what/if anything you could do to improve the property and rents.

Short of that, look at similar rentals to yours that are listed and use a comparative market analysis method to determine market rents.

Really recommend working with a local property manager for making your ownership experience as passive as possible, for compliance issues related to renting, and to help you scale to more properties leveraging the property manager's time and experience.

To Your Success!

Hi Jagger-

Great question.

I am a fellow Michigander from Ann Arbor.

Nothing against Maine but the Midwest has seen some of the strongest rent growth in the country.

When I consult with my clients, if they don't have the budget for a market like Ann Arbor, I direct them to Lansing, MI.

The cashflow is strong, the economy is stable, it is the State capital so there is always economic development creating new jobs, the price point is relatively affordable because the cost of living is lower there, and appreciation is predictably linear.

I also advise investors to buy duplexes and up so you always have a rent check coming in most of the time if you have a vacancy. A single-family house is a binary investment. It is either rented or it's not and when it's not it can quickly become a financial alligator.

I would be surprised if a duplex in Lansing was more expensive than a single family house in Maine.

As far as managing from a distance without a property manager, I would not advise it personally. I always advise my out of town and out of state investors to buy the property factoring the cost of a good property manager so you still have the returns you want. You can do that in Lansing.

To Your Success!

Hi Mathew-

Great question.

The last time a pulled money out of one of my investments properties I used the University of Michigan Credit Union.

Link for them found here.

To Your Success!