All Forum Posts by: Jeremiah B.

Sorry for delay. I re-read your numbers post, and that makes more sense than I thought. But you are still conservative on several fronts. These include:

• If the units are individually metered, I wouldn't budget anything for utilities.
• Your debt service number looks huge! You may want to double check that one.
• Your hazard insurance is very high. Very very high.

Though for a place like this, I would increase your maintenance amount by quite a bit.

The decision to get into owning a REI is a big one. But if this is your plan and you have the resources behind you, this place looks like a good, safe, first investment.

On paper - the numbers look fine to me. But there are dozens of other things that aren't on paper, that could kill the deal.

What about the bones? Is it a 60's place with original plumbing? How are the wires? Circuit breaker box? When will it need a new roof? Are utilities separate? Does it have 70's shag carpet? Or those really groovy bead doors?

And the other stuff: Is the area OK? Is the location OK? Parking? Do 2/1's fit the needs of the community? Road noise? Sewer plant? Piano school?

So, I wouldn't rule it out based on the numbers you provided.

Edit: Simu-post, and I just read your cash flow breakdown post. I think you're being over conservative... more to come soon.

This is a very interesting topic - and one that really requires you to have a good understanding of who you are and what you're looking for.

Personally, I would not do this deal for a few key reasons:

1. Long term, I would not expect any appreciation.
2. I wouldn't do a deal this small with partners. In all fairness, I try and avoid partners, but even if that were not true, there's not a lot of monthly pie to split.
3. I try and stay away from areas that I'm not crazy about.

With that said, Part of something is better than all of nothing. And it sounds like this about the only way that you can do this deal. Getting seller financing is a big bonus, and you got fair terms. Props. If you can't get the cash together solo, this meets that need as well.

And your risk isn't huge. Small house, low rent, and low purchase price mean you probably will not get burned big (financially). You may have months and years where you're in the red, but if you have adequate finances behind you, you should be able to absorb those.

But if you take one thing from my rambling, let it be this: Come to an agreement (written) with your partners, specifying what will happen if it goes to ****. What if someone wants to sell? What if it needs cash and someone can't put it up? What if you disagree about new carpet or hiring a property manager? What if guy 2 sleeps with guys 3 wife? The chances are that you will never need this contract, but if you do, it's a way to salvage your friendships (unless the wife thing happens).

Update us - i'm intersted to hear how this turns out.

So, I'm pretty sure that there is a difference between a distribution for a house (which does not need to be repaid, for your primary residence) and a loan.

A loan can typically be made for 50% of your account or 50k - whichever is less. I think loans are on a 5-year balloon with no monthly payments. There are typically fees. The biggest catch: if you leave your job for any reason, the loan is due immediately in full.

In either situation, getting the money into your account takes several steps (sell stock, request loan, approved loan, money transfers.

Or - i could be wrong. Your HR dept could say for sure.

Welcome Aboard! I think you'll find BP to be an awesome resource.

I may be over-conservative, but if I'm in your shoes, I'm attending a local Real Estate Club, spending some time on BP and saving cash. I wouldn't pull the trigger on any deal (or even any approach) until I get my head around the topic a bit more.

Honestly, if you have the time, going through the BP podcast would be an awesome way to do this. They cover just about any topic that that you can imagine.

Then, see what strikes your fancy.

With all of that said, if I were starting over, I'd buy a local, single family house that needs 4-10K in repairs as a rental. Using traditional financing. And I'd check in with the forums every step of the way to keep from making a mistake.

Keep us updated!

Odd - my crystal ball seems to be working just fine...

Overall, real estate will have a modest year - but that will be an aggregate of strong gains in cheap markets, and weak gains in expensive markets. Though intra-market variance will resemble a normal healthy market. Rents will be soft for 1-2 years.

Bonds will have a great year, but their returns will still be piddly. I'm not touching them.

Gold and most commodities will decline. Oil is the exception, and will show decent gains.

Stocks will have a volatile year, but end roughly flat.

For me - I'll continue to invest in SFRs in Charlotte, and invest around 10% in my 401k (primarily index funds).

@Andy Robison - does equity affect the ability to get a mortgage?

Kirk - you make great points about your target market being super competitive. And I think we can all relate to feeling like you're being pushed into a corner, and needing to pull the trigger with thinner margins than you like. I dig.

With that said, I'm a firm believer that if the game doesn't make sense for you for any reason (fair or otherwise), you should take your ball and go home. I fought with my local market for about 6 months before realizing that I simply couldn't complete in it. So, I've taken my my financial ball, and am playing another game.

But then again - I don't know your market, your skills, or any number of other factors. Please do keep us posted, and best of luck either way.

Congrats on the purchase!!!

I've run into a similar issue in Charlotte (kind of).

In the agent's defense, this is only fair IMO. To work with me - the agent is going to need to put in a lot of work and have a pretty high knowledge base. Those are valuable, and as such, may be worth paying for.

With that said, always always always read the stuff you sign! I recently caught something that was good-natured, but saved me 6 months. At the very least, read the parts edited by your agent and skim the boiler plate stuff.

I think that there are a lot of relevant factors that you need to consider. These include:

1. What other resources do you have?
2. Risk tolerance?
3. Timeline?
4. Do you need the capital back in a reasonable time?
5. Credit score/W2 job?

If you don't have any other resources behind you, like another 30k sitting in cash, I would NOT buy real estate, and would recommend that you don't buy it either.

With that said, if I had 20k cash sitting around, I'd buy a smaller house, financed, in a city with good fundamentals.