All Forum Posts by: Jody Sperling

@Dawn Brenengen, thank you for the insight. I'm glad to hear the strategy worked for you. The strategy appealed to me because I could do it cheaply, and it was a method my wife supported because we got more room for our family.

@Jaron Walling, for my current home, I owe roughly 60k with 35k in equity. Currently the property is valued around 150k and comp rentals are going for around 1200/mo. I'm still practicing real number crunching, but based on a simple 50% withholding for future repairs, I think the rental house will produce just under $300 cash flow. 

What's a bit unsettling is the fact that my new mortgage payment is increasing by just over $500 so in a sense I'm "poorer" than I was before.

My family would've outgrown the current home (the one we'll be renting), and I believe real estate investing is the best way to build wealth, but I wonder if buying a more expensive house and paying PMI was a mistake.

If I rent the new property in the next couple of years and nothing changes in current rental rates or home values, I could expect to get $1400/mo, meaning I'd cover the mortgage but be in a bit of trouble if/when expenses were incurred. That's how I see it now, anyway. Perhaps I'm missing something?

Thanks for the reply.

Hey, Jeff, Thanks for the reply. I didn't mean to be confusing. Too busy trying to be clever, I guess.

What we did was purchase a new primary residence. I've owned the current property for five years. We'll be renting my current property and living in the new home I bought. I've been told I could repeat this process every 2 years and by doing so, avoid the high cost of a 25% downpayment needed on commercial loans.

The problem I see with doing that is the pace of building a portfolio. It may work as a complementary strategy in which I can slowly improve my primary residence, buying slightly larger each time and renting the properties I move out of, but my concern is that if I'm intentionally selecting nicer houses for myself, will I leave a trail of negative cash flow behind me?

Again, my apologies for being confusing.

Hey, all,

In mid April, my wife and I decided to make the leap and buy an investment property. Because we didn't have enough cash saved to put a 25% downpayment on a home for a commercial loan, we elected to murder two birds with one rock and applied for a personal home loan that required only a 5% downpayment. Now we're doing a few mild renovations to our current house to ready it for renters. 

Brandon Turner hasn't named this strategy that I'm aware of yet, probably because if it were your primary method of acquiring new properties you'd be dead before your portfolio was large enough to produce meaningful income...but it worked for us. My question, sorry this is so long-winded, is this: was it foolish to purchase a move-in ready home for ourselves?

I've gone back and forth on how I feel about it. The pros include, my wife's comfort. She doesn't have to endure a big renovation before move in. We can focus our available cash on the current property to maximize its value and rental appeal. The cons include the loan being too high for cash flow if we want to rent this one in a couple years, and I have to pay an extra percent for PMI.

Any thoughts would be appreciated. Omaha investors comments especially welcomed, as that is our local market.