All Forum Posts by: Jonathan Lyford

Thanks Kathy! I like your advice. we do live below our means, so we can go slower and save up the next down payment while getting more experience managing properties.

Thanks in advance for all your collective wisdom! So, I've been looking into real estate for a while now, and just recently moved and turned my old place into a rental as a way to get started in real estate investing. Its only been 1 month, but I definitely think I'm hooked! I'm already thinking about how to do my next deal, and I'm trying to figure out what the best way is to access money for a down payment. option 1) I have about 100k in equity in my first rental. I could refinance it and take money out. the problem is it wont really cash flow much with a new 30yr mortgage on it. Option 2) Take out a HELOC for a down payment on a new place. the downside of that is I have about 7yrs left on a 15 year mortgage currently, so I'm getting a ton of mortgage paydown every month, but its not currently cash flowing. So, if I took out a HELOC, it would be more in the negative on monthly cash flow. Option 3) Is there a way to access my 401k without paying a ton of penalties? Option 4) Sell the current place. I'm not really super interested in this option, because I feel like a will lose money in closing costs on selling and then buying another place, and, since I'm so new at this - and this is an easy place to manage - I feel like it is good "training wheels" towards becoming better and being a landlord in the future. What would you do? any other ideas I'm missing? Thanks in advance, Jon

Thanks for the replies! We didn't get the sewer lines scoped(probably should have in hindsight). I'm leaning towards getting it just to be covered. Thanks again!

Hi BP community, My wife and I just recently bought a SFH(built in the fifties, if that matters), and while we were doing the inspection, the inspector had mentioned lateral line insurance and that it might not be a bad thing to look in to. we found a policy that covers 7,000 of water line and 10,000 sewer for about 15 bucks a month. my questions are: - Is this a good type of insurance to have? - is this amount of coverage reason for repairs? Thanks for your input!

Hi, I just recently started too, so take my advice with a grain of salt. That being said..... Break that large goal down into smaller goals. Maybe buy one cash flowing rental property in the next 6 months. if that works out, go to the next one. Also, a word a caution; I think setting the goal of 250,000 per year in 5 years might set you up to do some things that are too risky, and ending up losing a lot of money. Maybe just do one or two properties, hope you don't screw up the deals too badly, learn from them, and them reevaluate your long term goals and what you are willing to risk to try and grow that fast.

Hi, Most investments can take a very long time to make money. Most investing professionals say you should leave the money invested for at least 5 years, because the market can fluctuate too much in a shorter time period. I would really need more information to answer that better. Are you in debt? do you already have a house? do you have a job? In general, 30,000 would be a good downpayment on a house. look into house hacking. but, if you do that, you should have an emergency fund set aside as well.

Originally posted by @Jim K.:

The lower the class, the more expensive and unpredictable the repairs get. It's the end of November; this is when furnaces typically die in my area. My HVAC guy, last week when I called him, had six replacements on his schedule.

Dead furnaces are an IMMEDIATE expense. You get hit with the bill immediately, you have to pay immediately, and the biggest probability is that it will happen at exactly the wrong time, when the HVAC guys are busiest and charging their most outrageous prices. This is why we spring for American Standard/Trane/Bryant/Carrier in even our cheapest long-term buy-and-hold properties. We also make sure we hit the start of winter with max reserves. Since our best annual acquisition time is December, this took some learning for us.

I'm curious. Why is December you best acquisition time?

Look up Graham Stephen on youtube. He has a video that explains this in-depth. Essentially, he took out 90-day loans, where after the 90 days, the bank could either agree to extend the loan or "call" the loan, meaning it all had to be paid back. He couldn't do that, so went bankrupt. It is a very risky way to invest. If you get a 30 year fixed rate loan, that cant happen. I disagree that Dave Ramsey info is for idiots, and I actually follow most of(not all of) his principles, and think there is a lot of wisdom in that, but maybe that in a conversation for another day.

I'm pretty new as well. I cant give you a definitive answer, but can tell you my thought process. We are moving out of a current townhome and turning that into a rental as we move into a new home. We could have sold that and bought a multi unit property, probably, but I figure that, since this is my first time doing this, I am bound to make a ton of mistakes. I would rather make small scale mistakes than big ones. I kind of look at this first place as a learning experience, that way ill be better prepared to buy something bigger in the future, once I actually know what I'm doing : ) Good luck!

Originally posted by @Lili Liu:

Hi, all

My job contract will end in the May of 2020. I have no intend to find another job now but rather I would like to live completely on rentals. I have one rental property which generate $500/month cash flow.

Since I still have a job now, should I buy as many rental properties as I can by getting a loan?

1) What is your suggestion?

2) What lenders should I go to?

I have talked with several banks, one bank says they can do 15% with 5.65% interest rate. Is this a good deal in the lending world?

Thanks!

Hi, To be frank, this plan sounds disastrous. I think you are more likely to end up in financial ruin than never have to work a job again. you have one property that cashflows 500 a month, which is great, but thinking you can buy enough properties before your contract runs out to never have to work again is not realistic. You are more likely to rush into bad deals because you need to buy a bunch of houses(even assuming you made 500 per month on each, and were planning on living on 3,00 per month, that's still five houses in a short time), which increases the likelihood of making bad deals. And what if you run into some sort of emergency and things don't work as planned? How would you cover that? Stopping work is a great goal, but don't try to shoehorn that goal into an unworkable situation. Carefully and methodically start buying rentals, and at some point, you will no longer have to work. take it step by step, and until then, keeping working and adding to your portfolio as you go. good luck!