All Forum Posts by: Jonathan Lyford

Originally posted by @Ronnie Holbert:

Rent is $800 a month, mortgage payment with taxes and insurance is $627.  So I have $173 before repairs, vacancy, capx.  So for the past year I have just been paying the full $800 toward the house.  I work in the construction field so I do all repairs myself and just pay for them out of pocket.  I have    $0 saved up for expenses.  Now I’m wondering if I should start putting that money aside just for the rental instead of paying it down. 

So, I believe in having a 3-6 month emergency fund(I tend closer to the 6 month) set aside in a savings account to cover anything that would come up. This covers for rental issues(tenant not paying, vacancy, repairs etc...) but also covers my personal life as well(needing a new car, losing a job, repairs on my house, medical bills etc...) Having that in place gives me peace of mind that I am not one emergency away from a financial crisis. Once you have that done, you can take the "extra" money from the rental and pay it down or save/invest it. Really, that dependents on what you want to do. Me personally, I take "extra" money and put it in an S&P 500 fund rather than paying the mortgage early. my interest rate on my mortgage is 3.8%, so paying the house off early is essentially me making 3.8% return on my investment, which isn't great. As that mutual fund grows, I then have multiple options; payoff the house in a lump sum(this would be faster than the monthly payments due to the better return rate), use that pile of money as a downpayment on your next rental, buy a mink coat and gold chains :) whatever you want to do, its your money!

Originally posted by @Rebecca McDonald:

I recently got denied a refinance loan on my property due to losing my job whilst this was in the process. I have no desire to go back into the work force I wanted to know what could be my other options of obtaining large funds without a job? As I’m hoping to obtain investment properties in others state’s that are cheaper than New York. I’m hoping to do the buy and hold strategy. 

I would recommend either bank robbery or cooking meth.... ;) Also, have you looked into marrying an old, rich guy?

Usually BRRR would be when you do significant rehab to a property that causes significant change in value, which in turn allows you to take your money out. Doesn't really seem like what you are describing would increase the value a whole ton, at least not to the point of getting your money out of the property completely, which is the point of BRRR. That being said, there is absolutely nothing wrong with holding a cashflowing rental property. Maybe just take the money you are making from this place and use it to do a real BRRR on your next deal when you are ready.

Hi, What a great problem to have! :) I would do option 2; keep the current place, refinance it if you want, and use that money to buy another rental. My logic is, every time you have a transaction, you are losing money to realtor fees and closing costs, so I would try to keep the number of sales to a minimum. Also, where are you going to live? You could start out by using the equity you have to make a downpayment on your new residence. then just keep an eye out for your next rental.

I'm obviously in the minority here, but I would a) pay off the debt b) save up an emergency fund of 3-6 months expenses c) house hack a multiple unit place. I know I am more conservative than most here, but to me it would be a stable foundation to start your investing career from. good luck!

Market crash lowers market value of home. Cant find tenants. Tenants don't pay/trash house. Finding new things wrong with house once you start repairs. you/spouse losing jobs Things breaking (HVAC, roof leak etc...) I made the same sort of list, and like you, planned how I would deal with each one before jumping in. our renters are moving in Nov 15th, so I'm just starting out too. Good luck!

Hi, My wife and I are just starting as well. Actually moving and turning our current house into a rental on Nov 15th. For us, the thing that made us more comfortable was running through scenarios of "what could go wrong?" and working through how we would cover those things financially. Things like "what happens if we cant find renters?", "what happens if they don't pay?", "what if the hot water heater breaks the day after they move in?," "what happens is I lose my job?," etc... Working through how we would make it through those kinds of worst case scenarios helped make me feel more confident that we could handle any bumps in the road with our first property. Good luck!

Hi, I'm new to this, so please bear with me if this is not helpful at all. Try to learn through this as well. What are you basing the ARV being 125k off of? What are you basing your rental income off of? Don't you have to factor in holding costs for the 3 months the repairs would take?

Hi, I am probably more conservative than most, but you asked so I will give my two cents. House hacking is a great idea, but I don't think you are ready yet. If I were you I would a) become debt free b) save up an emergency fund of 3-6 months expenses c) save up a downpayment for the property you want to buy(even if just 5-10% down). I know that will take some time to do, but in my opinion, starting from a solid financial foundations will prevent your investing from becoming a nightmare. Besides, paying off debt gives you a good rate of return, so I would take that guaranteed return before I started investing anyway. Just my two cents,

I think that becoming an investor is something that you transition to over time, but you need to first have a steady income so you have some money to invest in the first place. If you don't want to go to school, fine, but you need a some sort of skills and a job that you can make money at. Then, once you have some money saved you can start using that money to invest and create passive income. It just takes some time but you'll get there.