All Forum Posts by: Account Closed

If you plan to sell in 15 years, it could massively reduce your buildings value, I mean it could make sense for a place where you pay for everything (rent by the room to old people) but for a normal appartment building it'd surprised me if it was worth it right now

Incorrect. They can easily last 3 decades. Where did you get this info from?

"A solar panel typically lasts approximately 30 years."

http://www.solarcity.com/residential/solar-energy-...

1 Vote

You're talking about construction in an area with declining population. You need a team of experienced people around you, or you'll lose all your money fast (due to spiraling construction & rehab costs). This is completely a full-time job & a business. You need to understand every aspect & outcome completely before going in, during rehab, and know your options coming out.

Is it worth the risk? That's for you to decide. You'd be buying a job, not an investment.

Best of luck.

0 Votes

How about get 100% owner-financing on a different property first? Then, you can show that you have experience & you'll increase your income if you need to put down a percentage towards doing a project like this.

I'm not in a position to give advice on developing, but focusing on increasing your income (and savings) will only help your situation.

Keep us posted!

1 Vote

Originally posted by @Mike Wood:

@Michael Landrum Using leverage (ie debt) allows you to build your real estate holding much, much faster than waiting to pay off each property. Sure, there is less cash flow, but its a numbers game. If person A owns one house free and clear, and make $1000 per month in cash flow, is that much different from person B that owns 10 houses with mortgages and makes $100 per month per house (thus the same $1000 per month in cash flow)? Person B can acquire those houses quite quickly, sometimes with very little money tied up in each house (if using a BRRR like process).

In addition to the speed in which you can acquire property, the leverage increases your cash on cash returns. There is more risk with the use of leverage, but there are generally greater rewards.

For me, I like leverage, but I also understand that lots of people do not want that much debt.

The best part about the person who owns multiple properties (ex. 10) is that you can use the multiple income streams to pay off the lowest value loan, then snowball that into paying off each house quicker & quicker. For example, before long you'd have 3-5 free & clear properties cash flowing that you could add to paying down other debt incredibly fast. This can get even faster if you add money out of your own pocket to getting the houses paid off quicker.

Just one scenario of many.

1 Vote

Easiest option is to sell the properties, which would give you options to decide how to invest or distribute the money to your liking.

1 Vote

Don't worry about the tax benefits. I would refinance & pay the minimum + $100 a month. Also, make sure you have emergency savings (3-9 months of monthly expenses saved) & a savings for real estate (for a total of $10-20k, whatever will help you sleep at night if a deal goes bad).

It's better to save money & get a nice property, instead of buying property under 50-70k. Recently, non-accredited investors could start investing with $1000-2500 minimums into RE crowdsharing sites (RealtyShares, etc.).

Don't rush into RE too fast. In summary, get that debt paid off WHILE increasing your savings before you jump into RE. Best of luck.

1 Vote

Remember, mortgage interest should be tax-deductible. Shouldn't this, at a minimum, zero out the property taxes that are due annually?

0 Votes

Originally posted by @James Wise:

Originally posted by @Ben Leybovich:

I like @James Wise's thinking, but I disagree and raise him one :)

The issue I take with the plan of using the money as a down-payment with FHA supplying the leverage is two-fold. First, if you use everything you've got to get into the property, what are you going to do when a furnace needs replaced...?! You see, $10k is really not enough to cover both, the necessary float and the DP. You NEED the float.

Second issue, which actually alleviates the problem, is that God invented creative finance for a reason, and this reason is - if you have limited cash floats, keep them...and figure out how to get the property with nothing down.

Interestingly, the side effect of thinking along these lines is that the process necessitates that you get better deals, and that you are much better educated - both are good :)

Good Luck, Jason!

Re-raise

Currently I am seeing some 1% down products out there but they come with a lower debt to income threshold than an FHA loan. A deal being "better" doesn't change the mortgage underwriting process. You can't get a loan for the required down payment no matter how good of a deal you got.

I suppose Ben & I could go back and fourth on some of the technical ways to get around this in a round about way but that gets far to complicated to go over in this thread. It would also involve loans obtaining loans that are technically on other properties and or assets and not technically related to the particular property at hand.

Let's face it 1-3.5% is a pretty small amount of money. If a furnace broke you could float that with a credit card. I say keep it simple and go with a traditional loan product as I described, this is your first purchase after all.

I definitely agree with having a credit card available & getting free travel points in the process, if any expenses come up. :)

0 Votes

Talk to a lender to find out what you are eligible for at the moment.

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All Forum Posts by: Account Closed

Account Closed has started 9 posts and replied 88 times.

Post: My property might be on fire. What should I do?

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Post: How much should I be concerned about property taxes?

Post: What to do with 10k

Post: Investing while getting Masters degree