All Forum Posts by: Justin McFarland

I am curious if a pool with a SFH is a valuable item for renters. I would hire a company to maintain it but I am not sure about liabilities that come along with it. I am curious if anyone has experience with this subject.

Originally posted by @Aaron Taylor:

Originally posted by @Justin McFarland:

@Aaron Taylor Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements and more liberal underwriting standards than most conventional mortgages. Because of their stated purpose, FHA loans are, for the most part, restricted to buyers who intend to occupy the houses they are purchasing. An FHA loan typically cannot be used to finance a second home, a rental home, a vacation home or investment property. However, there are a few exceptions to the general rule.

People are not going out and buying investment properties with a FHA loan in mass. While there Is little equity it is also there primary residence and without this option most people could never afford the down payment.

Read more: Can FHA loans be used for investment property? | Investopedia https://www.investopedia.com/ask/answers/112515/can-fha-loans-be-used-investment-property.asp#ixzz5OgHoTez8 Follow us: Investopedia on Facebook

 Oh I totally understand that, the one post just mentioned that we aren't overleveraged and I was just pointing out that 25% to 40% of the loans made today are at a high leverage point.    Not that it means anything other than maybe people are being stretched a little thin possibly, and if housing dropped you could have a large number of homes under water mortgage wise. 

 I didn’t see your percentage of the loans. I agree with you on that. Worst case scenario there are an increase in foreclosures or uptake in note repurchasing. Both cases can be capitalized on.

@Aaron Taylor Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements and more liberal underwriting standards than most conventional mortgages. Because of their stated purpose, FHA loans are, for the most part, restricted to buyers who intend to occupy the houses they are purchasing. An FHA loan typically cannot be used to finance a second home, a rental home, a vacation home or investment property. However, there are a few exceptions to the general rule. People are not going out and buying investment properties with a FHA loan in mass. While there Is little equity it is also there primary residence and without this option most people could never afford the down payment. Read more: Can FHA loans be used for investment property? | Investopedia https://www.investopedia.com/ask/answers/112515/can-fha-loans-be-used-investment-property.asp#ixzz5OgHoTez8 Follow us: Investopedia on Facebook

@George Cavazos

Here is an article i found on China and US GDP relations and how they are intertwined and not competing. What is unique about economics and productivity is that when countries or people work together they both benefit. China is the largest foreign holder of U.S. Treasurys. In May 2018, China owned $1.18 trillion in Treasurys. That's 19 percent of the public debt held by foreign countries. The U.S. debt to China is lower than the record-high of $1.3 trillion held in November 2013.

Here is a great video on youtube on How the Economy Works. It is also important to remember that housing markets are not the same in every state or area. A holistic look at the the country as a whole is sometime hard when your familiar area is increasing in price or stay steady. I agree California's housing has always been an issue especially in tech heavy areas. From what I have read people are starting to move to Colorado and Texas to get away from the high prices. Austin, TX is becoming a tech hub as well as other cities because people can't afford to live there. From what I understand the banks allowing 0% down and Interest only loans as well as other risky behavior was a major contributing factor to the bubble. That on top of bundling loans into packages as reselling them make the problem escalate. Since then the banks have created stricter guidelines. I am not saying that it doesn't mean it will not happen again but speaking from personal experience I have to put 25% down on investment properties and cannot take HELOCs out on anything but a primary residence. the crash of 2008 effected a lot of people and is still in peoples mind. It is hard not to keep thinking about it years or decades later but we should not fall into availability bias and think of examples that are readily available. If you remember people that lived through the great depression of 1929 they still kept there money under mattresses for decades after the crash.

I couldn't make it but I am looking forward to the next one!

46k invested.

Once this property is paid off I will use the extra income to quickly pay off the second.

56k invested.

I have attached graphs of a scenario where I use the cash flow I am making to pay off two properties in less than 15 years. This may seem like a great idea at first but if you look below at what the original 46k and taking the extra income would be like in the same amount of time. This is assuming a conservative 10% growth in the NASDAQ where 15.08% is the mean growth of the last 30 years.

It all depends on what you reason for getting into REI is and what you want to gain from it. It also depends on your timing in your life what other foreseeable circumstances.

I sat down with a friend of mine who flips houses it Pittsburgh but comes down to Florida where I live to visit occasionally and we were talking about the differences in real estate in both of these areas. He mentioned in conversation that SFH start at around 50k there while here the minimum is 100k. He has been flipping homes for over 5 years and has been successful but in conversation he said he doesn't own any long term rentals but would like to because he uses all the money to buy fix and flips. Also it is very hard for him to get loan because he doesn't show a steady income (all he does is fix and flip).

That got me thinking, I have a steady income but don't have the cash to buy more properties (bought two in the last year) at the moment, and he has cash but can't get a loan, what if we partner on a long term rental in Pittsburgh where he is familiar with the area. I know there are multiple ways to partner and I wanted to ask if this is a good idea and what other ways I could make this work? If I did approach him about this I would use an attorney to formalize everything and do my due diligence on his business model, but what else should to protect both of us? 

Justin

After reading the book "Start With Why" I can up with this mission statement. What do you guys think?

Manors of McFarland is dedicated to improving the lives of everyone involved in our company, family and the community through trusted relationships, sharing knowledge and putting clients first by investing in real estate and rental management to maximize profits without sacrificing integrity.

I currently own two rental properties with plans to manage 3 more this year from friends moving to build passive income for future investments.