All Forum Posts by: Brant Richardson

If you are good at rehabbing and property management you guys are going to be an awesome team.  Congratulations.  Bummer to find out you aren't getting the acreage in the final hour.  On the other hand acreage is pain for a rental if it has to be maintained.  Where do you expect rents to be after all the units have been rehabbed?

I just looked at all the mortgages and coincidentally the smallest is also the one with the highest rate so that is the place to start.  My thought for paying down the smallest first is that if I ran into financial trouble and had successfully paid off one mortgage then my combined minimum monthly payment would be lower.    

My thought on paying off the student loan first is that it is not tax deductible, will not be forgiven in a bankruptcy and well... it just irks me to still have a student loan 15 years later.   It doesn't feel successful, I know, emotional investing is not the way to do it right, so I will concentrate on the loans with higher rates.

As far as the loan that affects my debt to income ratio the most, that is definitely the 600k loan I cosigned.  That one is not going away any time soon and the rate is better than the others at 4%.    It's not a house I would have bought as an investment property but am now holding onto it as an investment property.  Got my fingers crossed.  I don't plan to aggressively try to pay that loan down, just pay the minimum until I am ready to sell in 5-7 years.

If there is only a few months left on the lease just let it go and do not let them renew. 

When I was 19 years old a 3 bedroom house was a multifamily home!  Get a few roommates, don't tell them the cost of your mortgage and have them pay the whole thing.  Put somebody in the garage.  I even lived in a place during college that had an RV in the driveway rented out.  I wish I had been a landlord back in those days. 

Make an offer anyway.  The pending deal may well fall through. 

My OOS agent pretty much always finds that the "deals" I identify online are not as good as they appear. If you are buying off the MLS then most likely your deals need more rehab than the pictures would lead you to believe. Truly good deals on the MLS are going to be gone fast, whether you are OOS or not. I have certainly felt your frustration of a bargain lost forever.

People in the Bay Area will keep renting in a recession.  Both markets will go down in a recession.  The reason to still be in the Bay Area is because ultimately you want to return there and you could get priced right out of the market if you sold and tried to return later.

  I personally live in Santa Barbara and do my investing in Kansas City so I can certainly understand taking your money out of California.  For me it would be a no brainer, in your situation I would proceed with the plan you described above.  Better price/rent ratio in NC, no mortgage interest to pay and you could do all the property management/maintenance yourself for overall way more cash flow.  I like cash flow better than hoping for appreciation.  

   I guess it depends on how sure you are about returning to CA, a really expensive part of CA like the Bay Area in particular. 

What Jason D. said!  Get the rehab done ASAP and refinance it once. 

Chances are, if you sell your place in the Bay Area then you won't be able to get back into the area.  Hold onto it for now, maybe after a few more years in NC you will decide you don't want to go back and you can sell it.  Or in a few years rents will be even higher and it will start to cash flow.  In the short term, if your wife got a job it would improve your debt to income ratio as well as provide some more cash and maybe you could make another deal happen in NC.   She could quit as soon as the deal was completed.  Do you own both sides of the duplex in NC?  If not then maybe you would be better off with a property that gives you a home as well as a rental unit.

I currently have seven SFH rental properties. Five of them have small mortgages, 40-60k. The interest rates on each mortgage is pretty similar 4.5-5.25%. They are all 30 year fixed rate mortgages. I also have a 28k student loan which has a rate of %2.5 but I can not write it off my taxes due to my income. I recently cosigned a 600k mortgage to get my mother into a home a couple blocks away from me so I could take care of her as she ages. That move changed my debt to income ratio from maybe being able to get another small mortgage to definitely not being able to get another mortgage. I have a solid emergency fund and no credit card or vehicle debt. The combination of my debt to income ration and the feeling that the market is pretty high right now has me thinking about finishing the acquisition phase. I know, I can get more creative for my next deal and I may do that but I would like some input on the best strategy if I did decide to move into the pay down phase.

Should I?

   1.  Pay down the mortgage with the highest rate first?  Obviously mortgages with lower rates are better.

   2.  Pay down the smallest mortgage first?  Once that loan is completely paid off I will have increased cash flow to put it into paying down the next mortgage and so on.

   3.   Pay down all the loans equally?  Get my 30 year mortgages paid off in 15.

   4.   Pay down the student loan first?  It's not tax deductible like my other loans but the rate is so low that it doesn't make much difference.  Also, that loan would follow me if I was to go bankrupt.

                                   Thanks for your input

Thanks Meagan,

The article refers to it as an installment sale.  Unfortunately "Basically, the sale of the property created a capital gain anyway—the use of an installment sale simply spread capital gain tax liability over the length of the payment plan".  That is not the answer I was hoping for.

It could still be a good win-win because he will get steady income with out landlording and I will give him a much better rate than the bank would on his money.