All Forum Posts by: Kenneth Burdick

Hey guys,

I'm a newbie who is trying to clear some personal debt and save for a first real estate investment property. I thought I was ready a couple years ago but then we ended up upgrading our primary residence and I feel like it set me back a bit, but everything has tradeoffs I guess.

At the moment, just trying to build a better network of people around me who are like minded and on this same path/journey of trying to build passive income over time to gain greater financial freedom down the road. Would love to connect with those are in the same boat or are more experience and wouldn't mind sharing some learnings. Reach out!

Ken

Hey I'm a newby still working on acquiring investment property #1, but if you'll have me, I'll consider dropping by!

Quote from @Joe Villeneuve:

Quote from @Kenneth Burdick:

It all depends on the rate of return you believe you could generate on your own with the $1M. In the retirement investing world (mutual funds and stocks - the dark side, I know...), they often talk about the 4% rule. This is a rule of thumb to help you figure out how big of a nestegg you need before you're ready to retire. The idea is once you can live off 4% of your nestegg, you're set since you'd be living off a conservative rate of return and wouldn't be cutting into the principal.

So 4% of $1M would be $40k/yr or $3,333/mo. So if your belief is 4% is the best ROR you could generate, then you might take the $10k/mo. But if you are more confident and believe you could get a 15% ROR, then you'd take the lump sum.

Wrong. 
$1M at 4% gets you $1.04M at the end of year 1.  When you reinvest each year, at 4%/year, you get the following returns in DOLLAR$:
Start    $1M          $10k/mo = $120k/yr
2 - $1.08M             $240k
3 - $1.12               $360k
4 - $1.17               $480k
5 - $1.22               $600k
This is based on a ridiculously low return of only 4%/year.  It also doesn't consider the compounding effect of the cash flow from the properties you are investing in. 

You misunderstand the concept. The idea is you're living off the 4% return, not reinvesting it. If you reinvested it, then yes, it's a different formula.

Why not just get a side hustle and crank on paying off that $30k loan? Could probably do it in a year or less.

Thanks Mike. So if there’s a house we’d like to offer on now, we’re probably out of luck?

Yikes. So if we’re interested on offering a house right now, we’re basically out of luck most likely? In any event, thanks for the thorough response.

Our hope is to purchase a new property that we will move into as a primary residence and then rent out our current residence.

Hi BP community,

Our current primary residence has a first-position HELOC. We were planning to use funds from this account to purchase another home, but the lender is having an issue with us "using borrowed money for the down payment." This seems like an overly simplistic way of thinking about this to me. Does anyone know of other good lenders in California that are OK with using a HELOC for down payment?

Hi BP community,

Our current primary residence has a first-position HELOC. We were planning to use funds from this account to purchase another home, but the lender is having an issue with us "using borrowed money for the down payment." This seems like an overly simplistic way of thinking about this to me. Does anyone know of other good lenders in California that are OK with using a HELOC for down payment?

@Daniel Wirtes Hey were you able to find a good one? I'm interested in talking to one also. Been trying to reach Strawberry Realty Property Management but can't get a return phone call.