All Forum Posts by: Kevin Coggins

True, and to add to the numbers, the quote is at 5.375%. It would take 4 years to hit 20% and have PMI removed, which means $1968 towards PMI. I guess I will run some numbers when I'm not stuck at work to get a better idea on what kind of returns I'd need to make this work - then see if it's even feasible.

But 20% would literally be all I could put towards a property and then have my reserves. I wouldn't be able to put 20% down now, then in 2 months do the same (well, technically I could, but it'd have to be one hell of a deal to pull a loan on my 401k).

Which would you prefer?

On a 100k purchase...

Option 1: 15% down + $41/mo PMI

Options 2: 20% down

The numbers would work either way. But on one hand, I' paying more interest/less principal and also getting a $41 charge, which is going to reduce my cashflow.

Alternatively, if I put down 20% I will have better cash flows, but I now have 5% less to put down on a downpayment (which could be 33% of a downpayment).

I'm thinking I want to go the 15% down route, especially considering my money to put down is limited, the 15% would allow me to get more deals going quicker. Just wanted to see others opinions/views on this.

seems like an awful not of risk and based on the numbers you've posted it doesn't seem like an amazing deal

If Vacancy is already at 40%, if it's going to be conservative, shouldn't it be higher than current (like 60%)? I feel like unless there is a demand for rentals in a dying city, there isn't really money to be made on this. From what's been posted, it seems like the supply exceeds demand. 

If the numbers worked, and like somebody mentioned if you cut rents maybe you could attract renters from the next town. But seems risky with not a ton of upside - unless the numbers are far better than the rough estimate from the person above.

Why wouldn't you just buy the house to begin with? If you can get DP assistance it just seems like there's too many additional fees associated with going from Point A to Point B in your given scenario. Since you're going to owner-occupy you could even go for an FHA loan.

 Been looking at rentals a bit, but now that my wife is getting serious about going back to work, it's more realistic to purchase one now. The reason I plan to wait two years to sell, is that we won't have to pay any capital gains tax since we will have homesteaded for the previous two yrs. We also purchased at a price point where there would be some cash flow as a rental if the market was down, not great, but I ran the numbers on it so I would know of alternatives to sell. Never heard the quote until now, but I've always been frugal - got it from parents, but they just lacked the investment side of things and are scared of risk. I got tired of putting all my money into the stock market and that's how I finally ended up here. 

@Michael Swan I haven't bought any investment properties yet, so I got a long ways to go with that.

But felt like chiming in since your story reminded me of my wife. After pestering her all the time about being more frugal, she one day randomly told me we should sell our primary (built in '72), and throw a mobile home on her dad's property (vacant 3 acres). I'm all for downsizing after we hit 2 years if the market is in a good place for us to sell, but thought it was pretty funny she was so down to not only downsize, but even go for a mobile home (I'd rather stick with downsizing to a smaller house myself haha).

 That really isn't bad at all. I considered doing the RE classes, but my wife had been out of work after our daughter was born so I gave her that option and she's finishing up now. Gives you some flexibility to also do your side hustle, whether you're flipping or whatever you end up doing.

I don't know your situation, but if you're single, I would try and research personal finance and various ways to save more. I was pretty frugal to begin with, but I started doing that and cut out things like cable tv and various ways for what little I had starting out to go further. Could afford to live in nicer apartments, just chose the cheaper ones so I was saving about 50% of my take home pay (maybe not 50%, but some crazy amount looking back on it).

I would get a credit card - I only had maybe 2 years of credit history when I bought my primary house 7 months ago. You don't need 20% down to own a house, you can go the FHA route, or even pay PMI if it makes sense (for me it did). There are also programs through Fannie Mae/Freddie Mac, one is called HomeSteps and I forgot the other, but if you are owner occupying you can get in for 3.5% as well.

As far as the route it seems like you want to go, in Texas you can do all the classes required for your Real Estate License for like $200 online. I'm sure there is something similar in WV.

That makes sense, although I'm not positive on the deeds since the property is located in an oil/gas county, so they charge like $150 just to access their records. Since this property is REO, I'm going to guess the bank would want to handle this all as one transaction. This is good to know in case I come across anything similar in the future, I like the idea of the ability of getting into a property, then selling X and being able to recoup downpayment + some of the rehab costs.