All Forum Posts by: Kevin Touw

BLUF: Don't make the extra payments.

I wouldn't even think about making the extra payments, especially because you're looking to invest in more real estate based on your profile.  3.625% may be the cheapest money you'll ever get and with the house hack, it seems like most, if not all, of your expenses are covered and your housing costs are pretty cheap.  Which means you should be able to save up cash for your next deal.  You really need to balance the opportunity cost of the interest you'll save with the returns you can make by investing that $400/month or however much you can scrape together.

If you want to get real nerdy, you can download a loan amortization spreadsheet, plug in the extra payments, compare the interest saved each month versus what it'd be if you keep the loan as is, and discount the NPV into today's dollars.  Or you can just trust that, given the low interest rate on your mortgage and the length of time it'd take to realize the savings (i.e. you don't save all $76k today, you accumulate the savings over 20+ years), that $76k becomes a much smaller number in "real" dollars.  Especially when you compare that to some FV calculations of investing that $400/month at a reasonable rate of return.

Yea, it's annoying to earn 1.5-2% in a money market account or a CD ladder as you save up for the next down payment, but it's about having the cash on hand to be able to strike when you find that next deal.

Hi everyone!

I'm active duty Navy looking at the very real possibility of heading to Newport next summer. I'm looking to purchase a multi-family to house hack or a fixer upper SFH depending on what the market is looking like. Looking to connect with an investor friendly realtor to help with my own research on the market and get a boots on the ground perspective. Thank you!

Based on what you've shared, have you considered buying a SFH that you could force some appreciation into (i.e. it needs some TLC) and taking on a roommate or two? If you have the down payment, want to invest where you live, and have chosen SFH as your niche, that seems like it's viable option. You'd be able to secure favorable, owner-occupied financing; force some sweat equity; get your feet wet as a landlord and start to learn the ropes; and down the line, depending on how things go, you could turn it into a full-time rental and either rinse or repeat or move onto a different strategy to obtain future rentals.