All Forum Posts by: Jeff Libby

Joe, especially when interest rates are so low right now. I wonder if there are others out there who would argue against not making extra payments

well the math I did in this post leads me to believe paying the mortgage off as slowly as possible in order to invest elsewhere is best. I just wanted to make sure I wasnt missing anything that would prove otherwise

I meant the second, not the third

Shane and Steve, thanks for the resources. I'm thinking 3rd would be best as well, even though the rents are looking to be more around 1300 each after renovations.

Thanks Micki! I'm trying to get a good grasp on the Denver market so I'll be knowledgeable and be able to spot a good deal if one ever pops up.

this is a good point. I think I should look at potential rental rates again and reevaluate the side by side. I'm looking at craigslist to make comparisons.. do you have any other tips on doing this?

Something I would do is talk with multiple realtors and mortgage brokers. When you find a few that you feel good about, do some research on them to find who fits your needs best.

I have been wondering what would be a better strategy, making two extra mortgage payments/ year or using that money elsewhere. 

I'm going to use a basic mortgage calculator for the doing the math on this example.

If I have a 200k house with a 165k loan amount and 3.75% interest, and .5% tax the monthly payments are roughly 850 for 30 years. If I paid bi weekly instead of monthly I would save 16k in interest over the 30 years but I would be paying an extra 1700/ year which could possibly go somewhere else instead. The mortgage would be paid off in 26 years instead of 30, so after the 30 years I would have a paid off house and approximately accumulated about 36k from rents since it doesnt have to go toward a mortgage payment.

Now lets say I invest that 1700/ year somewhere with minimal risk, growing at 7%. After 30 years I would have put 50k into it but it would compound to 170k, making me 120k profits on it. After 30 years in this scenario, i would have paid off the house, but accumulated 170k (minus taxes)

It seems that it would make more sense to invest the 1700 instead of using it to pay off the mortgage early but I'm sure I am missing a lot of variables so I want to get input from you smart people.

I am looking at some properties on the MLS in Denver right now, just trying to learn how to analyze in order to prepare for investing. I want to compare and contrast two of them specifically but I'm having a little trouble because of the differences.

My goal is to buy a duplex as my first property so I can live in one unit while renting out the other. I think this is a pretty common goal for a newbie and is especially important in Denver as rental prices have been so high.

The first duplex is by old town Englewood, going for 270k and is an up/down. Each unit has about 1200sq ft and are 2bed/ 1 bath. There is a large garage and a decent sized yard. The bottom unit has nonconforming bedrooms and my guess is that i would need to spend about 3k to fix this by installing windows.  It has been recently updated with rents totaling about 2100/mo, the top renting out for 1500 and the bottom 600. I think this is probably the maximum income I can get from this property. My expenses for this property (not including renovations or maintenance) would be about 1,700/mo so if I lived in the bottom unit, I could possibly pay about 200 out of pocket.

The second duplex is a side by side in Lakewood going for about 320k. Each unit is about 1100 sqft and again, 2bed/ 1 bath. There are two attached garages and two large yards. This property could use updating. The rents are at 1000 right now but haven't been raised in years. I think if I were to update the units, i could get 1500 out of each side. My expenses would be about 2000/mo not including renovations and maintenance. My plan would be to live in one side and renovate it while collecting rent from the other side. I would have to pay out of pocket about 1000/mo for rents today, but the tenant on the other side is on a month to month lease so I would raise her rent to 1200 prior to updating and pay 800/mo myself. After updating the unit I am living in, I would rent it out for 1500 and move into the other side and do the same thing. 

I think for long term, buying the second duplex would be best because I would get 900/mo more in income, and my expenses (not including renovations and maintenance) are only 300 more. Any input would be greatly appreciated!