All Forum Posts by: Logan J.

I'm new to BP and am venturing into buying and holding with a skeptical spouse. We're considering moving to Austin, Tx and that's where I'd most likely buy a rental. Given my partner isn't on board for any sort of RE investment (live-in / house hack / duplex), I've considered my first property to be 20% down on a non-line-in investment (not ideal, I know). 

One of my partners' concerns is I'll be over-leveraged, for when we try and buy a home for ourselves, ideally our dream home. I have no sense of what my dream home would be and just view RE as an investment and don't need somewhere I buy to be a permanent home. That being said, they want reassurance that it's financially the right choice either jointly or for me before they get on board.

What sort of emotional logic can I bring to the table to convince them? They are very financially risk-averse, so not only does it need to make financial sense, but I also need to convince them that it's the best emotional decision as well. 

Has anyone on BP ever faced similar challenges with your spouse? If so, how did you handle it?

Sure would appreciate some advice here. Thanks!

Following. I'd also be curious. 

Currently living in San Antonio, Texas roughly ~90 miles south of Austin, Texas and I'm considering making a move! I'm considering going heavy and buying above the average/ median home price and going with a Duplex or SFH (3 Bed /2 Bath) + 'Mother in Law Suite'. That being said, how realistic is it to significantly offset my cost of living or even reasonably find one of these properties? I don't expect to be completely cash positive but I do want to considerably lower my cost of living in a city where the cost of living somehow mimics cities on the one west coast. 

Question: Are there any Bigger Pockets members out there doing something similar? What was the cost of the property and do you live-in? Given the market is hot, is it reasonable to think a buyer will accept an offer with only 5% down? Most of my research has been done using Zillow and I estimate the minimum I'd be able to find a property that's is semi-move-in ready to be 600K+. Is this assumption wrong? 

@Cheasare Green I forgot to @ mention you in my previous comment. 

@Mindy Jensen 

I could rent the entire property out for anywhere between 1400-1600 which would cover most if not all expenses. The $1000 is being brought in by the two tenants from renting out 2 out of the 4 bedrooms (not including the rent I would be substituting from myself). If I substitute what I am spending on rent and add that with the expected rental income, I would hit that $1500 mark that would cash flow ~$50 a month until I am able to get rid of the PMI.

Obviously this isn't a great deal, but ~$50 x 12 month = $600. $600 divided by the $10K investment (down payment + closing costs) still nets me a 6% return. You can double check all of my expenses above but I think I have most if not all major expenses included. I'm okay with an initial 6% return on my investment as that ROI will grow once I've minimized expenses and have cut out the PMI.

Another point to add is that I currently am in a stable relationship. I am buying the home on my own. I am also renting a single room in house which does not allow my partner to live in the house unless a new agreement is made. Most likely the rent would go up. 

If I were to purchase my own home, that wouldn't be a problem. We would split the remaining monthly expenses of the home, roughly ~$250 each, and that would substantially increase my return. 

I'd love to hear your input. I've also considered doing a rehab or BRRR. It would take substantially more time out of my already busy schedule but the return would be there in the long run.

Here are my calculations so far:

Purchase Price: 162,500

Closing Costs: ~2K - 3% of Purchase Price + 3K in Seller Commissions

Down Payment: $8,125 - 5% of Purchase Price

Interest Rate: 4%

Loan Term: 360 Mo.

Rental Income: $1K (If I Include my cost of living, I add $450 a month because I currently renting out a room in a 3/2 house for 535/ month I can bring this number up to $1,450)

Taxes: $216/ month

Insurance: $121/ month

PMI: $115/ month

Vacancy: $84/ month

Repairs: $102/ month

HOA: $10/ month

Monthly Payment Due Each Month which includes all above: $1,385

If rental income is ~1,450, I'm clearing $65 a month or $780 a year which divided by the down payment and closing costs I am earning a ~8% return on my investment. That jumps up by ~$1200 or 10% when I am able to drop the PMI.

I may not be including everything from my calculations but if you could give them a glance, I would appreciate it.

I could see myself renting out the entire home at $1300 - $1400 a month. If in a year or two I can get to 20% LTV then it seems like a solid return on my cash. However, until then, it's barely break even.

As the title says, I’m roughly a few days from coming for an agreement on a single family home I am purchasing. I’m posting here because I am getting cold feet and wanted to see what the community here at biggerpockets thought. I am looking to build the start of a rental property portfolio to achieve financial independence faster and/or become my own boss. How does investing in real estate compare to the passive income investments such as index funds compare? Am I in a position to buy and are there any other alternative investments I should explore? I have expanded and added to the post based on a few questions that popped up in the thread.

A little about myself, I am a 26M living in a one of the largest cities in the country that probably has the lowest cost of living among them. The median list price for a home is ~$227K and the median sale price is $178K. I am 6 months shy of graduating with my masters in Statistics with a focus in Data Analytics. I am currently working at a large Fortune 100 making roughly $70K a year. I have roughly $25K in cash reserve, ~14K (5% down and 3% closing) of it I plan on using on my down payment and closing costs. I have a large enough down payment to qualify for a conventional loan and was planning on going that route as opposed to an FHA because of the life-long PMI associated with an FHA.

I also have a sizeable amount of invested in my 401K and IRA. I have roughly ~100K in my tax-advantage/sheltered accounts because prior to learning about real estate, I wasn't sure what else to be investing in. I might also mention that I am able to save roughly 40% of my income every year. So in the case that **** does hit the fan, I have the financial backing to cover needed expenses.

The home is a 4 bed/ 2.5 bath with a detached garage that has been renovated as an office/ living space without a restroom. The garage is carpeted and has a functional AC. I’m not honestly not sure what to do with the garage as-is and my idea was to un-renovate it because I actually need the space for my tools. One of the bedrooms is connected to the master through French doors. I don’t have any use for the space so I was planning on walling off the room and turning it into a shared office (given I un-renovate the garage).

The home is listed at $180K and has been appraised at $180K but I have been able to talk the seller down to $162.5K + $3K in closing costs. The property has been on the market for 3 months and on the surface is distressed. The back yard is a mess and there is moderate wear on the home. It is move-in ready but does need some TLC. The sellers' agent also mentioned that the home was under contract for a month before the previous buyer backed out for personal reasons. Must be why the house has been on the market for so long. At this point, I feel like the seller just needs to get out of the house and is in a desperate position to sell. That being said, I should be able to clean up the house and bring the value back up to 180. If I can get the home valued/appraised at $180K when the initial loan amount is it $154.3K that would be extremely close to 20% equity/ LTV and I could eliminate my PMI.

I have explored MFH in my town and most of them either require an immense amount of work or are extremely expensive to be feasible.

My intent with the home is to rent out the remaining rooms. As a 26M, I feel comfortable having this landlord tenant living situation. I am currently renting one bedroom in a popular area of town for $535 not including utilities. I should be able to clean up the house and sell it for that price within a year or two at $180K, given the housing market doesn’t take a dive.

Financially, as a rental property, I need to be bringing in $1,450 every month to cover the mortgage, taxes, insurance, as well as any variable expenses such as expected vacancies, repairs, and maintenance. I expect I can charge $400-$500 per room and will most likely be able to have a given 2 tenants at any moment. So, in worst case scenario, I am paying towards my mortgage rather than paying rent as I am now.

I am getting cold feet because of the obvious commitment buying a home/ rental property it. I am also not sure what my future holds for me one I graduate. I am I making the wrong decision? Am I taking on too much unneeded risk? Any thought or opinions would be appreciated. Sorry for the long post. Thanks everyone.

Thanks Brian for you input. I really appreciate it. I like to see locals on here for sure. Most people don't know what they are missing out on. 

 I grew up on the northwest side and although I enjoy the area, I don't think I want to buy there. I would prefer something along i10 and/or west of i10 mainly because it is closer to work for me. 

What are your opinions on live-and-flip homes? That is, for the most part, what I plan to do. I have a good idea of the neighborhoods in town but would like to hear your opinion. 

 Brian, I've got a bonus question.

If I was interested in approaching a seller from a craigslist ad how might I finance the deal? Is it as straight forward as confirming they want to sell and then going through a loan officer to get the financing and closing on the deal? Would I even need a real estate agent at that point? 

 Thanks for the response Ross. If I were to buy a 4 bedroom house I have realized I need at minimum 2 full bathrooms and a half, assuming one of the bathrooms is in the master bedroom. 

Assuming that I can find a simliair price between a 4/2.5 and a 3/2, It would make more sense to go with the 4/2.5 since it has the opportunity to cash flow more.