All Forum Posts by: Logan J.

@Jack B.

I appreciate the insight but, again, I feel like you are criticizing me more than you are helping me. I realize I have a lot to take into account. I realize I still have a ton to learn. In no way do I plan to just jump into planning into managing three tenants. This talk is all speculative. I'm just on this blog to ask some questions and hopefully learn a little. I'll absorb whatever information and/or insight from the question I have and then rinse and repeat. 

I've done some rough estimates of expenses but I honestly have no idea of what my expenses might be other than the average utility bills from the previous owner. Regardless of the loan that I go for I can only approximate the interest rate based on the current rates. At this point estimating and speculating is all I can do because I've never done this before. I never gone through the steps of purchasing a home. I have no idea what I'm doing, I can only take-in what others offers and, well, learn through trial in some sense. 

@Kyle Handy

Thank you for the advice. What is your opinion on the MFH homes in SA? I had my realtor start sending me the few listings that pop up every now and then and for the price point, they don't seem worth it. For the most part, they seem run down and not maintained well. In my opinion, I would believe they are managed by a "slum" landlord. 

I've done the financial and it seems like the best option would be to put 5% down on a convention. I would cash flow more than an FHA while still putting a minimal amount of money down. Also, once I've hit 20% equity I could drop PMI and begin drastically beating the FHA comparison.

I wouldn't mind asking you a few question but I have to tell you that I already have a realtor that has already been helping me for some time now. He hasn't shown me any homes for sale but has been extremely accommodating in adjusting the listing I receive from the MLS.

@Rick Pozos 

Haha thanks! I'll look into that. I am a few month away from actually making a purchase so if they still have that offer I'll take advantage of it. 

@Rick Pozos

Thank you. In my area are 150K would be a greater price for a start home. I've been town between buying a SFH over a MFH but ultimately I believe for my situation a SFH would be the better choice.

My plan was to buy a 3/2 or 4/3 and rent out the extra rooms.

Do you have anything to add about an FHA over a conventional loan? Putting 3.5% down versus putting 5% (or a minimal amount) down for a conventional loan? I've found that with an FHA I wouldn't cash flow as much but my IRR is greater with an FHA.

I guess it's just hard to decipher which financial ratios to actually focus in on. 

@Jack B.

I think I may have arbitrarily put 3% in for the FHA mortgage. If I change the interest rate from 3% to 3.25% the difference in the monthly mortgage only changes by $20. Although I realize that $20 adds up over the course of 360 months, in the first iteration of my model, these assumptions didn't have to be as exact as you are making them out to be.

I realize I have a lot more to learn and that's why I'm here on the blog trying to ask questions and get input on the concerns and questions I have about RE. I appreciate the input thus far and in no way am I just going to jump into RE without taking into consideration the largest moving parts of it all. Is there any additional reading you might recommend? 

I thought it was interesting that you recommend 20% down at minimum while @Nghi Le mentions the complete opposite by putting down as minimum as possible. 

 The 3% I have in the model is an estimate. It's probably higher with the recent rise of interest rates. A four plex would probably run over 200K here in San Antonio. I have also not factored in rental income from that perspective. I'd have to change those numbers to actually realize that profit. Row 24-25 is an additional section where you can change expected expenses, vacancy, maintenance, and so on. That assumes that the rental income covers all expenses and you can actually pocket that cash. So yes the $312 is the end all without having to spend any additional money from my job on expenses. 

@Nghi Le

I contribute up to my company's match and then some. I think the only reason I do this is because I don't know what to do with my savings. By default I assume that it's better to defer those taxes and invest in low-cost index fund now than have it sit in my savings account and depreciate while I try to figure out what to do with it.

I think the reason that I don't know anyone who has comfortable retired on their 401K's is because most of the people I know spend well more than they save, if they end up saving. They all contribute to their 401k up to their employers contribution (roughly 5%) and that's all they save. They rely on that and assume it will be enough to retire when in actuality they should be saving closer to 15%. I haven't seen The Retirement Gamble but will probably check it out tonight. Thank you for the recommendation!

I plan on emailing my realtor and seeing what option I have and who I can contact about what type of mortgage I might qualify for. 5% would be ideal and oddly enough the financial ratios seem to favor a conventional mortgage. I referenced this link above but here is one of the first iterations of the calculators I was putting together. Here: https://drive.google.com/open?id=0BwQwOpR2XQaaMEpZ...

If you can provide some sort of financial ratios I should look at that favor an FHA @ 3.5% over a conventional @ 5% please insight me. All of the numbers I have ran seem to say the other way around.

In your opinion, would it be better to go with a SFH over a MFH for a starter home? I feel like a MFH would be a hurdle to trump while working on my MS. What are your thoughts?

Yes, I am working on my degree in data analytics and am looking at becoming a data scientist doing consulting. With that in mind, my thought it to make good money doing that type of work I might be pulled away from San Antonio. If I decide to pull the trigger and buy a place here in San Antonio, I might have to hire a PM company and/or sell at a loss. This all assumes I have to move for work rather than travel regularly.  

Again thank you for your insight. Looking forward to hear back from you. 

@Jack B.

It's interesting that you mentioned doing the financials of the situation. I've put together an excel spreadsheet comparing FHA vs. Conventional mortgages. You can see one of the first iteration on my google drive. Here is a shareable link:

https://drive.google.com/open?id=0BwQwOpR2XQaaMEpZ...

Since this iteration I have added tables on tabs in the back that calculate and forecast the NPV and IRR on a year-by-year basis. I've attempted to do the analysis and I'd appreciate it if you look through it and see if you have anything to add.

@Jack B.

Thank you. I appreciate the response. I know what you mean about having at minimum 20% down. I could save enough for 20% down but I'd have to cut back on my 401K contributions. I guess I'm not really sure where I want to be putting my money. If I want to be saving for a house or if I want to be investing in a retirement account. I haven't made up my mind yet and I guess the purpose of making this post was to get some input from others here in the community. 

@Jack B.

If I wasn't front loading my 401K and maxing out all of my tax-sheltered accounts, I would probably be able to save up enough for a 30% down payment within a year. However, that isn't what I'm doing. I'm always torn between investing in my tax-sheltered accounts versus saving for a house in the long run. 

I've looked at a few duplexes here in San Antonio and they all seem pretty worn down. A four plex would be ideal but then my downpayment would have to be substantially more. It would also be a little but more maintenance than I feel I can manage (or know how to). I've lived with a few professionals and it seems that most of the people that are looking for a room to rent are either students, young professionals, or even seasoned professionals looking to save money on rent. 

Thank you for the input through. I always am going back between whether or not I should be heavily saving for a house or if I should be investing my retirement accounts. I have also jumped between doing a SFH vs. a multi-plex.