All Forum Posts by: Kristin Horowitz

Hi guys, I live in a very high real estate cost market. I've been paying ridiculously low rent in comparison for the last ten years in the same place that it never made sense to buy. A house recently came onto the market that was cheaper in mortgage and fees than renting, so we jumped on it.

The plan before was to have invested money in cashflow buy-and-hold rental properties out of the area, but decided that throwing away rent when we could buy a very good buy-and-hold starter home in a market that I know well and believe will do very well in a few years if we are ready to move out of it -  seemed like a good call. 

Thing is, I'm still looking at a decent deposit for another purchase at the end of the year.

The house is undermarket currently and with about $20,000 in upgrades, it would be worth a lot more. We plan to live in it for at least 2-4 years. I could use the money to increase the value of the home for sale (and enjoyable living space), or I could use the money as a downpayment. 

That assumes that I would even qualify for a downpayment so soon after. It would have to be a conventional loan as we've tied up ourselves in this house's loan (and that's fine - we have dogs and livestock and couldn't swing a multifamily in the area with them).

What do you suggest?

Hi guys, I've discovered REI in the last six months and been reading voraciously while I get into a position to get into the deep end of this stuff.

But I have a couple problems/questions:

1. My family have all done real estate investing and I would say they were not very successful. They just didn't know enough going in, the market dropped out, etc, and I do not want to be a victim of this.

2. I live in a very expensive area - the median price for a 2 bed/1 bath is $500,000. We're looking at possibility of doing FHA loans for a multiunit situation but I have dogs and so less flexible with that option. (Currently rent, for very cheap.)

3. I have a mentor that invests a few hours out of the area where all of this makes a lot less sense. She says she's interested in partnering with me, but generally I find that partnering just means equal work and less return. I don't know her extremely well, so am wary. She really wants me to attend Rich Dad Poor Dad sessions, but I'm wary about spending money on something like that when I can learn it in other ways (I'm pretty good about self-education).

But come the end of the year, I should have enough to be able to move on my options above if I want to. But rather than feeling confident, I'm not (mainly because of #1). Would you recommend a partnership in my situation or do you have any advice for people who are ready to do it, but just afraid to pull the trigger because they know they don't know enough yet? (And generally, I'll feel this way for many years . . . I like to UNDERSTAND everything. It's a fault.) :D

Thank you!

Good thoughts, guys. What you guys are saying is exactly what I'm thinking. I'll talk to a local bank about it rather than the loan officer to set myself up.

My business was volatile in 2012 thanks to a very bad partnership and decision that has us seeking collections, hence the loss. It's already doing great and we're just ramping up, so, like I said, expecting the cash to be enough to push it over the edge. All profits this year are supposed to go to investment (we make enough with the other job to maintain a lifestyle I'm happy with).

Hi guys, I'm in the midst of creating a plan for my investments and I'd like to see what you think - you guys have been EXCEEDINGLY helpful in making me think bigger than I imagined so far, so wanted to put this out there.

Things to know before I launch into the plan:

• My husband and I are both bringing home entry level salaries for our area thanks to being executive directors for a non-profit we started. We have no other outside employer.
• We own another business that in 2012 showed too much of a loss to qualify us for conventional loans. This year we show a profit, but our loan officer told us we needed to wait until 2014 returns were in to try again using conventional routes. 2014 numbers are looking to be more than double what we take home from our salaries.
• We are currently renting way below market. We could not remotely secure a mortgage for even twice what we pay in rent right now.
• I have a fantastic spreadsheet and have been doing market research, everything I say below is pretty much what the picture looks like for me unless I get lucky and find something way undervalued. You'll have to trust me there.
• My long term goal is cashflow and the purchase of ag land as a primary residence in town (about $1,000,000 price tag on that baby) while not being land-poor.

• Buy a USDA-0% down eligible property, preferably with enough land to stop having to pay for rental space for our business' equipment and take the write off. The mortgage would cost at least twice what we pay now, but I guess we're not renting. Sell in a few years when the market is right and hopefully end up with enough cash to both buy a new place and invest for cash flow (my primary objective).
• Buy a multi-family FHA 3.5% down property in town and live in it. The mortgage would be closer to 3x what we pay in rent now (aka, our debt-to-income would be pretty ridiculous and not sure how that works with multifamily - does the lender look at the rent income as something they count when working that out?), and pretty much no chance at a positive cashflow there. Same as above, we'd have to move out after a couple years and hope it made enough money to invest again.
• Keep renting and buy in a lower-value area where we can afford 25% down and get positive cashflow in the first year. Keep investing money in more homes and wait until cashflow is high enough to secure a loan above (are we even eligible for loans like that if we have conventional loans to start?) to invest in town (likely as a primary residence).
  
  I am thinking the last one makes the most sense, but as I said, you guys tend to open my eyes to the possibilities and I would love your input.

@J Martin,

Just wanted to thank you again for telling me about the opportunities like Sandercock. I totally just saw one go up and go pending when I was out of town that was exactly something I could swing - so my mind is wide open now. Much appreciated! Got my real estate agent on it!

@J Martin, makes sense from that perspective. My own personal income can't cover the kind of mortgage that's going to take, even with a supplemental rental income to defray it. We'll look into it for sure, but I suspect the SLO market is way out of my league for the meantime. :)

@J Martin, I told my husband about your leads and we was absolutely ready to move, but by my calculations, we'd end up with a mortgage that was WELL above anything that could generate a positive cashflow, so I wanted to ask if you were just pointing out that they were for sale or if you really see potential there and why?

@Nicholas, definitely not actually knocking Iowa, but I want my cake and to eat it, too. As I said, my first dog's breeder has a gorgeous spread out there, but I have far too much for me here to leave, even if I have to work harder for what I want. (Because I also want to mountain bike, climbing, surf, hike in the mountains, etc right out of my doorstep, which I do now.) Great cattle! Congratulations!

@J Martin, thanks for the tip on this redfin site: I was using a SLO based MLS search that brought nothing up. The world just opened up with this opportunity you're laying out! My goodness, you're right that the Sandercock place is definitely up my alley. Now to get the cash in reserve to have the down payment and make sure we'll get approved for a loan (yay working for yourself - I got batted out of a land purchase last year that I qualified for up until I filed my taxes - it's so much more volatile when you own a business, even if you have a salaried job on top of it). Or yes, I know there are a number of ways to get that loan elsewhere, but again, I'm a baby at this. I need to think less complicated right now before I launch into complicated. My brother had me extreme couponing in college and in the end . . . I should have just bought the lap top I was gaming the system for. :) But perhaps I am wrong on this? You're already killing it with ways to show me how to get into this right now.

@J Martin, that's awesome! Go Dad for supporting our boys. The whole town was psyched about it. I'm not a sports fan, but even I cared!

Did a cursory looksee on the possible multifamily opportunities in the county - none. But I will keep looking. Like I said, more interested in less developed markets (but stable ones). My husband was pretty excited about it when I told him your suggestion.

I own a brick and mortar in SLO and I'm not fond of commuting. So, you know, rather than make a concession, dream big!