All Forum Posts by: Josh P.

I was able to borrow above and beyond tuition costs so right now its at 6%. Is there any way I can restructure to lock it in and use it to temporarily augment my emergency maintenance fund until I can get it to a healthy level with rents. Otherwise I'm just going to pay it back because its not fixed by any means.

After having read about the universality of the rule on here and other sites, and having been convinced of its merits I guess I just feel like I'll absolutely be spinning my wheels if I settle for any property who's market rents don't adhere to it.

I'll be sure to check that site out thoroughly.

One more thing about the fifty percent rule.

I have a triplex thats doing $1800 a month in rents. Sale price was 62k, mortgage payment is around 545 on a 15 year.

When I do the fifty percent rule.using those figures, I'm barely at the $100 a door free and clear cash flow benchmark.

I'd like to think I'll be able to get just as lucky with my future properties as this first one, and actually be able to follow the rule, but it doesn't seem likely. Is it easier to follow this rule when you're buying apartment compexes rather than SFR's or apartment small multi family properties like mine?

Thanks Bryan. That article really hits the nail on the head, and even spells out the alternative lenders would have to that approach:

Another way to pay off the balance is to make equal monthly principal payments, in addition to interest. For a long time, this was the method used in New Zealand. In my example, this would require a principal payment of $100,000/360, or $277.78 a month. In the first month, interest would be $500, making the total payment $777.78, as compared to $599.56 on the FAMEMP. While the payment using this approach would decline over time, the borrower’s ability to afford a given-priced house would be reduced, which is why New Zealand replaced it with the FAMEMP.

I think I'll pass on that method and stick with FAMEMP.

@ Paul. Your actually right. I can't really back up that point of view because its not one I hold to. I was just sounding off and trying to start a discussion.

Well I think its just great. It has the net effect of putting us all into a scarcity, rather than an abundance mentality. Which is bad when it comes to personal relationships, but great when it comes to figuring out what you should pay for a rental property, especially at this juncture.

Even in a low appreciation area like my part of Texas, 9 out of 10 deals I look at don't fit the criteria at asking price. But at least the 50% rule is in place to act as a beacon for the right direction, rather than the direction of exuberance and fluff.

It might also be useful to consider whether your portfolio as a whole is satisfying the 50% rule, provided you do reinvest your $100 per door cash flows.

I agree with that. I really haven't been able to nail down definite fixed rate yet, but I suppose I would have to pay the 20% in order to with the small time stuff I'm doing. (1-4 units for now)

Hey Jeff I noticed on another discussion that you were thinking of moving to Yardi software for your properties. What would you recommend for someone like me?

I want the most robust software for small time guys that's available. The main differentiating factor I need it to have is for it to replace quickbooks as far as the accounting feature. I saw an ebook called Landlord accounting where the guy claimed to be able to walk you though all the steps to set up quickbooks for REI.

That seems like the most robust accounting solution for my RE business as a whole, but could I have that in tandem with the relatively simple accounting feature offered with these PM software suites. One that would serve to track my simple expenses (as opposed to accounting for flips, lease options etc)

Would you recommend quickbooks set up the right way, PM software or both?

Yep, I understand. What I really hate is how they have you pay all that interest at the beginning of your loan term...

Lets say my rich uncle won't help me invest until I've proven I can invest wisely. I do well enough for five years and he's impressed, so he gives me loan at 2% fixed, and I'm glad to have it, but I'm kicking myself because I haven't reduced the principal on my total debt by much at all because I just paid all this front loaded interest.

I realize the banks are in it to make money, but it seems like they make an ungodly amount of money on money they just pull out of the air, you know? I wish there was a work around.

But I mean if you had 1M cash, would you invest in the absolute best REAL ESTATE deal you could find and let it pay you back, happy all the while because you weren't paying interest?

Or would you use it as a down payment on 10M worth of real estate?

Up until now, I haven't considered 30 year because of the extra interest I would pay over the long run....that and the bank I went with for my first (and only, so far) property wouldn't allow it. But as I get more in depth with this and other sites, I'm beginning to re think that position. Is it best to have the lower debt service just in case of hard times, and to pay more when you can, after building up a reserve for each property, of course, so that you don't lose your shirt when it gets rough?

When I'm using it to figure my monthly payment and therefore the max I should pay for a property, am I to go by the monthly payment amount for a 15 year or a thirty year mortgage?