All Forum Posts by: Mark Smith

Thank you everyone for your input!  There has been a lot of great advice here, and a lot of great points made.  I'll hang onto the 401k.  Our match is 25% of the first 4% we contribute, and as of 1/1/18 they are increasing that to 50% of the first 6%, so I will plan to contribute 6% so that I at least max out the match.  I like the idea of an additional income stream down the road, so I'll max the match and keep the rest liquid for other investment opportunities.

Yes my employer does have a match, I forget what it is honestly.  But in the last 7 months the account has made a whopping $40.  It just doesn't seem worth it to me.

I've been listening to Set for Life, by @Scott Trench.  Great book!  One of the things discussed in the book is how a 401k locks up part of your income, and that if you aspire to reach early financial freedom then a 401k slows you down because you cannot access part of your income.

I'm 27 years old and about 3.5 years post-college.  About 7 months ago I changed jobs, and I was able to cash out my 401k instead of rolling it over to my new employer.  I restarted a 401k with my new employer and currently only have about $900 in the account, so I wouldn't be taking a huge penalty hit or anything like that.  I contribute $42/week, which seems pretty significant on a monthly or annual basis.  Should I kill my 401k so that I can access this $42/week?  Another $168/month does sound really nice, and I do plan to grow a portfolio of rental properties to support myself and my family.  I have one duplex currently and I'm under contract for my second.

Any general thoughts or advice would be great!

According to the FHA official site, "A principal residence is a property that will be occupied by the borrower for the majority of the calendar year."

If you are planning to take a vacation and rent out your unit for a week, the unit would still be your principal residence. I don't know of any regulation stating that you cannot collect rent on your unit. I don't see a difference if you were to buy a single family home using an FHA, and rent out a couple of the bedrooms to your friends. Maybe someone else here can chime in if there is something I'm not thinking of.

Jump now! FHA is an awesome tool for your first property. Start putting your money to work now instead of waiting.

I must admit my disappointment though. When I saw the title of your post I was hoping it was Hulk Hogan. "What are ya gunna do, brother?!" What a terrible reference...I hope at least one person gets it!

I never noticed this Investor Deal Diaries section! Time to make use of it!

I currently own one duplex, and my fiance and I have been looking for another multifamily to purchase and move into together with her 5 year old son.  Finally!  On October 17th, THE house hit the market, and we were ready to jump.  We got in to see the house that afternoon, so quickly that the listing agent didn't even have keys to the place.  The sellers had been "leaving the door open" for contractors, so we could basically walk right in.

We really liked the house.  It is 4 bedrooms each unit, has a nice back yard, and a lot of off street parking.  The location is great, and it is freshly renovated.  PUMPED!  The one thing we are nervous about is that it is a flip.  Also, when we looked in the basement there was a little bit of water (the sump pump wasn't running as the utilities were off), and there was a considerable amount of rust on the bottom portion of the boiler and two water heaters; all of which didn't look old at all otherwise.

Soon after that we put in an offer.  We found out from the listing agent that they were supposed to have 4 showings that day (a Friday), and at least 6 that weekend.  I was nervous we'd be in a multiple offer situation.  We put in our offer on a Friday and gave them two days to make a decision, so I thought for sure they would take the weekend to see if they received any other offers.  To my surprise, they counter offered that afternoon at only $4,000 more than we offered.  My agent responded that if we were to accept their counter offer they would cancel all other showings, to which they agreed, and we were under contract!

We had our inspection on 10/27, and it was bad...really bad.  First we found out there was mold in the attic and basement, approximately $4,500 to clean up.  Then the inspector told us that there had been about 14" of standing water in the basement at one time...WHAT?!  Sure enough, there was a distinct water line on all of the walls of the basement and everything else down there, which we now know is why the boiler and water heaters had rust on them.  They recommended we have the basement sealed up and have work done to keep it dry to the tune of $15k-$20k.  AND, they recommended the furnace and water heaters be replaced; approximately $6k-$7k.  We were really upset to have to give the seller this inspection report because we knew the deal would fall apart.  Oh, the icing on the cake: there was a fire in the basement!  The subfloor was all black/charred.  The inspector said it was all cosmetic, nothing structural, and they had made the proper repairs.  But I just had to laugh since it was just piling up.

The following Tuesday my agent tells me he spoke with the listing agent.  The sellers agreed to make repairs!  We were floored, and again, really pumped.

Today (11/1), I get an e-mail from the sellers.  This is strange to begin with since all communication is typically through the agents or attorneys.  He wants me to give him a call so he can talk to me about the work he's done, so I call him.  He lets me know that he put in an additional sump pump on the other end of the basement, replaced the gas valves in the boiler and water heaters, is having the mold taken care of, and has fixed a few other odds and ends.  So at this point my only major concern is the boiler and water heaters.  I was hoping for replacement, not repairs.  So tomorrow I'm headed to the property to look at the boiler to see if the water was high enough to damage the electronics or any other parts of the unit, and I'm planning to have a local heating company come out to inspect the unit.

So this deal has already been crazy and stressful, but that's real estate.  Who knows what tomorrow will bring!

Hi @Kyle Burkhardt. There aren't really any major downsides to using FHA. The worst part I'd say is that you'll have PMI since you'd be putting down less than 20%, but this will be somewhat offset by FHA's favorable interest rates. Also, you will be required to live in one of the units for at least a year. Once your year is up you could potentially refinance out of the FHA into a conventional, then use FHA again on another property (you can only have one FHA mortgage at a time). Or, don't bother refinancing if you can afford 15% or 20% down on your next property and just go conventional. You can use FHA for houses between one and four units, 3.5% down. I used FHA on my first duplex a year and a half ago, and I'm now purchasing another house I will owner occupy using a conventional mortgage, 15% down.

@Jason D. I absolutely agree with you.  I don't discount the value of a good inspector.

@JD Martin unfortunately I can't go that route since the bank won't lend on it the way it sits.

Hi @Joshua Huston. Just something I thought of, not directly related to any of your questions, but you mentioned that you are using Zillow. I have alerts set up on Redfin for the areas I am interested in. I am also set up to receive MLS e-mails from my agent, and the Redfin alerts consistently beat the MLS alerts to my inbox by about a half hour. Maybe 25 or 30 minutes isn't much, but you never know.