All Forum Posts by: Mark Costa

@Joe Villeneuve may I ask you to describe what "investing in both" looks like for you? How do you decide when to invest in which and what does that look like. Sounds like stocks are an afterthought for you compared to REI but I'd love to get a clearer picture of what the allocation / timing looks like for you.

@Nathan Gesner I'm actually coming at it from the other side. Passive investing in stocks is all I 'know' and I'm just educating myself now in real estate. 

Do any of you invest in the stock market (i.e. S&P 500) *and* real estate properties at the same time?

If so, why and how do you prioritize both? (Do you invest a percentage of your cash flow into each?)

Clearly the downside is each portfolio will not grow / compound as quickly due to lack of total focus.

On the other hand / upside, if one does well  it can feed the other and if both do well that’s even better.

My motivation for asking is because I am already 100% invested in stock market as I am just learning about REI.

@Brent Coombs Thanks! That’s an interesting way to look at it and makes sense... 

The “fastest” way to get there is obviously to use all the cash and leverage you currently have access to and get as many properties so you can start the snowball... 

I’m just trying to figure out my personal investment philosophy and how that factors... I don’t want to throw it all out the window and end up over leveraged. 

I guess the decision of whether to get 15 yr over 30yr mortgages has the same effect? Results in slower growth over the short term.

Goal 1: Pay off mortgage on the home you live in. (With no plans to borrow against it in the future.)

Goal 2: Begin, grow and accelerate real estate investments using leverage. (The monthly cash that previously was paying the mortgage on your residence now goes into real estate investments *and* you are using leverage to fund / accelerate your rental properties.)

Do the above goals conflict with each other?

In my mind this protects the downside (of losing your home because you can't pay the mortgage) and allows you to take more risk and invest in properties faster.

Thanks Michael for the perspective! 

I'm still working out my philosophy but here's where I'm at right now:

I'd like to keep all personal liabilities (non-investments) as low as possible. This means prioritizing paying off mortgage on the home we live in. After that is paid off, our ability to take on risk will be much higher and I'm okay using leveraging for RE investments going forward. 

I suppose the answer according to this philosophy is to sell the house in order to pay off the new one faster.

This just seems like a unique opportunity considering we already have the house and it has appreciated so much in a hot rental area. So it's an outlier I want to be educated on before I sell. 

Thank you for the thoughts!

Our family is growing and we're looking at upgrading to a larger home. 

I'd like to understand the opportunity of keeping our current home (financials below) as a rental and see if that makes more sense than selling. 

The Financials

• Purchased our "starter home" brand new in 2010 for $166,490
• Zestimate is currently at $281,510
• Mortgage Outstanding Principal balance is $137,331.69
• Monthly Payment (PITI) is $1,159.24
• Rent Zestimate is $1,625 /mo

In case it's relevant, our budget for a new home is $450K and we have 25% saved for deposit. If we were to sell our starter home I would take that cash and put it right into the new home as well (resulting in a ~$240K mortgage.)

For what it's worth, this would be our first rental property. I'm not even sure what needs to be considered beyond this so please ask away. Anything you can do to help me come to a decision is much appreciated.