All Forum Posts by: Mat Garcia

Thanks @Aaron Ameen. What you say makes sense. I want to start, but I'm not sure where to. Perhaps its best for me to wait for the increase in income that's supposed to come this year. And I keep hearing property values will crash. But I've been hearing that for years and I am tired of waiting and I seeing the stock market go up and down with my fund money is causing me some stress (not that I'll lose it all, but that it might get locked up for months or even years). I want to start, but I don't want to be reckless.

@Drew Sygit: Thank you for the wisdom... As for the property and tenant classes... I even see spiritual parallels and intersections here... I normally don't think too much of the type of people in a property.... I guess I just use myself as a placeholder for the tenant. I've rented and have always given the place back in good shape and have gotten my deposit back. But I do know that some tenants are disastrous and really wear down or even destroy a place. And I guess one has to take that into account as an extra cost in maintenance or just steer clear of such people. I will reread your Investor Advice again.

@Ryan Irwin: My friend has no experience with managing rentals. I just figured I could do much of it remotely and he could be my eyes on the ground. But maybe you're right. I am a little hesitant to have a long-distance rental, but I don't know what to do with the market where I'm at. Perhaps I would be better off buying a very small/cheap apartment an hour or so from my area and manage it myself.

So I'm in South Florida and as everyone knows, prices here are sky high, and I can't afford to buy almost anything without a considerable loan. Now, I happen to have a good friend in Davenport, Iowa. I've been perusing the property listings there on Zillow, etc... And the price differences are enormous. Would it make sense for me to buy a property there and have my friend help me manage it?

Of course, I'd pay him for it, but it'd be cheaper than a professional property manager and would be extra side money for him. I would handle everything that could be handled remotely. He would simply be my eyes over there and help verify what tenants and technicians are saying. Of course, I would have to run the numbers on the specific property.

But, for example I saw a 1070sqft house with 2Bed/1Bath for $100K that was supposedly being rented for $1200/mo. According to the listing, it was updated only a few years ago and has a new roof. The only thing is that it's literally over a hundred years old, but I figure that if it's still standing, it must be well-built. Is my enthusiasm wrongly-placed, or can this work out?

I went to my local credit union and the rep ran my numbers... But ultimately concluded that my current low income would probably not qualify me for the loan, even though it would be a very small mortgage. I didn't go through with the formal application because it would be a credit hit. So, I may still make an offer on the property, but only based on what I have and nothing else. She did say that once I had the full time position I would almost certainly qualify.

@Mike Fingleton: My Real Estate Agent just sent me a screenshot of a chat with the HOA rep where she said they "were" replacing the roofs- that is- it was very obviously put in past tense, not in present tense. They did confirm that there are no special assessments, but something funny seems to be going on there. Not a dealbreaker, but something my real estate agent and I need to dig in deeper to.

As for distance: The property is near where I live, so that's not an issue at all.

And yes, the debt does weigh on me even though it is currently not costing me anything. I'd like to pay it off, but right now I prefer to have it work for me (I've got my savings invested in mutual funds and some stocks) until I have to pay it off.

I'm definitely going to try to negotiate the price down.

@Jaren Woeppel: Good point on the cost of a personal loan vs. a mortgage. I will have to keep that in mind.

As for house hacking, I don't see a lot of duplex/triplex/etc. here at a lower price point. I was cinsidering renting out the second room of the townhouse, but it's a small place and I'd have to share the common areas, and I'm not sure how comfortable I'd be with that now. I have rented together with friends before, but that was years ago when I was a bit younger.

@Raymond J. Rodrigues: I know it's a lot to put on one property. My thinking is also about having the security and peace of mine of having one's home paid off, although I would not hesitate to have a loan/mortgage on an investment property.

@Khalid Bryan: It's certainly an idea. I just don't see a lot of duplex/triplex/fourplexes in my searches, but I will keep an eye out for them.

And my thinking has been along the same lines: That I can't get a property that is destroyed and needs a lot of repair, but one that needs some normal maintanance and upgrades is doable. I know repairs can start costing more than the initial estiamte, especially if one is just starting out.

@Theresa Harris: Thank you for the advice. I'm not fond of HOAs myself, but there's not a lot to choose from at the low-end. Maybe waiting is a better option.

As far as saving $200K, I wish I could take the credit. Most of it was inherited (which is a tragic story I will leave for another day). I have simply invested the money, left it alone and added to it a little bit every month. And I have been lucky so far to have been able to make it grow in the stock market, but I would like to shift it into either a real estate investment or my home property soon.

@Obed Calixte: I am looking into loan/mortgage options this week, although I don't expect much given my low income right now.

As I understand it, the bank pulled out of funding the buyer because of the issue with no reserves and maybe something else they didn't like about the property (I'm not sure of the details).

Thank you so much for all the replies!

Hello!

I’m in my 40s and live in South Florida with my father and his wife. I own no properties. My expenses are very low. Currently, I work a part-time W-2 job that pays me about 17K/year. This is supposed to increase significantly later this year as I transition to full-time in the same position, but my employer won’t give me a date for this yet. My credit score is over 650 and I have about $200K in savings. I also have about 12K in debt on a 0% credit card offer that won’t expire until next year (part of this is an unrelated business debt that I think is a write-off).

I would like to move out and live on my own again. And so I have been hunting for a property within my budget, close to 1000 square feet, with a low (or no) HOA, in my area for years to no avail. Recently, I found a listing for a 920 square feet townhouse built in 2006 with 2 Bed/2 Full Bath and an HOA of about $230/month. Properties like these are rare, in my experience searching.

The sellers are investors and are asking for $240K and claim they won’t budge. I saw the property and it looks good to me. It is also near to where my dad lives, which is important to me. They claim it is being rented for $1900/month.

Now, I have thought about offering $200K, which would leave me with no money (I am factoring in closing costs), but then renting it out for a year or so to make up for this. The income from my W-2 job should cover my minimal personal monthly expenses. After this, I would move in and then, with a fully paid property use any extra cash savings over time to purchase an investment property (or I could use a HELOC, but I prefer to keep my home paid off) with a mortgage.

Since they claim they won't budge on the price, I am considering getting an investment or personal loan for say $40-$60K instead, maybe for a 5-10 year term. To add another obstacle, the sellers say that the previous potential buyer's financing fell through and that they want all cash. But I'm thinking they'd consider a mostly-cash offer like mine and that this would make it less likely for the financing to fall through. I've asked my real estate agent to check up on the HOA for me, but she is still waiting on the seller for some details. She did tell me it has no real reserves.

Does any of this make sense, or am I allowing my desire to move on with my life color my judgment and potentially get me into a bad deal? Should I try to execute or should I sit this one out, keep increasing my income and savings and try again in, say, six months, hoping another lower-priced property will pop up?

Thank you for reading!