All Forum Posts by: Mathias Simmons

I agree with John, but depends what you mean by maintenance. 

If they are just the handyman, then your friend is getting a great deal as 20-25% of cashflow and equity is a lot more than what you would pay any other handyman/contractor. I guess the question is how good of a friend is this person? :)

If you're doing STRs at a distance, definitely read David Greene's book on Long Distance Investing. It has lots of good information that will help. It also has a chapter on lending that has a lot of information on what lenders are looking for and how to stay bankable.

@Robert Penniston and @David de Luna. Thank you both for the recommendations!

Hi all,

Do you have any recommendations for electricians in the KC area?

Thanks in advance,
Mathias

I'm not an unemployment expert and I'm sure there are various factors that go into when people get paid, but 2 months seems like a very long time compared to the people that I know personally who are on unemployment during this time. I've been told from a couple of different people that they started getting paid pretty quickly. I'd dig into that a little more because her experience isn't lining up with what I've seen personally.

If you have the time, you may need to step in and help them navigate the process so you can get paid. I know it's not your job, but your success relies on it so it may not be a bad idea to help where you can. You may also need to remind them on the importance of paying rent during this time, that their rent is still due (and potentially collecting interest depending on where the property is and what's in your lease), and trying to motivate them to start paying you back now. I think that has a better chance of working for you than waiting on a check from the government. This may be one of those situations where you're trying to get blood out of a stone. But the fact that she only paid a quarter of her rent less than a week after she was let go says to me that paying rent is either extremely low on her priority list or that she is irresponsible with her finances. Either way, it doesn't exactly give me confidence that a payment plan would work out.

@Zane Biggs Congrats! My wife and I and 2 little boys are doing the same thing and currently have a duplex in KC under contract. I concur with everything that's been said so far about running the numbers both ways. My only addition is that when you run the numbers with no rent from the unit you'll live in, make sure that you take your rent savings into account somewhere. I think when your cashflow comes out zero or positive, this isn't such a big issue because you realize that you would be living for free or getting paid to live there. But I think sometimes it's hard to remember (at least it was for me when we first started looking) that even if you're estimating -$400 for cashflow, you're still making a decision that probably improves your overall financial position by hundreds of dollars per month compared to your current living situation. And it could even be thousands depending on how much you're currently living it up.

Hope that's helpful!

Hi all,

Does anyone have a recommendation for home inspectors in KCMO?

Thanks,

Mathias

Hi Jalah,

That does sound like a lot of work. Especially for a first property. The way I see it, you have a few options (in no particular order). 

One option would be to walk away. Sure you'd be out the cost of the inspection, but you wouldn't be on the line for anything else and you could try to find a place that would be a little less harsh of an entry to real estate investing. You're giving off the vibe that the owner is somewhat delusional about the state of the property and what a fair value for the property is given that state, so you might be forced to go this route even if you try to pursue one of the other options.

The other options involve taking on the work. Your first step there would be to get a structural engineer and other qualified contractors out to the property to give you an idea of what it would take to fix. At this point, it just becomes a math game and taking their estimates and negotiating with the seller to come to a price that makes sense given the state of the property. If you don't have the capital to take on the repairs yourself, you could negotiate for the seller to bring the repair costs as cash to the closing table. Or if you do have enough cash and would still have enough in reserves, you could negotiate the purchase price down and pay for it out of pocket. Or some combination of the two.

Either way, make sure you do the math and stay true to your criteria. Having to walk away happens so make sure you don't just keep going with this deal because you put money into an inspection.

@Steven May This is such an awesome question! As a person in my early thirties that spent most of my 20's getting a PhD and then spent most of the money that I earned once I started working, I think the most important thing I would tell myself is to just start early. To be honest, if my wife and I committed to becoming financially independent when we were 23, then we would be there or almost be there at this stage in life regardless of whether we invested mainly in index funds or real estate. I understand that you're trying to optimize, but I think getting some of the bigger things right early (living off of significantly less than you make and investing the difference) is 80% of the battle and choosing whether you invest in stocks or real estate after that is a win-win question.

As for what I'm doing, my wife and I have committed to being financially independent and have significantly reduced our spending. We have two boys under 3, so this has allowed us to let my wife leave her job to stay at home and still give us the ability to save about half of my income. I'm currently contributing to my 401k to get a 5% match from my employer and then everything extra is going towards a down payment and reserves for a house hack so we can further reduce our expenses and accelerate our path to FI. We also have 6 months of expenses saved up in an emergency fund. I normally wouldn't be so conservative, but with two kiddos and one income, I think it sets us up to weather some storms should they come without having to send my wife back to work.

I'm also in KC. I'll send you an invite to connect and hope we can touch base at some point.

P.S. Your two-step approach to your finances (cash flow then tax-advantaged accounts) reminds of an approach that Tanja Hester wrote about in her book "Work Optional." I recommend it if you haven't read it. The first section about envisioning what you would retire to is a really worthwhile exercise.

@Steven May This is such an awesome question! As a person in my early thirties that spent most of my 20's getting a PhD and then spent most of the money that I earned once I started working, I think the most important thing I would tell myself is to just start early. To be honest, if my wife and I committed to becoming financially independent when we were 23, then we would be there or almost be there at this stage in life regardless of whether we invested mainly in index funds or real estate. I understand that you're trying to optimize, but I think getting some of the bigger things right early (living off of significantly less than you make and investing the difference) is 80% of the battle and choosing whether you invest in stocks or real estate after that is a win-win question.

As for what I'm doing, my wife and I have committed to being financially independent and have significantly reduced our spending. We have two boys under 3, so this has allowed us to let my wife leave her job to stay at home and still give us the ability to save about half of my income. I'm currently contributing to my 401k to get a 5% match from my employer and then everything extra is going towards a down payment and reserves for a house hack so we can further reduce our expenses and accelerate our path to FI. We also have 6 months of expenses saved up in an emergency fund. I normally wouldn't be so conservative, but with two kiddos and one income, I think it sets us up to weather some storms should they come without having to send my wife back to work.

I'm also in KC. I'll send you an invite to connect and hope we can touch base at some point.

P.S. Your two-step approach to your finances (cash flow then tax-advantaged accounts) reminds of an approach that Tanja Hester wrote about in her book "Work Optional." I recommend it if you haven't read it. The first section about envisioning what you would retire to is a really worthwhile exercise.