All Forum Posts by: Matthew McNeil

Shiloh, lots of similarities in our respective stories regarding our wives.  Actually, it was my wife who initiated the idea to invest in rental properties and her impoverished childhood keeps us anchored on the conservative lower risk side of the equation, which is OK for me.  Many BP members are quite aggressive and proactive regarding risk and I remain intrigued at what they do.  Ultimately, though, I need to understand that my wife and I are in this together as joint partners.  I have found, however, if I take the time to gently move her towards more risk and show her the numbers then she is more willing to embrace the risk - aside from risking anything regarding this one house we paid off.

Thanks for the "congrats" Steve! It does feel good to own a rental property debt free. Actually, it was an inheritance that we used to pay it off and buy another SFH (not outright though - still has a mortgage). You made a good point by addressing the question of how we paid it off speaking to the type of investor we are.  Insightful question you've proposed, but I'm not so sure its indicative of the type of investor I am for the following reason.  You know the terms BC and AD?  Well, I tend to approach my knowledge as a real estate investor divided between BBP (Before Bigger Pockets) and ABP (After Bigger Pockets).  I think there's a lot of newer BP members in the same club!

My learning curve really accelerated after joining BP.  In hindsight, while looking into the rearview mirror at what's behind me, I realize I could or should have done things differently.  I paid off the house before understanding the value of leveraging.  Subsequently, after reading countless posts and watching several videos I feel that my goals are evolving as I learn. The good thing is that I'm able to buy another property in about six months - and my wife is elated that we own this particular one outright, out of the 5 we've bought over the past few years. I'm 55 and we're on track to buy a SFH every 2-3 years from the cashflow we're earning from our current portfolio. I'm a buy and hold person with the hope that growth equity will benefit me 15 years from now. But I'm well diversifed in the market as well, which has been good to me.

 Docusigning is great.  I've even Docusigned my way through a bidding war from the Philippines. 

I recently proposed a similar question regarding an SFH that I own outright with healthy cashflow vs selling it and buying two other properties. Received healthy opposing comments; some with excellent advice, but I went with those who advised me to hang on to it and not sell - based on my buy and hold strategy. I tend to hesitate in giving advice, but I'll go out on a limb and suggest that you may have answered your own question. You said that your strategy is "buy and hold." And, you have good cash flow. Isn't this what you're striving for?

John, we're almost neighbors! I'm an American expat living in the Philippines from where I've bought 5 SFHs during the past few years and built 1 spec home. The last SFH I bought 6 months ago was sight unseen and I never stepped foot in the US. Only thing I needed to do was sign documents in front of the Embassy consular notary. I don't know anything about Peerstreet and Yieldstreet (sounds interesting though) but I did buy some land and develop a commercial export banana plantation several years ago; 50,000 trees, 50 field workers, aerial spraying and contracted buyer.

I attribute my ability to invest “remotely” in SFHs to a team of people I’ve gathered over the years that look out for my best interests; primarily an excellent real estate agent and an outstanding property manager.  My market area is Boise Idaho.  If you're interested in a buy and hold approach I'd recommend that area because its poised for significant growth.  Forbes lists it as the fastest growing area in the country;

http://www.idahostatesman.com/news/local/article20...

BTW – I’ve been to Siem Reap three times to visit Angkor Wat.One of our favorite places to visit.

 Shiloh, I'm going to go with your adivce because you mentioned "risk tolerance."  And here's why.  

After I posted my question asking what other BP members would do with a similarly owned asset, my wife chimed in and said, "We're not touching that house and we're not taking out a HELOC."

Let me explain.  I tend to believe that “emotion” and “risk-assessment” can’t be quantified in a spread sheet, yet they are very much significant factors in every investment decision.  I forgot to consider the risk factor as it relates to my wife's internal spreadsheet.  My wife grew up without running water or electricity in a make-shift cabin situated on a logging deck in western Montana. Locals refer to the place as “poverty with a view.”  The emotional value she has knowing that we own a rental property free and clear (cash flowing $1000/month) with no debt owed to anyone (aside from county taxes) trumps leveraging that asset to acquire additional properties.

Thankfully, the cashflow from that asset and our other properties will enable us to save the 20% down payment on another SFH by the end of the year when the local market cools down a bit.

 Thanks for this nugget Thomas. Very insighful!

  And your pragmatically applicable interpretation would be...? 

12 months ago, I paid off my first rental SFH property in Boise/Meridian, Idaho. Net cashflow is $1060/month. Comps say the current market value is $230,000. I paid $172,000.

Two options I’m looking at;

1. Sell and invest in two separate SFH rentals. Move-in ready SFH start at $215,000 in my current market. Net cash flow with 20% down puts me around $360/month.
2. Not sell and take out a HELOC to buy another house. My lender is offering 7.85% for investment property.

SEEKING ADVICE; what would BP members advise if they owned such an asset?  BTW – buying a few $80,000 houses in Memphis (for example) is way outside my comfort zone.

My lender is currently offering 5.5% with 20% on 30-year fixed.  Discount of .25% if I put down 25%.

I agree with Jay; “it’s not norm to positive cash flow with only 20 to 25% down.”  It just doesn't work in my market.

5.5% with 20% down will get me into the house, then I’ll recast the loan with $50K and re-amortize at year #3 which fits into my long-term goals.