All Forum Posts by: Matt Kvalheim

Thank you all for taking the time to advise me! @Brandon Turner @Doug S.

@Albert Bui . Thank you especially for pointing out the tax ramifications - I wasn't aware of how the standard deduction worked along with mortgage interest. Last year, I had about $21K in mortgage interest and another $8K in property taxes. That is definitely something to take into account!

Here is some more information on my home and what I have modeled out in terms of investment property.

The monthly PITI on my house is $3700. It is worth about $850K and I have a 30 yr fixed loan for $550K. The rent for a similar home in the area is about $3200. The issue I have is the location (Orange County CA) and the price I initially paid for my house. I can't rent it out to cover my PITI (plus I'd have to cover maintenance, vacancy, etc. on top of that). If I could rent it for cash flow, I definitely would! However, we play to sell within the year and either buy another primary residence that better fits our needs or buy an investment property and use the cash flow to pay for our rent - that's the choice we've given ourselves.

So, if we did go the investment route, I was thinking that I would invest out of state where the cap rates are much higher and gain enough cash flow to live almost rent free (I think I would need a cap rate of about 10% on a $700K or $800K property). We currently own 2 4plexes in Boise, but that market is very difficult for us out of staters to purchase anything good right now - at least, my contacts there haven't been able to identify the kind of investment I would be looking for. So I need to find a different city to look in (any suggestions?).

This is what I modeled out (below).

I think a seasoned investor could probably do a lot better, but I want to realistic about what I might be able to find in the market. What do you think of my numbers? What have I missed and do you think if I were to buy an investment that worked out like this, would it be a good idea to go for it instead of buying another primary residence? Any suggestions for cities/locations where I might be able to find a somewhat hands off investment like this (I would have to hire a manager because I would still live in CA)?

Thanks again for looking at this post! I understand if you don't have time to look at this as closely as I have (we're all busy), but any suggestions would be appreciated!

Hello everyone, I wasn’t sure which forum topic would be best for this topic, so I picked this general topics forum.

I would like to get your feedback on my plan for freeing up funds to invest in Real Estate. My wife and I live in a home that we plan to sell in the next year which should provide us with $200K of funds to invest (that is conservative, hoping for closer to $250K). We would like to purchase multifamily units and use the cash flow to pay for our rent (ultimately, we would like to save and buy another home and have the multifamily units pay for the mortgage).

Basically, we would be selling our home and becoming renters again in order to hopefully have an investment that will pay for some or most of the rent expense. I do have some R/E investment experience, but not a lot. We have owned a couple 4-plexes in Boise, ID for the past 10 years, though I am not actively participating in the management (we have property managers as we live in CA). So what do you think? Is this a good idea financially?

The second part of my question is more short term. Since we are planning to sell our home next year, should I refinance my 30 year fixed mortgage to a 3 year arm in order to save about $600 per month on my mortgage payment until we sell? Again, do you think this is a good idea? My concern is that if we don't end up selling the home and rates go up by the time the ARM resets in 3 years.

Thanks everyone for your advice.