All Forum Posts by: Account Closed

 A $37,000 salary and $140,000 student loan (who knows what total debt is), will very likely always cause problems due to a high debt to income ratio.

Clarify a few things. Are expenses during the year for the duplex allocated between all units including the owner occupied unit? That would be an IRS requirement. Are you also stating that the owner occupied unit contributes to generated income? What percentage of both income and expenses are attributed to the owner occupied unit and how does it affect the numbers on the excel file?

If you have not already, you benefit from developing a personal budget to have an intrinsic understanding of what all your personal liabilities are, what you should be making and what your savings and investment requirement should be, in an environment where the future of social security and it solvency is suspect. 

I have heard some real horror stories where they do not wait on you to send student loan payments but have the ability to get at your paycheck as if they were making some sort of a FICA or medicare tax deduction -- before you even see your check. 

If you have  considerable personal debt, credit cards etc., and owe anything in the $100,000 range on student loans, at the recent 6.8% rate and 10 year term, the student loan payment alone would be somewhere in the $1152.86 range per month. When you factor in other obligations, your debt to income ratio at a personal level may affect your ability to make substantial or meaningful investments that rely on your personal credit.

About real estate investment strategy, the margins on a rental business model can be thin at times (there may be a few exception to this), unless you invest in a market where that is being offset by rapid growth in the value of the property. 

An aggressive strategy would be something along the lines of rehabbing and flipping.

 $28,000? The monthly payments on that would certainly be manageable. It is not unusual for grad students for instance to have student loans in the $100,000+ range. At a 10 year term and 6.8% interest, that can sting a bit. 

Until I reread your post, I thought you said you had to get three kids along with the wife to help work on paying down the loan. I'm thinking, good gracious! What is the pay rate in Minnesota?

On a yearly basis you want to plan for, allocate resources, should there be a disruption of this sort. This is an inherent risk with the rental business model. Disruptions in the tenant's life may often also mean disruptions to your cash flow. Life happens.

If the seller's intent was to give you bogus financial data, they could and would do so in many ways regardless of what file you told them to print out. This is why when buying a business for instance you rely on audited financial statements because someone typically goes to jail or looses a license for knowingly providing false information. If the seller is serious about selling, it is in their interest to provide the necessary financials. How they keep records may vary (if they formally do so at all) but they could produce standard financial statements from which you can make a decision on. Misrepresenting or using fraudulent cooked up documents to induce a contract is a serious prosecutable offense and definitely basis for voiding a contract at the very least. 

Student loans can get  you on the ropes. Depending on where you live and student loan debt principal balance, it may even be the equivalent of a few mortgages and can be significant. If you plan on maintaining traditional employment for a while, it definitely affects what jobs you go after (pay rate), if you plan on having any quarters left after paying student loan bill. Definitely want to look into ways of earning additional alternate income if you plan on aggressively attacking it.

What  is your investment budget? That sort of dictates both where (location) and what price range you invest/play in. Also housing price growth is not always speculation in some areas but rather a driven by demand and supply of inventory in that particular area.

Not exactly. Usually the more you pay in taxes, the lower the net income which affects growth of retained earnings. There isn't a direct correlation between taxes paid per year and qualification for financing. Perhaps you meant the longer you have been self employed or in business, have an operating history that demonstrates consistent earnings, the less perceived risk and hence lower lending rate or increased lending amount?  At a certain level it is about cash flow and quality of earnings.  Although the lower your taxes the better, it doesn't mean not to look into self employment simply because of a higher total tax from running a business compared to traditional employment.

I actually thought this was a rhetorical question but wage levels across the country is too low not to explore alternative earning channels from traditional employment sources. Census data suggest 2015 median household income in the United States was about $56,000. Now that is household income which means just that - the total household income; which in some cases mean a combined wage of some sort for households with couples. This in part is what fueled the last housing crisis... banks had to get creative in order to make the numbers even make any kind of sense. Try to get a mortgage in San Francisco with a $56,000 income. You typically don't restrict your earnings potential because you don't want to pay more in taxes.