All Forum Posts by: Monica Young

Welcome! I'm new here too & I live in Baltimore county. I was given a great tip about networking at local meetings. When you go there, don't just sit in the crowd and listen. Always leave with 3 new contacts. Just walk up to people and introduce yourself. Ask them about their investment niche & talk about your plans and ideas. You will find what you need that way.

@Tyler Mullen - Preparing for the worst case scenario is precisely why I posted this question. These kinds of responses are what I'm looking for. One of the reasons we are low balling our max purchase price from what we qualify for is that we want to be able to cover everything during vacancies or any other issues. We've been overextended before and we don't want to be in that position again. The best case scenario is that we pay off the loan in 2 years by paying more than the min so that 2-year calculation is what we'll be using in our analysis, but we want to be able to cover the minimum payment at all times. Thanks. This is great information.

@John Dombrowski - Yes, that's on the pro list. We don't have much of a savings yet because we just finished paying off some credit card bills. That's where the wiggle room in our paychecks comes from. We could wait a year or so to save up money and purchase or we could get started now with a 401k loan. This way, we'll be paying ourselves back. We have a little credit card debt left, but it's manageable now with a debt usage of less than 35%.

@Michael Seeker - Yes, we plan to get a conventional loan. Interest rates are low right now. We owned a house about 7 years ago that we used a 401k loan to get & they didn't take the loan payment into account when we got that (and neither did we). It turned out to be a nightmare. Without going into too much detail, we did a short sale on that house. We don't want to make the same mistakes again so we're being a lot more cautious now that our credit and income is better than it was then. We anticipate that we will qualify for around a $600K loan, but we only plan on using $350K - $400K. Thanks for that link. I think we fall into the "good cash flow and minimal non-401(k) savings" category.

@Nathan Waters - Thanks. That is a very good bullet list to follow & those are some of the things I learned the hard way. On point number 2, that is not always the case. I had a 401k loan at an old company & they allowed me to leave it at the same company and continue to make the payments after leaving the company. I know that's rare. It was a small company & I did some consulting work with them after I left, but it is a possibility. I just had to ask for it. I'm not counting on that this time. I just wanted to throw that out there.

@Tyler Mullen - What do you mean by "protected"? Do you mean from creditors or taxes?

@Matt Mayotte - Good point. We have the flexibility in our budget to handle a smaller paycheck for a while. Not ideal, but it's doable. Also, we wouldn't be taking out the max amount we can take at this time so there will be some left if we need another loan.

@Nathan Waters - That's a really interesting strategy. I guess I'll just have to see what the lender does. I'm sure I can come up with something. Thanks.

@Michael Seeker - I didn't realize we'd need to have the funds in our account to get the loan. That's for actual approval, not pre-approval right? We haven't done that yet either. The only reason living in the property is a maybe is because we're looking in the Baltimore County area of Maryland and multi-family properties are hard to come by... at least in any areas we want to live in. We're working with a new agent who's an investor himself with several rental properties of his own so hopefully, we'll have better luck finding something now.

My husband and I are thinking of using a 401K loan as a down payment on our first multi-family rental property. We may or may not live in it as well. We both work full time and we'd like to use all of the cashflow to pay back the loan & then after that, save for another property. If we live in the property and the other unit covers most or all of the mortgage we can pay down the loan faster. Does that sound like a good strategy? 

Already been through it. It was great! I learned a ton. I'm going through the  Free Course now. It's pretty involved, but I'm committed to finishing it.

@Account Closed Thanks! I see you're in Maryland as well. I'm originally from NJ so I don't know MD as well as some, but I guess I will get to know it now.

@Ned Carey Thank you. I found a few investing groups and I visited a meetup last week & got a lot of information and networking from it. The Rich Dad representative wanted me to make a decision on our first phone call to spend that money. That was a huge red flag for me to run the other way.

I have to admit, I haven't had a lot of luck finding multi-family houses in neighborhoods I want to be in like you said, but our budget is 450K so that may open up more choices. I just don't know if the numbers will make sense at that price range. That's one of the reasons I recently talked to an agent that's also an investor. I thought that might up my chances of finding something. My 2nd choice is to have a single family home with a basement apartment to rent out. BTW, thanks for helping to answer my question about the exclusive agent agreement.