All Forum Posts by: Nicholas L.

Hi @Clay Hollingsworth the deal is that on a 30-year fixed mortgage, you get a low interest rate, and, it's FIXED - that rate can never go up.  So the bank does a great cut... but you get tremendous leverage.

There's a huge BP thread going about velocity banking - read it if you dare. It doesn't really have a lot to do with investing. There are tons of different financing strategies - they're all valid, they just depend on your situation and your goals. You can buy with cash, BRRR, then refi out into a 30-year fixed mortgage. Or a 15-year fixed mortgage. Or an ARM. You can buy with an FHA loan and put 3.5% down. You can buy with a HELOC using your primary. You can buy with hard money and refi into a 30-year fixed mortgage. You can buy with hard money then refi into that hard money lender's long term product - many offer rental property loans (might be easier to qualify for, but going to have a higher interest rate than a bank). You can use seller financing, where you pay the seller and the seller is the bank. Etc.

If you read through BP forums, you will generally see that the 30 year fixed mortgage is a core part of investing because of that great rate.

Hi @Kahren Aydinyan yes, you can call local PMs.  Real estate agents can also pull actual rental comps. 

Hi @Tim Sipowicz do you currently own or rent?  Have you ever purchased a property before?  You could do any or all of the following over the next few months:

-call a bunch of different lenders and find out how much financing you qualify for.  This is free (but they'll check your credit.)

-are you carrying debt? Are there ways to reduce your DTI? Can you save more each month?

-try to find some investor friendly real estate agents in your area.  Look at online reviews.

-make a spreadsheet of properties that look interesting to you on Zillow, and run the numbers as rentals using online calculators.

-listen to every podcast interview you can find with Brie Schmidt, an inspiring local investor.  She's a moderator on BP, she's been on the BP podcasts a couple times, she's been on Rod Khleif's show, she posts on BP.  She has an inspiring story.

-read a couple of Brandon Turner's books.

Good luck.

Hi @Jack Amaral I think that's the yearly gross rent, you want the monthly rent / purchase price to run the 1% calculation.  But depending on the variety of units in this building. it's not as effective a screening tool as it is for single family properties, since you're dividing an average across all of the units by the purchase price.  Thus I don't think it tells you a whole lot.

Hi @Chad Dunham congrats on your strong financial position, that's something to be applauded.  I'll take a run at your question 2.  The BP calculators are for evaluating potential deals. But you already own your house - that means you should be able to use actual historical numbers to tell you what the expenses are (PITI, utilities, repairs, etc.) So you don't need to estimate very much. And, you should be able to get actual rental comps from a real estate agent or property manager.  Does that help?  You take the actual comps, subtract your actual costs (you might need to estimate vacancy), and that's your potential monthly cash flow.  You don't need the calculators (except to maybe tell you what items to include in your calculation.)

Some questions for you - 

-what's the house you're going to be living in going to do to your financial situation? I am assuming you'll finance it, so that will be debt in your DTI calculation.

-I'm not sure I understand "take out the equity and 1031" - I wouldn't add any more debt to this house until you know it works as a rental for a couple years.  A 1031 exchange would be if you sold the house - are you also thinking of selling it?

Hi @Bianca Nunes welcome!  I think Fredericksburg, VA would be a great place to do this, but since you work in DC, the commute might be tough.. although lots of people happily take VRE or Amtrak from there.  =)  Fredericksburg is growing, has proximity to the Quantico base, and the 95 HOV lanes are being extended:

http://www.virginiadot.org/projects/fredericksburg/i-95_express_lanes_fredericksburg_extension.asp

I tend to agree with @Adrienne Green that JUST OUTSIDE Fairfax County is the best place to do this (in VA), but I bet it's also possible in a few closer-in areas, such as Springfield or Alexandria, where there might be "diamond in the rough" older houses and where your commute might not be too bad (train or Metro).

I know a fabulous agent in Fredericksburg if you want a recommendation.

@Todd Dexheimer @Joe Splitrock agree on SFHs. It's so funny, because every other WSJ article on real estate is about how millennials are flocking to the city, and every other is how they too long for an SFH in the suburbs. So perhaps both are true? The US is a big country - there can be demand for houses in the suburbs and houses in cities without contradiction.

@Reed Meyer I love this question, and I love books.  I intend to invest mostly in RE, but I really found Kristy Shen's book, and life story, inspiring.  Here's my list:

• -Buy, Rehab, Rent, Refinance, Repeat by David Greene (RE)
  -Real Estate Investing Gone Bad by Phil Pustejovsky (RE)
• -Investing in Real Estate by Gary Eldred (RE)
• -Quit Like a Millionaire by Kristy Shen (FI)
  
• -Playing with FIRE by Scott Rieckens (FI)
• -I Will Teach You to be Rich by Ramit Sethi (FI)
  -The One Thing by Gary Keller (Inspiration)
  
• -Am I Being Too Subtle by Sam Zell (Bio)
  
• -Shoe Dog by Phil Knight (Bio)
• -The Big Short by Michael Lewis (Business)
• -Liar's Poker by Michael Lewis (Business)

@Eli Kallison got it, you're saying you don't know how much you're going to get approved to borrow.  If possible, talk to multiple lenders, and try to put down as little as possible.  Cash is precious, you need it for spending, for reserves, and for future investments.  

Hi @Eli Kallison just curious, why put down 80% and tie up that much cash?