All Forum Posts by: Nicholas B.

Sorry, @Hersh M. I wish I had a better answer, but I just use google and common knowledge. If you've lived in an area for a while, you'l know who the common banks/CUs are in the area by their marketing, presence and word of mouth. It's pretty easy to go to their website, find their rate chart/page or their mortgage page and find the applicable rate (it's usually broken down by Loan to Value and Term). If they don't list their rates, they probably outsource their mortgages and won't be as competitive as a lender that underwrites their own mortgages.

@Brad Smith, It's common in my area to do as you stated and replace non-grounded receps with a GFCI in order to be able to plug 3 wire appliances into them safely. The labels are generally just stuck to the cover plates and that's what inspectors look for if you pull permits.

The GFCIs are fairly expensive, but you only need the GFCI on the first outlet of a circuit. The rest can be normal grounded receptacles, but still need to carry the label. In many cases, it's cheaper and easier than re-wiring.

I've had terrible experiences with lenders from the big brokerage sites like you mentioned. After spending 10's of hours messing with several different lenders, I ended up spending an afternoon going one by one to the websites of my local banks and credit unions. I could rate shop easily and most small banks and credit unions do not use Risk Based Pricing rate models for mortgages, so what you see is what you get as long as you qualify. 689 is still pretty solid for a mortgage so long as LTV, DTI, etc fall in line. The experiences I had with these banks and CU's was night-and-day different to the banks from Bankrate.

4.375% as an APR is fairly competitive, but you may be able to beat it by a bit. If it's just the "rate", you need to find out what the APR is as it may jump another 1/2 a point from there and nearing 5% is high right now.

Wow! There have been some really great posts since I last checked in. I feel bad for not thanking each individually, but I did read every post in it's entirety. Thank you all. 

I'm considering this as confirmed that the factor of contradiction is scale. I'm not judging anybody for using an aggressive strategy involving leverage. It's just not something I'm interested in right now. I just hope that people understand that it's that scale that makes it work. 

My point is that people get it confused and seeing it in action confused me ("Why are people doing this to themselves?"). I guess it's not a terrible thing to stretch out a few properties that are "paying for themselves", knowing that 10-30 years later, you'll have acquired the asset "free of charge". Well, at least until they go to take out a loan and realize that in a personal credit transaction, lenders will add the rental income and mortgage payments directly to your DTI and still expect 40%...

Wanna know a trick?

There's another key aspect to this.  You could call it a "trick", if you like.

 It's great to have a credit card, but to get the best benefits, you'll need to use it! It's very important to use a portion of your card in order to establish revolving usage history.

The sweet spot for subprime revolving utilization is usually around 20%, maybe less. Since interest rates on these cards are ridiculous, I would not recommend carrying a balance. So here is the "trick":

Each month, the lender reports your balance on your statement date. You have a grace period to pay it off without paying interest. If you have a $500 limit, put $100 on your card. You'll be reported as carrying a 20% utilization. You could just leave this balance and pay it $20 at a time, but you'll pay 20%+ interest. If, however, you pay off the balance, then go spend another $100, you'll consistently report usage, but never pay a penny in interest. Nobody will know the difference and you'll have all that sweet positive credit history and pay $0 interest!

After 6 months, request an increase to your credit limit. Do it again every 6 months after. Little by little, you'll raise your credit limit, lower your utilization ratio and show responsible history. Eventually, you can request your security back and open better cards with less fees and no money up front. 

I've helped 7 people (including myself) establish 700+ scores using this method. It works!

I understand this as explained above, but again, in a single property example, a 10 year ROI is higher by paying the property off sooner making the interest relevant.

I'm not attacking you, but it's blanket statements like this that confused me in the first place. Since nobody contradicted the examples I used, I'm going to assume them to be true. If you're not planning on scaling, it's a foolish misapplication of the concept and you will not generate a higher ROI. You'll pay more interest, therefore reducing your ROI when amortized.

I don't want to "buy as much as I can with what I have as fast as possible", so that breaks the model. Barring other evidence, I think I have my answer. Thank you to everybody who helped.

Ozone, is probably the most effective method of eliminating organic odors once the source of the odor has been removed. It can also be quite dangerous if you're uninformed. A little research will show you how the area needs to be vacant while treating and the ozone needs to reach high ppm's for some time to be effective.

I would scrub everything down including the floor. If the cabinet bottoms are still ratty, either cover with a stick-on vinyl or a coat of quality latex enamel once clean and dry. If you use paint, make sure this cures for at least a week before you store anything in those cabinets to prevent "blocking". In the mean time, pick up a O3 generator and run it as prescribed to kill off the organics. I wouldn't caulk anything interior unless it's for painting. The ozone should do the job if done properly. 

So, I guess what I'm gathering here is that it's a matter of scaling upwards as fast as possible. So the model works if the plan is to buy as much property as possible with a given availability of cash in the shortest amount of time. It seems buying one or two properties using this model is simply a mis-application of the concept. 

 @Charlie Fitzgerald, please recognize that I'm not trying to challenge you here, just trying to distill it all in a way that I can understand.

Say that I am "letting the tenant" pay the interest costs, but still collecting $1,200 / month. (I mean, if I could get anything more out of the rent, why wouldn't I, regardless of my costs?) Unless I'm missing something, once amortized over the 10 years, it still ends in a net difference of $21,000 minus the $3000 of tax savings, so at the end of the day, I'd have an additional $18,000 in my pocket by investing the $10k out of pocket over the first 5 years.

It just all seems way too simple, though.

 Thanks @Russell Brazil. I can respect the "safety net" aspect of it. I also respect that you have a specific plan, but I hope I can pick your brain about your methods. 

Being as longer term loans generally fetch higher interest rates, not only would they cost more interest over the life of the loan, but also a higher pro rata cost on the current principal. Have you analyzed the effects of shortening some of those loans now & the cost savings? or even specifically paying off certain loans in order to accelerate the interest savings?