All Forum Posts by: Nick Pacheco

What would you do? Ideally, I would like to buy a duplex or a SFH 3/2 20% down using a conventional loan. Would you say pay off the student debt first or pay it down more?

Any tips? Further comments are much appreciated!

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@Bob Okenwa Awesome response, I appreciate that detailed and informative answer. I’ll double check those concerns and take into account what you’ve stated.

Thanks Bob

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Originally posted by @Cassi Justiz:

Check out some personal finance books and podcasts before you jump into it. Scott Trench's book Set for Life and BP Money is a good place to start.

By buying a house and renting out rooms, will you be increasing or decreasing your current living expenses? (don't forget to factor in repairs, utilities and commute time).

For example, if you are living with family and paying little or no rent, take advantage of that situation and pay off the student debt before trying to buy a house. I know it's SUPER tempting to get into investing, but only do it if it makes sense in your current situation. Buying a primary residence doesn't make sense in every market.

The goal should be to pay off that interest accruing student debt as fast as you can. If buying a house and renting out individual rooms helps you do that, then great! But if that is going to slow down your progress to financial freedom, then hold off until you get that student loan paid off.

*To answer your question, in your situation I would try to get in with as little money as possible on a conventional (not FHA) loan. If you can decrease your living expenses while putting as little money into the purchase as possible, that would be ideal. Just make sure to save money for repairs.

Cassi, that is some great advice! I will definitely take those factors into consideration. I will look at my market and see what makes sense. The first thing to do is save!

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Originally posted by @Frank Wong:

Hi Nick,

It all depends on what your total debt to income ratio is after taking on the new mortgage which is your PITI (principal, interest, taxes, insurance). Now if your ratio is at the max say 45% then don't do it. If your DTI is around 20-25% then it makes sense. You also need reserves. Don't buy if your down payment exhausts all your savings.

It's common for a college grad whos working now with large student debt. That shouldn't stop you from purchasing your first property. I would go with the down payment that will leave you a good amount of reserves maybe 8-12 months worth. You will have roommates that will supplement your payment which is a great idea.

You gotta start somewhere and you gotta work with what hand you're dealt.

Hey Frank, thank you for your detailed response. It looks like I may have to wait 6-8 months longer to purchase a property (because my savings will be all gone if I buy now). I will continue to learn more. I appreciate the input!

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Originally posted by @Michael Albaum:

Firstly, where are you getting your 4.3% interest figure from? It really doesn’t drive the numbers here, but I’d be very surprised if you could get that rate on an investment property. Also, where did the $4/mo in taxes come from? Seems EXTREEEEEMLY low. Like impossibly low, so I’ll assume that was a typo. Does your $44/mo of insurance include general liability of at least $1M?

Also, you’ll need to include a budget for miscellaneous repairs. Things wil break and need repairs that aren’t part of a traditional cap ex budget. Lastly, is it common in your market for the tenant to pay all utilities? If not, then you need to factor that in as well.

Thanks for the reply Michael. I agree they do seem low. The interest of 4.3% was from the default payment calculator from realtor.com [you're right it should be higher] and the property tax was estimated at $4 from the realtor.com payment calculator.

I included repairs in my calculations at $60/mo-- I had failed to mention it above.

Thanks for your response.

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I'm new to RE investing--I have just analyzed my first property:

I assumed this property was sold for $140,000, 20% down 4.3% interest, rented out for 1,300/mo, 9% property management, 5% cap exp., vacancy rate 7%, insurance $44/mo, property tax 4$/mo, P&I $560 (from realtor.com)

Cash flow per month is $240 or $2,880 annually.

Would you agree? Am I missing any significant variables? Any further comments are appreciated!

10920 N 83rd Ave, Peoria, Az 85345

https://www.realtor.com/realestateandhomes-detail/10920-N-83rd-Ave_Peoria_AZ_85345_M10493-53412?view=qv

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Originally posted by @Daniel Zapata:

@Nick Pacheco I like to use rentometer.com for rental comparables, just be aware that sometimes the sample size is not great and you may need to take that into consideration (longer time window, expand the search radius). I also find management companies are a good resource.

Some general expenses are easy to find, property taxes and garbage (online). When you're looking to make an offer on a property, you can sometimes get the expense breakdown before you make an offer.

The BP calculators are useful for running rental calculations.

Good luck!

Thanks Daniel! I just used rentometer and its fantastic. Great tips.

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I'm new to RE investing--I have just analyzed my first property:

Cash flow per month is $240 or $2,880 annually.

Would you agree? Am I missing any significant variables? Any further comments are appreciated!

10920 N 83rd Ave, Peoria, Az 85345

https://www.realtor.com/realestateandhomes-detail/...

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1. Which sources are credible to use to find out rent prices and general expenses for a SFH or duplex as an example?

(Other than word to mouth and ball-parking)

2. Do you have a preferred method to calculate how much cash flow a property will bring with 20% down?

Further comments are appreciated.

My market is Sacramento, CA

Nick

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@Scott Passman Thank you for your response! I am looking towards single family homes but I am open into looking to duplexes as well! If the ROI is high enough, I'm hoping that one investment property will cover a large amount of my monthly loan payment (at the very least).

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All Forum Posts by: Nick Pacheco

Nick Pacheco has started 7 posts and replied 18 times.

Post: Student Debt 60K, have 30K to invest, need advice

Post: My First Deal Analysis Numbers/Projections!(10.30% ROI)

Post: Smart to buy (owner occupied) with student debt?

Post: Smart to buy (owner occupied) with student debt?

Post: My First Deal Analysis Numbers/Projections!(10.30% ROI)

Post: My First Deal Analysis Numbers/Projections!(10.30% ROI)

Post: Reliable sources to find out cost of rent and expenses?

Post: I calculated this to be cash 10.30% ROI -- Realistic? Arizona.

Post: Reliable sources to find out cost of rent and expenses?

Post: Smart to buy (owner occupied) with student debt?