All Forum Posts by: Paul Gilo

for most ppl debt costs them money. 

imo... debt is only good when your making money. 

I'm clueless about this.

so how do they decide on what the rent should be?

you write off losses. which is fine if that that is your investment strategy... imo, if its cashflowing to the point that your happy, then its good debt and good interest expense.

You probably need to go talk to a CPA and have them tell you how you can take advantage of your situation. 

@James Paine - Thanks! Seems like your doing well your self. Great deal on the rental, I must say. :) Sounds like your landlord is pretty much loosing money on it. I figure if I get a 4plex bringing in 2500-3000 in rent each month, I can get a management company to handle it and I would be more comfortable doing that remotely. 

We would like to settle down, but its going to probably be 3-5 years until we can do that. 

I guess one thing to mention is that, if we do end up renting. The money I would have put into my home, I would like to put into some investment... perhaps buy a multifamily that cashflows well. I guess when you have 60k on hand there are a lot of options. Thanks.

@Alexander Felice - That is great advice. Sounds something like Grant Cardone would say :)

@J P. - I think your approach is great if you stay local. I have some concerns about having 200k of debt sitting hours away from me in a SFH. This would limit my ability to get something nice at the new location. Also for me to rent something, it has to cash flow pretty good. In this scenario, this is not going to happen. Paying retail is not going to happen in Orlando, I would have to score a great deal for all of this to work out. Appreciate your input and the fact that your in Orando, it make is that much more relevant. :) Thank you.

Hi everyone, been considering purchasing my fist home and the numbers just dont add up for me. So I was wondering if you guys could look over them and let me know if my math is right or wrong. Or perhaps I am missing something

Currently living in Orlando FL, paying 1400/mo for a townhome rental. Plan to be here for another 2-3 years and then probably have to move on to another location, due to job opportunities. So its good for us to be nimble...

Did some shopping for a house and found few that we liked, made some offers and ultimately were either too slow or didn't offer enough... so we didn't get them... 

So I started doing some numbers... and came up with this. 

We found 2 townhomes... few doors down from each other and pretty much same sqft. One is renting for 1600, the other is selling for 290k. 

So to rent is simple... 1600x24mo = $38,400 total. 

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To buy... here is my math. 

290k purchase price.

20% down = 58k + 10k in closing costs.

monthly payment with principal, interest, tax comes out to about 1550. 

monthly HOA is about 350/mo

1% for maintenance (heard thats a good rule.) so its another, lets say,  250/mo

To sell... 

so lets say in a couple years we have to move and we sell it for 300k. 

6% goes to agent = 18k

2% selling closing costs = 6k

interest paid per year will be about 8k a year, so 16k for 2 years. 

Cost of ownership...

now the fun part... 

So to own the house for the 2 years we would be paying. 

10,000 in origination and closing fees to buy.

8,400 in HOA fees, over the 2 years

6,000 in maintenance and repairs, over the 2 years.

18,000 in interest (750/mo x 24), over the 2 yeas. 

6,000 to close on the sale of the house. 
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$48,400 - this is the money I will never see again (cost of owning the house for first 2 years).

$58,000 - I will have tied up in the house, in form of "equity"? :)

I really would like to "own" a home, I like the idea of it. I like the though of stability and doing whatever you want to it... but the numbers definitely kill the motivation :) Some would argue the aspect of appreciation, perhaps that would be true, but we dont know the future, so its kind of hard to say IMO.

Am I missing something?

TIA

do the math. makes sure it cash flows. dive in and learn :) unless you can find someone local to hold your hand. 

Id keep pumping money into the rental until you pay it off of get close to the adjustable rate coming up on your forever home. then pull the money out of rental and refi the forever home. 

we dont know your financial situation, but id stay away from adj mortgagee if i can. 

Pardon the silly noob. 

But by turnkey we are talking about rehabbed and rented? How does management play into this? 

Thank you.