All Forum Posts by: Peter Kim

@Justin Marshall Hey Justin, thanks for the informative answer. I locked in the 3.25 at 5K lender credits with the agreement that it is subject to change depending on what the appraisal comes back as. But I 1000% agree with you, the monthly cash flow after property management fees is LOW. As you mentioned, one month of vacancy is a year's worth of cash flow... hmm.. 

Hello all!

I just purchased a 3br 2ba 1,500ish sq ft for 252,000k. After doing market comparisons, I believe I can charge anywhere between $1,500 at the lowest and $1,800 at the highest for rent. 

Obviously, the monthly mortgage (plus tax and insurance) will change depending on the % I borrow but I wanted to get everyone's feedback before I make a decision. I'll write down the rates below. 

2.75% - 0 lender credits - $1,327/mo mortgage
2.875% - $1,200 lender credits - $1,340/mo mortgage
3% - $2,023 lender credits - $1,337/mo mortgage
3.25% - $4898 lender credits - $1398/mo mortgage

I'm leaning more towards the 3.25% so I pay close to nothing for closing costs but obviously with the estimated rent, I would have to charge $1,600 to cash flow maybe $100. I do plan on selling this home in 3-5 years to break into the multi-family homes. 

Do you write off the expenses, improvements, depreciation ,etc of your investment off your A) rental income (cash flow) or B) primary income (full-time job)

Just to clarify, in the absolute simplest form, cap rate essential means % return on investment per year. So if it is a cap rate of 3%, you can expect a 3% return on investment per year?

If "yes" is this something you verify by running the numbers yourself?

If "no" please educate me where I am disconnected

@Theresa Harris @Andrew B. Thank you both for your answers!

@Matt Devincenzo @Stephanie P. Thank you both!

I know this is based on the goals I have for my self but a general rule of thumb, after deducting expenses from my cash flow, should I 

A) Use the extra $ and put it in the mortgage 

B) Save, save, save to buy another property in the future

C) Is there a third option that I'm missing?

1. When you decide to refinance, is it the appraiser that determines how much the home is worth? 

2. Let's say you bought the house for 80K and you refinance for 100K (fake easy numbers). After paying that initial 80K loan off, can that extra 20K be used for anything or does it have to be expenses related to that specific home? 

3. VA Loan specifically, if I were to refinance from VA to conventional I'm guessing I would have to pay 3.5% minimal of the new loan?

@Jon Kelly

The intention is to pay it off sooner so I can cash flow the full rent amount. Granted the pay off date between a 250K and a 300K property is only a couple years but still!

So currently the market I'm in, homes sell for an average price of 250K and range from 200K to 300K. I don't plan to sell any of my investment properties and plan to hold and rent as long as I can. That being said, I was wondering if I should buy a 200-250K home (that I can pay off quicker) or buy a 300K home?

My thought process is to see the rent rate for other homes near the area, see which house profits more after mortgage, figure out the average pay-off date, and go from there.

Sorry in advance if this post is a little messy, if anyone can point me to an article or provide insight on what strategy works best please let me know!

PS: The reason why I'm even contemplating this is that the first house I bought for 156K ($800/mo for the mortgage) is renting for $1,620 so I know there is more cash flow opportunity from cheaper homes.