All Forum Posts by: William Murrell

I think there should be a prize for the millionth post.  Perhaps an all-expense-paid trip to Detroit because I know Josh would love that ;)

Thanks, Bill.  That was what i was thinking but it never hurts to get a new set of eyes on a problem just to make sure you're on the right track.  

I worked for a property management company in Atlanta during college and a tenant, facing eviction, decided to take it upon himself to flush Quikrete down all of the toilets and sinks and showers throughout the house.  Not as gross as boogers, but a lot harder to clean up.

I should clarify that it was my primary residence prior to me moving out and keeping it to rent.  I never would have purchased it in the first place if it was not able to cashflow.  

It also depends on how much you like your primary career.  For some people they might continue doing it regardless of money and keep going just for satisfaction, interaction with coworkers, feeling like they're making a difference, etc.  However, for others it's a different situation.  As I once told one of my employees regarding the powerball lottery winnings that at the time were several hundred million, "if I won that much money, I'd walk out in the middle of this sentence and you'd never see me again."

Well, are you going to self-manage or have a property management company do it for you? If you do it yourself, you'll be doing the listing, marketing, screening, and collections as well as all repairs, etc. If you have them do it, they will do all of the above in exchange for a percentage of the gross rent. I would use rentrange or rentometer to get an idea of what FMV would be for rent and then make my decision from there based on how much money I wanted to make off of it.

There's more work to doing it yourself, but more money in your pocket at the end of the month.  

So I have a house I purchased a number of years ago, right before the market tanked.  The purchase price was 145,500 and the interest is 6.25%.  I owe ~128k and it's probably worth ~105-110k.  I have been renting it for years at a negative cashflow as I didn't want to sell and have to put a bunch of cash with it.  And the way I look at it, the tenant is paying for the majority of it.  However, now I have about 30k extra cash and I have been looking at paying it in to reduce the principal and then refinancing, which would make it cashflow ~200/month.  If I stay as is, I lose about $300/ month.  If I sell it, I still have to put a bunch of money with it.  If I put that money into it and refinance, I will drop ~2% in interest and begin cashflowing.

It makes the most sense to me to put that cash toward the house and refinance for the cashflow to go from -$300 to +$200 per month.  However, I want to make sure I am using this money to the greatest effect and perhaps someone has a better idea.

  Input/ thoughts?

I bet you have that feeling like when someone almost runs into you in traffic: that "I just narrowly missed a disaster" feeling.  Good job avoiding this one!

Mark is right, you don't want to wait to invest.  Your investments are like a snowball that gets bigger the longer it rolls, so the sooner you get it moving the better.  And sometimes financial advisors don't always have the best advice.  

As for multiple lenders, it couldn't hurt because when you lay out your financial picture, they can rather quickly tell you what you will and won't qualify for.  Now, they do check your credit to give you an idea of what your credit score is but you can mitigate that as well.  If you show up with all of your financial package lined up as in "this is how much I make per month, this is how much my total debt service is per month and my total expenses, and this is my FICO score.  Without running my credit and giving me a ding for the check, can you give me an approximate amount of how much house I could qualify for just so I can get an idea of where I am and where I need to be?"  I helped my cousin do this exact thing and though he was told he wasn't ready, they quite willingly laid out a plan that had him on track in less than six months and he was able to purchase his own house.  If you do this, you can take advantage of a lot of programs available to homeowners that aren't available to investors.  

You should read Frank Gallinelli's books. They're easy to digest and when you're done, your financial understanding will create a solid foundation upon which you can build a solid investing framework. You should also listen to the podcasts. They're entertaining and informative and you get to see a little bit of everything in terms of REI, including flipping, buy and hold, liens, etc.