All Forum Posts by: Rhiannon Then

*rents HAVE NOT been increasing rapidly. I meant home prices have been.

Hello All, So, my husband and I are finally in the process of buying our first multi-family home/ first intentional investment. We refinanced our primary residency and are putting 5% down. We will have about $25,000 left over after closing. Our first home, will be rented and cash flow over $200 a month. We have about $13,000 in debt due to remodeling our current residency and mainly because of medical expenses. Trying to figure out if I should pay off my debt. One credit card is at 5,000, 0% APR, no interest until summer 2018. The other is $1700 and 13.5 interest due 11/2017. My last card is at 5400 and currently accruing interest at 13.49%. I could pay it all off, make above minimum payments for all, or transfer the balance of this last card to 0%. But, am I pushing it? We have done a thorough analysis on the property we are in contract with, and it is not a winner at the moment because we will be living in one unit to update it. The rents are low and can be raised $100 immediately. We'd pay over $450 a month out of pocket after all expenses are covered. This would at least allow us to save or personal income. We plan to do some minor remodeling, more money out of pocket, and Airbnb two units as soon as possible. We then plan to move out in a year and Airbnb all three, which for the area should be very lucrative. In the long run, we could remodel and force appreciation, fingers crossed and sell. The house is in a B class neighborhood and rents have been increasing rapidly since March. I'm hoping we are not at the peak. The other option is to increase rents further after some remodeling. Rents have not been raised since 2006, and current tenants are longterm. Realistically, we bought this property for STR. It could be profitable as rental once maintenance and caped reserves are adequate to remove and rents are increased. My first inclination is to pay off all my debt and hold the rest as a maintenance/ remodel/ Capex reserve, and wait to use my hopeful Airbnb profits for future purchases. The other option is to pay my debts off steadily and save $13,000 for another purchase. Have not calculated how much this would cost in interest. Not sure if much I could do with $13,000 unless I hustle a smoking deal or the market tanks in my area, doesn't seem likely. This last option seems to be the impatient option. I'm aiming toward paying off all the debt. FYI: My debt did not affect our refinancing because my husband and I have excellent credit and he is the signer, while I'll be put on the deed and title. QUESTION: What would you do? Just wondering if there is anything I have not thought of. Thanks, Rhiannon

For me it's about finding a way to contribute to our family income and be home with my kids, In 2008 I saved up and left teaching when I had my son. I chose to cut back and live off my husband's teaching salary and savings to be with my baby. Wish I'd invested the money I had saved up. I toyed with investing and missed out on a great deal after the crash. I was uneducated and my husband was too afraid of risk. I could have stayed home and had some extra funds. I became ill in 2011 and working became less of an option. Luckily, I have recently started to get my health back. One big reason I am doing this is to maintain proper healthcare. My insurance won't pay for my effective integrative treatments for my severe RA. I am also doing it to be able to see my family more often who live all over. Another reason is to one day provide assistance for my disabled siblings. It's vital that I teach my kids to be financially intelligent and model that. I hope to help coach my kids into buying their first rentals by 18. I've become more and more of a minimalist and don't favor possessions unless they are truly needed. I do like experiences though. This is the least important reason but I'd also like to enjoy some little luxuries like being able to go out to eat without worrying about breaking the bank. I work hard as a homeschooling mom and wife and need a little break here and there.

Hi Ben Volkman I lived in Austin for 14 years, so I know owning a home their is costly if that's the market you are looking to buy in. Then, there are awful property taxes. We always rented. My question is could you downsize to help cover your debt? I agree with those who say Invest and use your returns too pay off debt, but maybe you could cut back in some way and help pay debt that way as well. I never had the amount of student debt you have acquired, but Ive also never had the kind of income you have. More like 21,000 debt to a $30,000 income, so relatable. We paid it off fast but we also had a smoking interest rate and paid no income taxes, so all our returns went to my debt. We've always been a one income family and if we weren't we both made little combined straight out of college. I was either in school or I worked as a teacher, while my husband transitioned jobs. When the market crashed, we were living off savings because I had my first child and stayed home and still do, and my husband was getting certified to teach with no pay. We could have bought a condo in Austin for $20,000 that sales for over $100,000 now and makes good rent, but we were uneducated in real estate and too afraid of risk. In hind site, we could have paid cash for this condo and lived rent free for a year or two. Once my husband got his first teaching job, we could have saved for our next purchase, or pulled out equity and rented the condo out. We have managed to buy a home with a depressing Az teaching salary. Teachers in Austin make $15,000 more than here. Granted we live in a place were its cheap to buy a home, and the house wouldn't be considered a dream home for some; its allowing us to use equity to buy a nice home in a different market. It's also gonna cash flow. All that with 3 small kids. You just have to get creative and maybe sacrifice some Personally, I'd never wait on kids. Real estate will always be there. Your ability to have kids is limited to time. I think having both is possible. We weren't even thinking real estate anymore. We just bought a home for ourselves and the light bulb went off and we are turning it into a rental and are on to the next purchase. Have you thought about purchasing in Buda or Kyle? Maybe avoid those taxes? Not sure if round rock is cheaper. Just my personal experience. Your variables maybe different or more complex.

Chris Martin Not sure if this tagged you the first time: What do you do in a sellers market when you have nothing to sell? Wait? I mean I do have my first personal home purchase, but I'm not going to profit from a sale. Renting is more realistic. 
Im relocating and don't want to throw money away on rent. I figured purchasing one home couldn't hurt until it's a buyers market. I'd like to believe I have the hussle. Hope I'm not being unrealistic in my goals. My husband and I have been educating ourselves and getting our financial ducks in a row. Now, getting our feet wet in direct mail. Can you explain what rules of thumb to use depending on the type of market? Thanks, 
Rhiannon

Chris Martin. What do you do in a sellers market when you have nothing to sell? Wait? I mean I do have my first personal home purchase, but I'm not going to profit from a sale. Renting is more realistic. Im relocating and don't want to throw money away on rent. I figured purchasing one home couldn't hurt until it's a buyers market. I'd like to believe I have the hussle. Hope I'm not being unrealistic in my goals. My husband and I have been educating ourselves and getting our financial ducks in a row. Now, getting our feet wet in direct mail. Can you explain what rules of thumb to use depending on the type of market? Thanks, Rhiannon

I was wondering if there was any benefit to purchasing the tax certificate on a pre-foclosed home? Will it still go to auction? 

Thanks, Brent Coombs Oh, I wasn't trying to imply you all felt the same way about paying down. I just tagged you all because you all seemed so experienced, and I wanted your input overall. Mike Dymski Joe Villeneuve Greg S. I really appreciate your willingness to share so much. You're time is appreciated. Yeah, Joe Villeneuve I don't know what to do about the market thing. I need somewhere to live and don't want to pay rent. That's why I wanted a duplex. Maybe I can buy tow SFR's instead?A new market would be something to consider after our next purchase and move. Funny you used the analogy of not being able to move my arms. That's exactly my problem. I have terrible RA and found holistic treatment (ozone therapy)that's been working in Mesa. I'm actually moving to Phoenix/Mesa area for this reason.

Greg S. Apparently, I got the concept in an early post, but then threw it to the way side when I was thinking about using my refinancing money. The whole point of refinancing was to create true cash flow from my current property which I invested a lot of cash into because it was never intended to be a rental. I think I got it.

I'm starting to get the impression hereJoe Villeneuve Greg S. Mike Dymski Brent Coombs that maybe it's not a good idea to ever fully pay down a home. Am I wrong? Wouldn't the idea be to be free and clear if someone else is paying off your debt? The more they pay down the more cash flow you receive?Someone on here mentioned that once the house is paid "the house owns you" This was under the conditions if someone lost his/her job, so maybe I'm generalizing the concept too much. Maybe it's different if someone else paid it off but there is still taxes and insurance. But the renters would cover that. Sorry processing this as I write. Once the loan is paid, you lose your ability to refinance. I'm assuming refinancing is a one time deal, and it would be unwise to miss out on the opportunity to reinvest equity. And how much equity should I use on a new purchase? The trouble I am having is finding the right price to bring in at least $100 cash flow. Seems going in low down hikes up monthly payments, adds Mortgage insurance to where I'm always getting negative numbers. At this point, I'm just going off the MLS. We are relocating for my health. I'm looking for a duplex to house hack, so I can live rent free-not necessarily my longterm niche. I'm finding the prices are high and the rents are low. $160,000 for a 2/1, 2/1 that at best,and I mean best, with upgrades, will generate $700 in income. When you add up all the expenses, it's always negative. I fantasize about making low offers but how realistic is this? I'd really have to go low. I could speculate about rents and appreciation but that seems foolish. The market I'm moving to seems scarce on duplexes.It seems my only shot is to work hard and hunt for a SFR pre-foreclosure and live in it for a year, but with limited time to move and three small kids, it seems like a needle in hay stack. Or there is driving for dollars and direct mail, but once again, 5 months doesn't seem like enough time. In the long run, I'd love to hustle in this way. Do I put in as much equity as possible into a new home knowing I plan to pull it out again? How do I find a goo deal? This thread has my gears spinning! :)