All Forum Posts by: Shari Azama

Quote from @Rick Albert:

Everyone will have a difference of opinion, and everyone is right. Personally, paying off your mortgage early is a horrible idea. First of all, you are only paying off the tail end of the loan. Because of the amortization schedule, the payments at the end are more principal than interest, so the savings aren't that much in the big scheme of things. Plus most people don't keep their loans for 30 years (either because of refi or selling).

You also are trying to build wealth. I would rather use those extra payments and save up and buy a second property. Let your tenants pay off the mortgage. Making those extra payments doesn't lower your payments unless you recast the loan (assuming your lender is fine with it) or refi.

With $20K I would stay put and learn. You have a 1 bedroom so house hacking doesn't really work and most HOAs won't allow for short term rental and in some cases, arguably mid term rentals (I am starting to see no "transient" housing of any kind, so an argument could be made that this applies to mid-term). 

I would save up and buy a house hack and either sell the condo or rent it out (whichever makes more sense). Most of my investor clients are selling their condos right now, not keeping them. 

Thank you for your response. So your clients who are selling their condos end up buying a house hackable property afterwards? Duplexes are rare in LA, so I'm assuming these must be multiple-bedroom homes? Or homes with ADUs in the back (which is ideal, but SO expensive in this city)?

My building also puts a cap limit of 30% for properties that can be rented out. The rest must be owner-occupied. I am not sure what the status of it currently is — already capped, I imagine.

So based on my current circumstances, and in alignment with your suggestion, I was thinking that the best option would be for me to continue to live in this condo, continue saving up, and then combine my savings + pull equity from this prop to invest in an affordable investment property when I can, ideally after a year or so. Or, if my savings + equity aren't enough to purchase a house-hackable property, then my next best move would be to wait until I have enough savings + the equity has built up enough to where I can then sell and purchase a house-hackable prop?

Thanks for taking the time!

Hello BP community!

I recently purchased my very first property — a condo for myself to live in (1 bed 1 bath) in LA (Culver City, for those familiar with the area)! I'm very excited, because now I get to start building equity. That being said, I want to waste no time in figuring out what the next best move would be, especially as someone who's interested in the buy-and-hold strategy and in managing my own properties (at least in the beginning). I still have about  $20K in savings (in stocks and indexes) and am continuing to save while I consider my options. I'm definitely the "play it safe" type, which is why the buy-and-hold strategy appeals to me, and because this is all new to me I want to "start off slow", but I am open to hearing thoughts on other options I could consider as well.

Put simply, if you were in my shoes, what would you do with that capital and now with one property under your name (if buy-and-hold is the most appealing strategy to you)?

My goal (and that of most of us in real estate, I imagine), is to build long term wealth and generate enough income so that I don't have to work a typical 9-5 job. To provide some context, I work in my family's business, but my parents are getting older and are formulating an exit strategy that will have them out of the business within the next 5 years. I don't know what will become of the company at the end of this time limit, but I don't want to wait to see, so I'm viewing this period of 5 years as the amount of time I have to hustle to get my real estate portfolio built out so that I have my own exit strategy. It's what I've always wanted to do anyway, but now I actually have a bit of a fire lit under my butt to make it happen sooner rather than later!

I've heard so many success stories on the BP podcast of people who've done really well with the buy-and-hold strategy and have the freedom to travel and not have to work a 9-5 (unless they want to, of course) and can pursue other interests, so that is a huge dream of mine too. Is this possible in 5 years and, if so, what are some ways I can accomplish this with where I'm currently at?

Thanks for taking the time and I can't wait to hear everyone's thoughts on this!!

Cheers,

Shari

P.S. An acquaintance of mine who does property management recently told me that there's some hack for paying off your mortgage sooner by paying the monthly fee in 3 chunks within each month. Anybody else heard of this? Maybe I misunderstood him or he meant something else, but I don't see how paying the same amount it would be regardless but just in 3 separate payments helps reduce the mortgage more than it would've been over time. If anybody has any clue as to what he might've been referring to, please share! If it's total bologne, also let me know haha. Thanks!

Hi, I'm very new to the real estate world and have some (very) basic questions about MH investing.

I've been listening to a bunch of podcasts, watching tons of videos, reading books and articles, and am fortunate enough to have a friend who is a property management company CEO, but alas there are some more nitty-gritty questions that I have no clue as to what the answers are (there's so much information out there, it can be tough to sift through sometimes...). So, your responses are GREATLY appreciated!

1) How do I figure out if the MH rent is lot rent or space rent (call the park manager? And what questions do I ask the park manager? I've heard opinions from several sides, concerning park managers...)

2) How to transfer title registration?

3) How to figure out if there are liens on the property if the home is being sold by the seller and not the agent

4) Step-by-step process of how to do a L/O or sandwich L/O (how to or if this is even the best move for a total beginner investor such as myself. The overwhelming part is the contracts and legal side of things)

5) Any additional tips in general that you have for something completely brand new, as far as actionable steps go. Like I said, I've been doing tons of research everyday, just trying to get comfortable with terminology and basic knowledge, but at some point I need to just create an actionable plan and actually get my feet wet.

I am also considering doing house hacking as well. So I'm between either house hacking or MH investing, whichever one seems more feasible and makes more sense, which depends on deals I can find, I suppose. However, understanding what a "good deal" is encompasses quite a lot (from a beginner's viewpoint), so that is another factor that makes it more difficult to know what direction I should take.

I have signed up for a couple of meetups, but with the virus and quarantine, it looks like I'll have to wait on those. But insights as to what direction you recommend I take at this point and with these thoughts in mind would be greatly appreciated.

Lastly, here is the basic rundown on one of the MH properties I have been looking at and have been considering doing a L/O or renting of. Would love to hear your guys' thoughts, if any, on what you think:

23701 S Western Ave Spc 94, Torrance, CA 90501

1 bed 1 bath 43 sq ft

$15K, built 1977, on market for 130 days

Avg rent in that park is $850 (but again I don't know how much of this rent would actually go in my pocket, based on other MH park and MH fees) and I can put 40% down, so roughly the cash flow would be about $600 and Cash on Cash return would be almost 100%. I got these numbers using the BP calculator, but being that I didn't know what to put for some of the boxes and am probably lacking information (other costs that I don't yet know about), these numbers are VERY guesstimated. 

In a decent area with schools and stores nearby, the park itself is a combination of RV and MH. I have not scheduled a meetup with the agent yet (and have 0 experience doing that), but I visited the place and from the outside and peeking in, it looks like it has been fixed up and is ready to be lived in immediately.

Thanks in advance for your patience with my super beginner's questions and looking forward to hearing your insights!