All Forum Posts by: Sam McPeek

I think Ramsey's priciple's are great! Having a plan helped me immensly, and I don't subscribe to the thought that I am somehow not smart, or part of the 95% or unsophisticated because I find value in paying off my personal debt...the reality is right now I pay out $878 per month in personal debt service, plus $1,378 in morgage & PITI. If I didn't have those personal debt payments, that would be $2K per month in additional savings that I could put towards REI. It doesn't take that long to save up down payments if you can save $2K every month.

It would also help if I didn't have to pay out $200 every week for my son's daycare...but Dave can't help me there. :)

That being said, I don't follow the Baby Steps exactly. I bought my house out of order and financed it over 30 years to give myself options. My debt payoff date is March 2017, but that is only with the help of my rental (my house is a duplex, that I'm adding another unit on).

For personal finances, you should have an emergency fund set aside. For REI, you should have retained earnings, or Cap EX, or maintenance, or whatever you want to call it. Having debt without savings wouldn't be a good plan.

@Joe Villeneuve I like that you used the term expense instead of 'bad debt'. That makes sense to me...

@Brandon Hall I don't consider my comment to be illogical, but it certainly contains a healthy dose of opinion. I think that bad debt would include most personal debt including credit cards, vehicle loans/leases, cell phone leases, medical debt, business loans, 401K loans and student loans. Good debt for me is a much shorter list...real estate investments, and even then I think that is only good debt if the debt service is being paid for by someone else (i.e. tenants).

It seems that my opinion you have the most issue with is calling student loan debt bad debt. Here's some of my thoughts:

• Student loans are not secured by any physical assest. (this is one reason that I consider real estate debt good debt).
• Student loans do not guarantee a degree, and a degree does not guarantee you a resulting career. 
• The amount you pay for a degree is not based on the income of your resulting career.  Student loan amounts are based on the tuition of the school, not the income earning potential of the degree field. Wouldn't it make more sense to say that an engineering candadite with a starting salary of $50K would be elligible for more student debt than a Elementary teaching candadite with a starting salary of $32K? (those are mine and my wife's professions, so those are real numbers) Or maybe it would make more sense that the engineering candadate pays more for his schooling compared to a teaching candadate...
• The ability to recieve student loans leads people to justify paying more for the education. It's okay to price Ivy League that much higher or state school tuition hikes of 10-15% per year or private religious college at 3 times state schools...as long as the students can get the loans. College isn't the only answer. There are trade schools that cost a lot less and still have high earning potential. In Washington State, I can get my Professional Engineer's license without a degree. But we don't talk about all that...we just push kids towards 4 year colleges no matter how much debt they have to incur.
• Student loans aren't forgivable or bankruptable. It's a decision you can't undo...ever. That's unlike almost any other debt decision out there, and I think that's a problem. If your "student loan investment" goes bad...there is no recourse.
• We have created a culture that says college is the only way to success, and I think student loan availability perpetuate that culture. Some people aren't successful with college. They would be better off at a trade school, or a apprenticeship, etc.

The other reason I don't like student loans really is a bigger beef with the college education system itself (but I think the availability of easy debt perpetuates the system). Why 4 years? Why pay for general education vs. accelerated plan for your degree field? Why have a communications degree, or women's studies, etc.? Why not a trade school?

@Cal C. I agree! Nice post...

@Ryan Billingsley I still think of school loans as bad debt. You'd be better off working through college, or taking it slower in order to not incur student loans.

Thanks @Brian Burke ! That's what I was missing, the LLC on title with a personal guarantee on the loan. Why do you allocate the depreciation to the investor? Do you figure that into their return?

 I just recently listened to Podcast 076 featuring you, and that was great stuff! That's definetly one that I will listen to again.

@Ashton Astillero That's interesting. I'm always curious about different states adoption of code. Over here in WA, they would make us update if we were doing a panel upgrade. I can tell you that, while I don't have any issue with the added protection, I don't like the added cost. Those AFCI breakers are about $40 each!

Also, I am running into an issue while wiring up my garage apartment in that my subpanel doesn't have enough open circuits. Luckily, the panel has the ability to use mini-breakers. I don't know if that old panel would've been listed to use mini breakers, but it might be something to check out on future projects. It could help avoid having to change out a whole panel.

@Ashton Astillero You did the right thing by fixing the issues, because you would be responsible had you covered up the found electrical issues. It seems that this investor either didn't think he should have to fix the issues, or knew he could get you to do it for free. Either way, that's not someone you want to work with again. I would also be worried that they didn't want to pull permits on the work. In my state, you can't do anything electrical without pulling a permit.

Out of curiosity, when was the work done? Are you not required to protect the circuits with AFCI's in Indiana? In WA, as of this last July the majority of circuits are required to have AFCI proctection and prior to July we were required to protect just bedrooms with AFCI. I'm not seeing any in your panel, which makes me curious...

@Account Closed even in a B area and being rent ready, it's too thin. You may be able to reduce your maintenance/cap ex but that's not smart. Find a deal that works with conservative numbers and then if you can reduce those numbers (management, maintenance, cap ex) then consider that additional cash flow bonus and temporary.

@Kyle Gregg the contractor has to be licensed and FHA approved. I did not work under him, he just had to be ok with taking responsibility for my work. He was because I was a contractor and had worked with him and for him before.

I was not able to get an initial draw, even for materials. I had to purchase everything on 30 or 60 day net.