All Forum Posts by: William P.

Instead of saving for a downpayment, pay down your existing mortgage. Savings earns about 1% at best. Making extra principal payments reduces your outstanding balance and provides you the rate of return of your loan interest rate (say 4.5%).

I think this is very poor advice for the orig poster. First and foremost, he needs the liquidity. Doesnt appear he has 40K to bring to the table to close out the property. He needs to build a chunk of cash. Secondly, assuming he has a job, the tax deduction on his interest means that he is likely paying a tax adjusted interest rate of ~2.5%. If he cant beat 2.5% on his future RE investing, then he's in trouble.

Bill S - Do NOT prepay the mortage on your condo.

1 Vote

@Bao Nguyen

I think poster @Andrew S. is correct, you cant just get an umbrella. Not sure.

The approach I take on my personal home is to have a high deductible (10K). I had to clear that with the lender. I wouldnt bother making a smaller claim anyhow, as then you rates go up

On these low priced properties tho, I wonder if the banks would allow you to have that high of deductible.

Anyway you are definitetly not crazy - I'm with you. I only buy insurance on things I cannot easly cover (my life, liabiity).

0 Votes

@Nate Garrett I would compare the interest portion of the payment of the three loans, as that delta is your true savings.

0 Votes

Originally posted by @Roy N.:

@William P.

It does look a little suspicious doesn't it. I looked at a 16-unit earlier this year where garbage was $80/month. Turned out the owner's son hauled the garbage and recycling himself each week.

@Nichole Wall

William has opened the door for axiom #2 when analysing a property: Assume the Vendors is lying to you and her/his numbers are bogus. You will need to do a little digging to find out what garbage service for a six unit is per-month in that area. We pay $55/month for garbage at our six.

@Roy N - I pay 89 a month for my garbage at my house (total ripoff). 15 a month for a 6 unit building is hard to believe

0 Votes

Originally posted by @Nichole Wall:

Ok BP friends...I've spent quite some time analyzing this deal. I still have some due diligence to do like go out and take a contractor on the property to see if it needs any fixing up. First question to that...should I be doing that before or after I lock up the deal??

Ok, let me get into the analysis of it...this is a 6 Unit Multifamily Building. There are 5- 1 bedrooms and 1 studio apartment. The rents are as followed: $680,$500, $650, $675, $675, $650. Which totals $3,830/month rental and $45,960/year

EXPENSES a year

taxes: 4,189

garbage: 182

Nicole - is garbage really only 15 dollars a month for 6 units or less than 3 dollars a unit per month?

0 Votes

oops a 2 in my categorization has NO current interest in leaving career. (big difference vs my typo above)

0 Votes

Originally posted by @Hattie Dizmond:

Yes. We observe the world and derive conclusions based upon our observations. However, just because in my neighborhood I only see blue jays, mockingbirds, robins & crows, it would be foolish of me to draw the conclusion that the avian population is limited to those 4 species. Just like it would be foolish of me to assume that dogs only come in the breeds I see at the annual Westminster dog show.

Most of the investors I've spoken to here on BP, at local REIA's and through my networking activities easily fall into Categories 2, 3 & 4 right now, simultaneously. I have a full-time job. I do intend to keep it for the foreseeable future or until I don't have to have it, but I don't "want" to keep it. I need the income it provides, until that income can be offset. Since I'm employed full-time, but also work at REI full-time, I assume I fall into your "full-time intender" category. You see where I'm going.

I'm not trying to be argumentative. However, you posted a statement in an open forum asking me to categorize myself. By doing so, you opened yourself to comments and opinions on the categories you've supplied for us to pigeonhole ourselves into. Sorry if you found those comments objectionable.

You're not a 4 by definition. I intend 4 to be someone who lives off their RE work. Also, few people can truly work 2 full time jobs for any material duration of time, even fewer can do them both well. You are not a 2, as a 2 has currently has interest in leaving their current career, until they retire. You seem like an energetic 3, probably similar are most of the people you refer to in your reference above as being 2,3 and 4.

I'm deciding between being a 1 and 2.

Another note, your use of phrases like "Wow", "Gross Generalization" and "pigeonhole"indicate you are the one who is offended. I'm just making an observation and a schema that is reasonably mutually exclusive and collectively exhaustive. Never said a person cant change where they want to be. Not sure why you dont like it.

0 Votes

Originally posted by @Hattie Dizmond:

@William P.

Wow. You've just made some gross generalizations. You also seem to believe, at least to some extent, that folks in one category will stay in that category or even want to stay in that category.

I think your categorization of investors has missed a huge piece of the puzzle...motivation. Many people are less passionate about RE and more passionate about it's potential to help them achieve their desired lifestyle. Many REI's dedicate the time they do, either leveraging RE as a part-time job (or like myself, a 2nd full-time job), because we want to achieve enough passive income to not have to work any job full-time, real estate or otherwise.

Generalization is how one understands the world. If one considers every situation unique, then its pretty difficult to make much sense what one sees. There wouldnt be much purpose for a forum if the information presented could not be generalized to ones own situations.

Where do I suggest that people cant change category? Category 3 is explicitly a recognition of people who currently have other work but wish to make RE a full time job.

At any given time, however, one is only spending so much time at real estate. That's the categorization I've put forth. HOw much time are they spending now, and do they want to career of it. There are many others I am sure.

As for motivation, one assumes its financial return for just about everyone. I dont sense much charitable notion on the board.

As for your desire to retire with passive income from RE, Doesnt just about everyone hope to retire at some point? I suppose some people might think that portfolio of RE is the way to go, others might just want RE to be 10-20% of their retirement portfolio. That's likely to to drive how much TIME they spend at RE. Time, of course, is the variable I've chosen to differentiate investors.

0 Votes

Originally posted by @Chris K.:

I'm always jealous when I see nice houses like this for so cheap. I would be happy to have a house/yard that size for that cheap. In Baltimore that would be $350k+.

In my area (San Francisco Peninsula) it would be close to 2M. ($700 per square foot). So dont feel too bad.

0 Votes

As I read the forums, I realize that a major way to categorize RE market participants is by the amount of time they can devote

From least to most time

1) passive investors. Have FT job. Dont have/want to spend a lot of time on RE, ie dont want a part time job in RE

2) active investors - Have FT job/career they want to keep for the foreseeable future, but essentially make RE a part time job. They love RE and/or have a lot of energy.

3) Full time intenders - these people have other work now, but want to make a full time career in RE. This type is fairly prevalent on BP. Often times these folks seem under-capitalized.

4) Full time RE investors. This group is always interesting to hear from - lot of knowledge. Also like hearing about all the different models.

I think these types really drive what type of investments a person should pursue. For instance, a number 1 is going to struggle with 20-60K per door,cash flow model.

So, what type are you, and how does that influence your strategy/model?

0 Votes

All Forum Posts by: William P.

William P. has started 4 posts and replied 46 times.

Post: Should I Pay Anything Towards Monthly Rent of my Property?

Post: Property Insurance: is it worth it?

Post: Should You Pay Points to Buy Down Mortgage Interest Rate?

Post: My first deal...need help figuring out how to analyze...Need feedback

Post: My first deal...need help figuring out how to analyze...Need feedback

Post: RE as investment, part time job or full time job? Hours avail to spend on RE

Post: RE as investment, part time job or full time job? Hours avail to spend on RE

Post: RE as investment, part time job or full time job? Hours avail to spend on RE

Post: Diary of my 4th flip

Post: RE as investment, part time job or full time job? Hours avail to spend on RE