All Forum Posts by: Timothy Mitchell

All,

I understand that putting less down on a property allows for opportunity to purchase other properties but putting less down also raises the monthly mortgage payments and you would also have to pay PMI (depending on the lender). From what I have analyzed, these two increases in expense always makes the deal worse. I hear a lot on the podcast that being able to buy a property as your primary residence has the massive benefit of putting a lower down payment (i.e. 5% down), however, I do not understand why that is from an analytical standpoint. If anyone could help me with this knowledge gap, I would appreciate it. Thank you!

As a new real estate investor, I am not that familiar with mentorship programs and am wondering what the average cost is for a mentorship program. Also, has anyone attended any worthwhile mentorships from personal experience that they recommend? I am currently interested in Pace Morby's Subject to mentorship but was not sure if this is rookie-friendly or if the cost of the mentorship was too high ($7800).

Hello,

I currently own a condo that is fully paid off (market price is ~$140k). I was wondering if I should pull out equity via a cash out refinance or HELOC. I am able to afford the extra payments and was primarily wanting to use this capital to scale my real estate portfolio via BRRRR. I thought that a HELOC was the way to go as I am able to access the capital multiple times at any time, however, after listening to David Greene's Q&A, he said that a cash out refinance would be better.

If I were to invest into commercial or multifamily real estate, a cash out refinance would be better, right?

Any advice would be appreciated! I linked the Q&A for reference (David discusses this around 3:44):
https://www.biggerpockets.com/...

Thank you

I appreciate the responses from you guys!

@Deneuve Brutus

I am comfortable with a ~$420/mo cash flow and 10% cash on cash return since I feel like it would be hard to find a property with similar numbers in this market. I plan on speaking with my realtor to see if I can have the seller pay for some of the closing costs.

@Dan Travieso

I haven't considering rolling portion of the repair expenses into the loan but it does sound like an very viable strategy to pursue. I will look into this.

@Matthew Paul

I plan on replacing the HVAC units when they break so it won't be an immediate expense. However, the inspector noticed indications of a leak from the roof and mold in the attic so replacing the roof seems to be right idea.

Hello,

The seller has accepted my offer of $121,200 for a 3 bed/2 bath townhouse. I initially analyzed with the following information and the property yielded a ~$420/mo cash flow and a ~15.7% cash on cash return:

Purchase price: $121,200

Closing cost: $7,800

Loan: I am putting 20% down for a 30 year loan at 3.625%

Estimated Rent: $1,400

Property tax: $135/mo

Insurance: $54/mo

(Assuming 5% Vacancy, Repairs/Maintenance, Capital Expenditures and 10% for a Property Manager)

At first, this property seemed good on paper until the inspector said that the AC, furnace, water heater, and roof are at the end of their life and will need to be replaced in the near term. I obtained an estimate to replace all of the previous items and it will cost roughly $18,000. I signed the contract for buying the property as-is so I don't think the seller will pay for any of these so I am wondering if I should continue to proceed with this purchase.

Paying an additional $18,000 will maintain a ~$420/mo cash flow but will reduce my cash on cash return to ~10%. However, this should also reduce the amount money I set aside for Capital Expenditures since everything should be brand new (which in turn, would increase my cash on cash return but I didn't account for this to keep the analysis conservative).

Please let me know if I should buy this as my first investment property.

Thank you