All Forum Posts by: Account Closed

@Scott Trench

1) I want to reduce eating out because I spend probably $10-$15 a day at eating junk food at work for breakfast and lunch when I could make a weeks worth of healthy food in an hour or two on the weekend and freeze it.  I just targeted that as something that for minimal effort I could save maybe $150-200 a month.  As for lowering housing/transportation costs at the moment, I don't really see a way to lower transportation given that I'm all over the place because of work.  I bought a 4 year old used economy car after my old one broke down in a major way last month.  As for housing, I would love to get into house hacking, but a decent 4 family home is in the $700K-$800K range and I would need probably $50K minimum to enter into that plus an emergency fund of maybe $15K.  That is the goal I am saving for right now.

2) I would like your opinion on this.  I am living in a small studio apartment, maybe the smallest apartment in my entire town.  I was renting it for $1200 a month, which is just about as cheap as you can find an apartment around here.  I came to find out that by spending $6000 now in down payment and closing costs I would be able to save $400 a month AND have $200 a month go into the equity of the home.  I also ran the numbers and if I were to move out I could make about $300 a month in cash flow and still build that $200 a month in equity.  I didn't want to wait for $50000 to put down on a 4 family home because the option I had was immediately in my reach and is a significant savings - $4800 a year in cash!  Also the reason I put money in the 401k is because I am maxing out the employer match. I understand though that I can't tap into this for a long time and there is a trade off there.  I'm not that far in the book yet but there might be a good reason to keep that money available now.  I'm thinking that if my investment income exceeds my expenses young, there might not be a need for a 401k which I guess would be just a cherry on top.  It might be better to miss out on the matching to lower the age where I can achieve financial freedom.

3) I'm making 65K and I'm in a 3-4 year program that ends in a promotion to a salary range of 85K-95K and some really nice perks, such as $600/month to spend on a car, insurance, and gas.  This is about the median salary of construction project managers in New York City.  The cost of living here is quite a bit higher than other parts of the country and that would be considered a solid middle class salary here.

@Taylor Brugna I live in New Jersey right next to the city.  I do need a car especially in my profession where I go to many construction sites that may or may not have public transportation.

@Darren Sager I can't reduce the number of hours on the job.  I am part of a safety team and I am required to be on site as long as work is being performed.  I also don't have the time or energy to do much if any work on the side.

@Chris Breezy My degree is a Bachelors in Civil Engineering.  Almost all the construction managers I know have this degree, but some have degrees in construction technology, project management, or architecture.  This is rare though.

Andrew, the book is already in the mail!  Looking forward to reading it.

I work 50-60 hours a week as a construction manager for a large company in NYC, but I want to run my own business doing flips and BRRR in northern or central NJ. What is your advice for shrinking my expenses and raising my income?

Below is a summary of my personal finance situation today as I'm nearing my 26th birthday.  What the arrows in the diagram are meant to show is that I'm using my left over income to invest in stocks, and using the income generated from stocks to invest more.  I'm planning on selling the stocks when they are enough to purchase real estate, but not touch my retirement account which will stay diversified.  

At this rate I will have $43000 in 2 years (assuming there is no major stock market crash) to make my first investment.  Will I be ready with that kind of money?

Here are my ideas for 2 years down the line  What are your ideas for me?

Idea #1 - House hack using an FHA loan in a 4 family home, maybe in Jersey City. I would rent out the studio I already own.

Idea #2 - Keep living where I live now because the payment is cheap, and begin to flip homes in the cheaper areas of NJ where I can afford.

Idea #3 - Keep working at my current job.  I am on track for a promotion and pay bump of about $1200/mo after tax income and can use the money for very passive investments that will allow me to keep my current job.

Cheers and thanks in advance for the advice.

Hey Martin, I went to college at NJIT just around the corner from that property and lived in Newark from 2009 to early 2016.  Best of luck to you in the brick city, but I just want to give you a word of warning about the area you are looking to invest in.  Even though physically this is near the four universities on university heights, as far as the students are concerned it is in another country.  Nobody in college would ever go to that side of town because those who have gone there have been harassed, robbed, beaten, had their cars stolen at red lights, and have been held at gunpoint.  Every student is warned in college on orientation day by the police department not to go there for any reason, and campus police will actually question students who are leaving the campus in that direction and question people who are walking to campus from that direction.

My first word of advice is to have a full time security guard on your property and leave a radio on inside to let people know that it is occupied.  I worked on a Habitat for Humanity house in Newark and overnight the walls were ripped apart, all copper pipes were stolen along with the water-heater.  My second word of advice is to make a deal with whoever is in charge of that block.  I work in construction and my coworker used to rehab in Newark.  He was harassed on a daily basis.  Eventually he had to pay off the local gang leader to be able to work on his block.  After he did that he was told that nobody would touch any of his materials or tools, and they never did again.

How did you save up for the down payment for your first buy and hold rental?  What income were you making at that time and how much were you saving per month?  How was the purchase financed?  And most importantly, are you happy with your investment?  Thanks in advance!

There is a lot of stereotyping millennials on this forum.  I'm a millennial that works 60 hours a week and is killing it financially for a 25 year old, and all the people I know my age work incredibly hard.  In any generation you have smart and dumb, hard working and lazy.  No need to hate on the generation you raised.

I am considering buying a unit to rent out in the Fort Lee, NJ area to own for 30 years and then sell. I am looking for advice on my ROI calculations and if this is overall a good investment. There are approximately 100 identical units in my development, so I am using Zillow to figure out what it would cost to own, and how much rent is. The unit goes as high as $96,000 for a great condition interior, and rents for $1200/month with hot water included. The HOA fee of $350 per month pays for property taxes, hot water, and maintenance of everything outside of the house, some or all of which would be tax deductible to me if I owned the unit. Please comment on my ROI calculations and let me know if I did anything wrong. Specifically, I think I may have bad calculations for taxes and tax savings. Here is a link to the spreadsheet I made:

 https://docs.google.com/spreadsheets/d/1_Rg21utKgh...

This is what I did to come up with the spreadsheet:

Home Value= $96,000

Up Front Costs

20% Down= $19,200

Land Transfer Tax 1% = $960

Appraisal = $300

Inspection = $100

Legal Fees = $900

Lock Charges = $250

Loan Origination Fee (1% of 96,000-19,200) = $768

Coop Application Fee: $300

Commission 3% = $2880

Title Search, Title Insurance= $875

TOTAL UP FRONT COST = $26,533

Recurring Monthly Costs

Property Tax = Covered in HOA Fee

Homeowners Insurance = $28

Maitenance (1% per year) = $80

30 year loan @ 3.45% = $343

HOA Maitenance Fee = $350

Tax Deductions = (Interest+HOA Fee)* 31 percent marginal tax rate = $174 (Savings)

TOTAL MONTHLY COST FIRST YEAR= $626

Assumptions: vacant 8% of the time, 2.3% housing price increase per year, 2.3% inflation, 2.3% rent increase per year.  I'm not planning on making money from the place appreciating in value.  

FIRST YEAR INCOME: $1200 * (1-.08) = $1104

Monthly Cash Flow Year 1= 1104-626 = $478

I then did a discounted cash flow analysis by adding 2.3% to the rent every year for 30 years and added 2.3% to all of the costs except for the loan for 30 years, and then assumed that I am selling the house in 30 years with 100% equity and the home value going up 2.3% every year for 30 years, and assumed that I'm getting charged a 31% tax on my net income each year. I then used the IRR function and it came out with a 19% return.

Thanks for the help!