All Forum Posts by: Tim Roberts

@Sherry Byrne

Looking at your cash flow from 1/2 of your rental pool paid off with the another 1/2 being leveraged you should be in a good position to sell the personal residence, using the cash out to pay your new home off and have peace of mind.

That being said...  

- Have you met your past goals and you are comfortable where you are today?

- Could the home you are moving out of become a rental, and the cash flow cover your new house payment at the lower interest rate?

- What was your intention with the home you are moving out of when you started this big remodel?

- What are your goals for the next 5 years?

Answering these questions may help make your best decision.

You could sell the home you are moving out of and pay off your construction loan. Then maybe get a HELOC on your primary residence to have access to money if some opportunity came up you wanted to move forward on at a later date.

@Bryan Devitt is correct, this decision should be based on your goals and no others. You clearly have been successful in building a real estate portfolio while limiting your personal expenses.  If you don't have a plan for the money from the sale today then I would pay off your house and keep with the strategy you have been running by.

@Roderick Dewar, @Geordy Rostad is correct.  The first place to start is to decrease your credit expenses.  How fast your credit score reacts to the changes you make depends on what is influencing your credit score down but most often if it is not negative credit then it's your credit card balances are maxed out or close to being maxed out.  

Credit cards should be used for cash flow purposes.  Don't carry balances on the credit cards if you can avoid it.  And if you do, have it in your mind to pay the balance down within a 3 or 4 month period of time.  High balances should be paid down as quick as possible; the first goal is to pay down balance to 50% of your limit, then 30%, then 18%, then 10%.  These percentages have a direct influence on pushing your credit score higher in a short period of time.

Once your credit card balances are down concentrate on saving your first $25,000 in the bank.  This will give you options on whatever your goals might be in buying or flipping a home. 

Continue to ask questions... it's where each of us started and this community is built to help. I know I am looking forward to reading more forums and learning myself.

@Chandler Colyer I like @Patrick Menefee's advice... Without goals you cannot create action.  Better yet, without goals thought out, written down, and reviewed daily action becomes pointless.  With written goals set, you now have something to measure against and identify where you are going or a plan on how to get there.  Otherwise, you will only be spinning your wheels.  Answering Patrick's questions first will help you begin to get a feel for where you want to go.  Create the plan and then look at your options.

Your debt ratio is good at 25%.  What it tells me is you don't have a lot of consumer debt.  Regardless of your income; you are managing your debts well based on the income you are earning.  You can calculate the increase in your debt ratio adding the 1% of the student loan balance your debt ratio (credit debt/gross income).  A borrower's debt ratio needs to stay below 45% when looking to purchase a home.  When you are looking to purchase an investment property you can use the 75% projected rental income to offset the new mortgage payment.  With this in mind, you can buy when you are ready.

Once you know where your debt ratio is and it's under the 45% buying a rental property comes down to how much money do you have saved for down payment and building a reserve account in case you were to run into a financial problem.  As a general rule, investment properties require 20% down and 6 months reserves; $1,000 monthly payment requires $6,000 cash reserves in your checking account.

The other possibility is you could also take Scott Trench's advice in his book "Set for Life" and consider buying a home to live in using limited down and rent rooms out to your friends or others to offset the cost of your housing expense. Or look at a duplex, triplex, fourplex using FHA lending guidelines to buy the home. The opportunity here is less money down because it is a home you are going to live in.

There are many ways to start investing in real estate, this is why you want to start with your goals so you can begin making decisions on what your next point of action needs to be.  It will be the best use of your time to start there and then continue gathering more information so you are making good decisions that will build cash flow or wealth.

Feel free to message me if you would like to talk in more depth about your goals and how to create your own strategy.  I am always available.