All Forum Posts by: Tom Seigold

Thanks Eddie 😊

Thanks everyone.  The reason I'm looking for a formula instead of using an online tool is because I'm developing some software for my personal use where I want to implement this formula, so that I can import a property and see (among many other things existing calculators/spreadsheets don't offer) what the monthly payment would be.

EDIT: I ended up finding it here:

https://stackoverflow.com/ques...

Seems like it should be a simple formula, but my googling is failing me... I'm trying to figure out what a lender uses to calculate the following:

Inputs: mortgage balance (after downpayment), interest rate, and loan term

Output: monthly payment (principle and interest)

 Thanks Jared, that makes a lot of sense.  I was worried about the subjectivity of the appraisal process, hahah- unfortunate, I was hoping their process would be at least a little more formulaic.  In any case, I'll take your advice and continue pursuing this in spite of the risk/challenge.

The idea of BRRR appeals to me strongly. I have skills in the accounting side of things, and skills for performing much of the remodeling work.

As I see it, the one biggest skill gap I'm missing now is the ability to say "if I spend $30k doing [x, y, z remodels], the appraisal should go up by approximately [amount]." Of course, I don't want to invest in remodels that won't raise the appraisal enough for the BRRR strategy to work, so I want to be confident in my ability to somewhat accurately assess how much of a $$$ value-add a certain improvement will bring come appraisal time.

Can anyone recommend resources for learning this?

My immediate instinct is to do one of the following:

1. Study the appraisal process itself to better understand the appraiser's point of view.  I've found some online "appraiser certification training" courses, free and paid, that may work to this end.  While I don't intend on becoming a certified appraiser, I do wonder if going through the certification-preparation process may be valuable to me just for this knowledge gained.

2. Study by doing comps directly: finding old/outdated homes, and comparing them with recently-remodeled homes of similar size, neighborhood, and year-built.  This seems most effective in theory, but may be difficult, because it hinges on whether I can realistically find like-properties where the only major difference is whether its interior style is modern vs. obsolete.  Particularly since Zillow removes photos as soon as a listing is sold, leaving the interior a mystery unless I take lengthy notes before sale...

 Thanks Chris, that's good to know.  I'll use Roth in that case.

- Income ~$170k, effective income tax rate is about 27% right now.  Employer offers full 401k match up to 3%, so I'm putting in 3% to get the full match.

- Retiring in about 30-35 years.

- Building a rental portfolio is my goal, like many here.  I'm saving for my first rental now and doing as much research as I can beforehand.  I have roughly $40k/year budgeted right now to spend on down payments, and will be reinvesting whatever my properties make.

I know the typical advice is "go Roth if you plan to make more when you retire than you're making now" - which I do plan to happen, absolutely.

But does that advice change at all when the income you earn is going to be rental income?  I have not claimed rental income on a tax form yet, so I'm not sure how it gets taxed.

I'm on the fence between building a house (for myself, not an investment property) versus buying an existing one.  And then, in either case, renting out my existing home.

Building a house has a few things going for it, including some decent grants in my area if I build in a neighborhood that my city is trying to breathe life into.

I see lumber prices are still through the roof right now.  Between that and the labor shortage, I assume building a home in 2022 is going to cost more than it likely will in 2023.  Am I correct in that assumption?  On the other hand, homes are still being constructed- I'd have guessed everyone would be waiting until lumber prices fell before building again, with the exception of very hot markets.  What am I missing?  Is it smart to rule construction out right now, or is the difference in cost not as big as I think it is?