All Forum Posts by: Tony Kim

My wife and I have three houses that we rent out. This journey started about 10 years ago. We have 15-year mortgages on these. The houses are worth about $800K (TX). We are very happy with how these houses appreciated; we put very little money down and were rewarded handsomely. Of course, this was no bed of roses: we put a lot of work into these - roof leaks, flooded floors, painting, clogged toilets, annoying tenants - you name it.

Today, we are contemplating selling one house and putting the profits into SP500. What makes us contemplate this is some back testing. For example:
- The first house was purchased in 2013 for $145K. That house is now worth $280K.
- If I was to invest $145K in SP500 in 2013, I would have about $500K

I know that the past is not the prologue, but I also know that historically housing trails the SP500. That said, in 2013, we were fresh out of grad school and did not have $145K to invest in the market. So, buying a house with 5% down was the only option. Today, we could sell one house or more and invest a larger sum for the long haul.

We have tenants moving out in the spring and we are considering selling. The house in question happens to be a house we lived in recently and we could sell it and not pay taxes on the sale. Do you think we should pull the trigger and put the money into the market? Thank you for your advice.

Relevant details: 

- Household income about $250K, which means that we cannot deduct rental losses

- All houses have 15-year mortgages , which means that they do not cash flow well. We are either in the red or breaking even depending on luck in a given your. Tenants are paying off our mortgage. 

- We could also sell, invest the money, and buy another rental (re-leverage)

Would love to hear everyone’s strategies to overcome adversity in real estate to help them stick to and achieve their goals!

Hi Guys,

If we received  36 k as a rent  on a house located in California . Mortgage was 24k. The repairs were minor, so it’s negligible. How much would our state taxes be? (My husband keeps waiting for the bill from the state of California , but I keep telling him to just pay it . We need to pay it for the last two years)

Thank you

Hello, I am just starting studying in real estate. My goal is financial freedom in few years!  Now I don't know what will be wise with my property in current situation.  Any advice will be greatly appreciated. So, my husband I bought a our first property in October. It is 5 bed/3 bath house about 3100sqft with swimming pool. At that time, he was getting a lot of stress and he wanted to buy biggest house under our budget ( So at least, he has beautiful house when he come back from work! ) . We both were making good money so we were prequalified for 1.1M. Anyways, realtor who I found from Craigslist wasn't very helpful to lower the property even though we were only buyer.Anyways, we bought a house at 790K, just 1k lower than listing price, thankfully, appraisal came back with 815K.  Now, my husband has no income. (He is starting his new business and now he is between jobs.) So, now we are only depending on my income.   Because my toddlers sleep with us, we are only using one room. We rented out one room  at 800.  We are paying monthly $5300 including property tax, insurance, and mortgage. Rent helps, however, that is more than half of my income! Luckily, we have no debt besides house mortgage.  I thought about renting our house and then move into apartment, however, if we do that, we will just pay few hundred dollars less so I am not sure if that is good idea.  Can you guys give me any advice? Should I just sell even though we will lose money or rent it out or just stay here and try to spend less money? What do you guys suggest? 

I miss my old town so anyways, sometime, we'll go back to old town anyways.   Thank you 

Has anyone tried Jerryll Noorden's system or have any information about him?

I know if you search turnkey, you get a ton of various feedback. But I wanted to consolidate a bit here. Any recommendations and most importantly any recent horror stories of some. 

The most obvious things I notice is a lot of Turnkey places offering inflated prices, which is fine, and I can respect that but really exaggerating on neighborhood quality. They'll say B+ in a C- area and just hope you don't research the area a bit harder. Hard to be B+ if walk score is low, school scores are low, etc. I've noticed that on ALL of the big name Turnkey websites. 

Another trick they do is say property management free for 1 year, 8% for year 2 and on the pro forma show you make $200/mo cash flow with ppt mgmt at 0%. It's like year 2, I'm eating away all that "cash flow". They're hoping you don't do any future projections. These points go for all of them RtR, REI, JWB, Memphis Invest, Pinnacle Properties, Martel, etc. All the one's on this board.

For people that invest....feedback please? For one's that are on the verge of investing, thoughts? I know @Austin Fowler has great things to say about REI, which is good to hear. But I'd like to hear more, as an OOS, Turnkey is naturally a bit more inviting but doing basic due diligence is showing me that there's a lot of inconsistency. I'm cool with the mark up, go for it. But the neighborhood hoodwinking and pro forma cover up, that ain't going to fly.

Also, for any current investors, did you guys pay the properties a visit physically?

@Chris Seveney - thanks for the response and unsure why the pict is so small. As with mastering anything is only when you can teach it right. So let me try to explain with what I currently understand. 

What you state is right IF I was lending my own capital. Which I'm not. Then you may say it's an arbitrage deal, where I'm borrowing at 4% and trying to get an 8% return. That isn't this case either. The process is to leverage from a line of credit (LOC) -> invest -> put own capital towards LOC payoff while receiving amortization payments back. Thus your return is the full principle and interest once you pay off the loan.

Example: 

10K is your LOC. You invest and receive ~300 a month for 4 years. You pay 2k of your own money each month. Therefore you're paying off the LOC at 2300 each month. That takes you ~4.4 months to pay off. Thus you've put ~8,700 of your own money towards the 10k. The interest you're paying in those 4 months is is minimal, and is a different type of interest rate vs amortization interest you're getting. If if you're paying more on the LOC side, you still come out ahead. I watched a webinar around that one. So for the rest of the 3.8 years you're getting a full ~300 of passive income.

Now do it all over again but since you're getting that previous $300 you're now paying $2600 which cuts the time down again. Now there is a point where you must increase the LOC loan to continue this process, and this is where their snowball calculator comes into play.

I am two years late to this post but thanks Peter for sharing. I think this is the reality of many turnkey operations, the turnovers are expensive, you have to be on top of the PM constantly, and things can still go not according to plan. 

Hopefully you have at least experienced some nice appreciation if you held on till now.