All Forum Posts by: Travis W.

Hello everyone,

Just double checking my math on my current home. Can anyone give me insight regarding these numbers? I am pretty new so I am not sure if they are right..

1. Bought a house for $127K. at 3.750 interest using a 0 money down 30 yr-fixed VA Home loan. (paid $1k in earnest money).

2. Monthly payments for the house are roughly $826. Principle is about $194, Interest is $394, and escrow is $237. Utilities are $220-250.

3. The house is a great house in a great location, and I think I can get 1300, maybe even 1400 dollars in rent a month.

Now, I used the BP calc to determine cash flow.. and I feel like its off or I am missing something. It is claiming my P&I is 550ish.. which isn't wrong, but I pay the escrow on top..so its effectively $300 dollars more a month than what the calc shows. So,

Scenario 1: $1300 rent + tenant paying utilities seems to cash flow out close to $200-300 dollars.

Scenario 2: $1300 rent + myself paying utilities seems to be negative $57 cash flow or so.

If I didn't have the escrow, it would be like $400 a month in cash flow.. I guess I don't understand how escrow account works..

 I would assume that follows me wherever.. So am I misreading my math here, or did I not fork out enough for a down payment to lower monthly interest payments and its biting me hard in the cash flow area? Or is this one of those scenarios where its better to take the loss for a bit until I can maybe do a refinance and offset some? or am I actually ok on this..

It is possible to rent out my basement albeit I'll have to share the kitchen which isn't a huge problem. That is one solution I've not considered suprisingly.. But hey, that's why I made this post :P. And Leanne had a great post. Deep down I know the real estate license will come in great. I'm sure I could find time for it. I wasnt aware you needed rental history to pull a second house. I figured the bank would be okay with it all as long as you had 20% of the price and what not.. that incentivizes renting my basement now I guess...

@Basit Siddiqi

I think you may be right. Now that I look at it all it seems less like a next move and more like a long term plan....

I am sorry I didn't clarify those numbers. I meant to. The 1,300-1,400 was the approximate rent that I could most likely get. The 1,150 is expenses i pay for the house itself (mortgage, utilities, etc). The 3,338 was my W2 income plus a disability compensation that I receive, no rental income included. The 2,000 expense I referenced was my monthly living expenses with the combined house expenses..

So, my monthly budget is $3,338-$2,000=1338 more or less, in savings roughly per month with no rental income. So as you can see, the 1150 of that 2000 expense is just my house... If I rented, it would offset a lot of that and put 300-400 extra in my pocket.. I just can't rent it yet because I have no secondary residence.. Which is killing me knowing that I am living in my investment which does not help me at all hah..

And if it was a multifamily, it would be perfect.. because then I could get that extra unit and live in it..

Since I can't tackle these all at once (i am overly ambitious at times i admit.) I think you may be right. If that is the case, this is what I gather.

1. I can't find a property until I know the tax implications/have the funds. So wait on that.

2. The partnership may be risky and I have no savings yet. It would allow me to get a new residence quicker but at some unknown possible expense.

3. I have a 3 year window until I have to use my GI bill without losing it. So I might as well wait.

4. My job is my investment income until it can be offset.. so, i'm keeping it...

5. Real estate license may be able to be done on the side, but takes time (which I don't have)

6. Increasing savings is probably the first task and a must-do.

So in order of priority... 4 and then 6... i''ll be really good at saving money for the next 6 months to a year I guess.

Then from there, I can become a pro at searching for a property and maybe using a partnership to get the next building.. Was hoping I could cut a deal to get a second house in <1 year, but if it can't be done, it can't.

Keep soldiering on I suppose, thanks for the insight! :P

I am also a young guy starting out. Trust me.. It's a lot of mental work. And I haven't even gotten to the hard part yet..  I advise getting your budgets in order, get your emergency savings, and working at saving for 20% at minimum of your first property. Then, when you are set to go, do some searching in your market for your perfect investment. Just remember, rushing into a bad investment isn't something you want to do, so be patient and you'll achieve your goals!

Thank you for the response David! I kind of figured the emergency savings would be first as a must-do. I am saving from now until June before I continue on. My owner-occupancy clause expires after mid June, so I can focus on getting a tenant in at that point. My biggest dilemma after that point is where to live.

Although I will have the emergency savings, and the tenant.. I am unsure of how to get the next place. Or if I even can.. Like I said, I have a VA Loan, 660 credit, and a possible investors money/building. I guess if I had to simplify this, it'd look something like this:

1. Save money from February to June. Emergency savings completed. Somewhere in that time frame, hire a CPA and go over tax implications, budget and expenses, etc.

2. Come June, I can either choose to rent or not, I really want to rent it out, but I will have no new home to move to. Which means: A. Move someone in, and I can find a cheap place to rent or be homeless? B. Don't move anyone in and save money again over the next 6-10 months for the next house purchase.

3. Depending on #2, I can start to achieve some more goals.. If I can get the second house to cash flow as a multifamily, it will substantially boost my cash reserves. 

4. If I can get these to all work without me going broke and dying from the Minnesota cold, I think I will talk to my employer about switching to 4 day weeks or part time and go and get my Real Estate license within the 3 year window. If I can't get any good investments going from now until then, I may look at going to school for 4 years in a nice major.

I am young, single 24 year old, and with essentially no debt.. so I realize the potential I have. It is just a matter of not screwing anything up.. which is bound to happen, I am just trying to mitigate the impact of it haha :). 

Again, thanks for the advice, if anyone else has input it is also welcomed! :P

Looks like the Starting Out section is very busy.. anyone?

I can't seem to edit my post so, apologies for the bump.

Just wanted to add that I also have a house my grandparents are trying to sell as they now live in Florida, that my family member who wants to invest is currently in right now. They are all trying really hard to sell it, but I believe it isn't in terrible condition and could be a decent rental property if I could snag it on a deal. 

Also, if I didn't mention it, this is taking place in Minnesota.

Hello BP,

First off I apologize for what may be a very in-depth/lengthy post. Sorry. :) I will try to be very direct.

I purchased a SF house, in a nice town, that's 20 mins from a bigger city about a year ago using a VA Home loan. Essentially, my numbers are:

-  $126K purchase price with no money down. (1,000 for earnest money is all I paid for anything)

-  Mortgage with Escrow comes out to $826 monthly, utilities about $230, and all that yada comes out to about $1150 in expenses monthly.

-  When I ran the calculator on BP here, it states my cash flow is about $300-440 a month if rented at $1300-$1400.

Those numbers don't look too bad to me. I made the best decision I could when I went to buy my house. My monthly income is about $3338 minus ~$2k for expenses.. leaving me about ~$1338 monthly.

Here is my predicament.

1. I have no emergency savings. I used it all for my house essentially and paying down my car loan which is set to be paid off this February 1st.

2. I have a GI bill that expires within 9 years. Meaning if I want a 4 year degree at any point, I only have 3 years left until I have to go back to school.

3. I don't know how I get into my next property. By that, I mean I don't know how taxes will affect it, what home it should be, what circumstances am I looking for? I was thinking of finding a multifamily in the nearby city and house hacking it, but I know SFH make decent investments.

4. The kicker. I have a family member with a one-time significant amount of money that wants to get into investing, that isn't opposed to partnering and wants to rent my house but only at break even......but they also want to invest in a vacation home on the east coast by the ocean ( I personally think its a bad move). Is there a way I could cut a deal to get a new property here without getting another loan? My credit is only about 660. And I can't use another VA Loan.. unless I can..

5. I feel like getting a real estate license would be a good idea. I tried 2 years ago but got un-enrolled from the course during a management changeover and never tried again.

6. Oh, and I work a full time 40+ hour a week factory job that includes holidays and weekends.. so I am strapped for time daily.

So, that's my situation.. I have quite a few options and I am interested in what an experienced investor would recommend. This year I am itching to get moving on this. I think about this stuff everyday and try to make the right choices. This time I am genuinely stumped.

Thanks for any opinions or beneficial advice you people may have!

Highly appreciated!

Travis

I am not, the house i reside in is a single family home in a decent residential area. The Tax benefit is a write off on up to 150k on property taxes, but i believe i need to be an owner occupant to keep that. Not sure if that plays a big part in anything. Just figured i'd mention it. So, it looks like the best option would in fact be to find a nice multi family home. I picked a sf home initially because it's more likely to find a tenant where i live. 

As far as my goals, i am looking to essentially replace my current jobs income. Maybe a small goal to some, but i do not think it is too extravagant. I figure i would like to get 5-10 single-family/multi-family rental properties by the time i am 30 for sure.

Hey there, just making my first forum post.

So I'll cut to the chase. (I am kind of a go-getter lol).

Some background:

I am 24, have been passively following real estate investing forums/topics for about 2 years.. Last year I bought my first Single family house for about 126K. 0 money down using a VA home loan. I am not married, I have no debt ( I had a student loan but paid it off in the military). I was going to get my real estate license but now I work full time to help pay for my house.

So, now that, that is all said. I am facing a dilemma. I need to get to the next step.. the next rental. I am highly unsure of what that step may be. Maybe I am fearful of the unknown lol. I got this far, finding the decent property, buying it, managing it on my own a bit (and its kind of hard doing it alone with a full time job heh), so I thought, "maybe i'll look at property managers" and wasn't sure that's a good first step. I don't have that 3-6 months savings quite yet, but I can attain that if I save the next month or so. 

What are my options for the next house? Save 20% more and use an FHA (making me wait even longer to purchase which I really want to get this ball rolling)? Partner to fund the next one (is partnering ever a good idea)? I will lose a tax benefit on the current house if I no longer live in it so I guess there is that consideration. Then I am conflicted on getting another SFH or a Multi. There is a decent multi that's nearby I was considering, maybe I could have a family member fund some of that, and I live in one side for a bit?? IDK, bleh.

All-in-all, I'm conflicted about paying off the house I have, and getting another one and rightly driving my costs up... but, I guess that is why rentals are such a hard thing for the majority to get into.. because the debt is so big, but not bad per se.  

Anyhow, nice to get any replies, and glad to meet other people with similar mindsets :)