All Forum Posts by: Trent V.

@Derreck Long it would be great to get in touch. What do you mean by RMD I have not heard of that acronym.

@Anthony Wick and it probably won’t even result in much capital gains tax for the government. Just another way the government is trying to get their greedy paws on individuals money in my opinion.

I understand where you are coming from. I take very little of Dave Ramsay’s advice when it comes to real estate. 

I have taken Dave Ramsay’s advice on savings and revolving debt though. I will have enough capital to take care of 6 months of vacancies. Plus we will be cash flowing so any of the extra money will go into a fund for the house. I suspect very few capital expenses either than possibly a water heater because the house is in decent shape. I think I would buy this house as a rental and I think it’s going to springboard me into more and more real estate investments. 

I appreciate the constructive feedback for sure though. 

I am very excited about my current plan. It is not perfect and I am open to suggestions. I wanted to post what I am doing because I think there may be Veterans that arent sure how to take advantage of their VA loan programs.

My wife wanted a personal home before I bought rental properties and understandably so. The home we bought was 300k at a 4% interest rate and about 1000 dollars for closing costs. Current rents on the home should easily hit 1750/month. At those rental prices, we would be making just enough to cover the mortgage. We have cash reserves but Cap ex and Vacancy would essentially make the property unprofitable with next to nothing cash flow. We want to sell and move out of state. I did some very rough math. We have paid 21,000 in total mortgage costs over the last year.  If I were to sell the property I would be looking at somewhere around 16,500 in just agent fees along with approximately 2500 to 11000 in closing costs and make-ready repairs. ultimately we would have been better off renting a property rather than living in the house for a year then selling. 

Enter the VA IRLL program. Because my wife and I are veterans we qualify for an interest rate reduction loan program. Essentially as long as the same names are on the title we can get our loan rate reduced to 2.3%! This saves us approximately 275.00 a month in mortgage expenses. Meaning that now even with Cap ex and vacancies the property will be mildly profitable. I understand it doesn't meet the 1% rule but it's profitable and I have virtually no money in the house if you don't count me paying into the mortgage for the first year.

Next step. We are going to use my VA benefit instead of my wives to buy our next home. The VA caps loan values at 510k. We are planning to buy a home right around 400k. This means we would be leveraged at somewhere around 700k. I have heard that we would have to pay the difference to get a VA loan meaning we would have to come up with 190k to get into a second personal home.

To count your rental as income you have to show two years of rental history but here is the interesting part. If you have a signed lease and two "months" of rental income you can get approved for your second property with little to no cash down. They don't count your first mortgage as a liability since it is being covered by your renter. so you don't have an asset but you also don't have a liability as far as the bank is concerned.  

We are essentially doing a version of the house hack and the BRRR method with the VA loan and refinance. I think we will be able to get great tenants as well because we are in a B plus type neighborhood. The people who rent from us will not need to be renters they will most likely just be in transition. At least that is my hope.

I am open to any constructive feedback about this move. I feel like its a decent plan although it's not the best cash flowing property something is better than nothing. Moving forward I will use conventional financing and use the equity from my first rental to purchase more rental properties further increasing my leverage but also my cashflow. 

Feel free to ask me any questions if you can use the VA loan benefit. I think I have a pretty good feel for the process at this point.

Thanks for the responses. We are going to take a small chunk and add that to what's left of our revolving debt. Car and credit card will be paid off. Then we are going to max out a Roth IRA. The rest will be put in a self directed IRA. The self directed IRA is nice because my understanding is that you could use the money for virtually anything although it will count as income on each dispersment. I am very tempted to invest the rest right into a rental property but I think it will be wiser to keep this as a capital expense backstop and save the rest of from my w2 job for a initial investment in a property. Thank you for the feedback.

My mother in-law passed away and there will be a a 401k and possibly a a piece of the property that we may inherit. 

I’m curious if there is a way to roll the 401k into a self directed Ira to avoid tax benefits then use the self directed ira to invest in property’s. 

Is there any other avenues that someone might use to 1. Avoid taxes. 2. Have a mind toward using it in real estate investments?

Hello, my name is Trent I am a new investor currently residing in the Portland Oregon area. I have teamed up with a more experienced investor in my old hometown of Missouri. We are currently looking for a property or two to flip in the Kansas City metro area. Looking for single family or multi family under 70K initial investment in Odessa, Oak Grove, Lee’s Summit and Raytown areas. We can close quickly on a home and will be looking for more long term buy and hold strategies in the future. Feel free to give any guidance or suggestions. 

Thanks for reading 

Trent 

Thanks for the replies.  I guess that’s the obvious answer.  If they are paying down rents and you are cash flowing then what is the problem.  

Here’s another one.  I often hear that there is no way to measure risk when you are leveraging OPM.  Is there a way to quantify the risk?  

IMO, it’s riskier than a 401k although I know a millionaire that did it the Dave Ramsay way and I’ve heard of him losing 20-30 grand in a day.  So to say they aren’t risky is naive I think.  

Hello,  my name is Trent.  I am a Commercial Helicopter Pilot by trade.  I have spent many years interested in real estate but have been focused on my career for the most part.  I love my job but it does steal a ton of time away from the family and I’m interested in being in a position to not need my job even though I love it.  My interest was sparked in 2011.  While I was deployed I read Rich Dad along with a slew of other books about wealth growth.  My main focus since then has been growing in my career field which took much longer than I anticipated.  My hope is to own a portfolio of properties that will eventually be paid off and lead to an early retirement.  I’m new to bigger. Pockets forums but I am trying to take actionable steps towards my real estate goals.  

I have recently began listening to Dave Ramsay. This has mostly been to learn a different take on a path to wealth. My question is. If you use the BRRR strategy and you never really pay off your loans on let's say 30 properties at 100,000 each. Now you owe 3,000,000 and maybe your making 9,000 in cash flow a month. Technically (according to Dave Ramsay) you are broke. The income your making is not going to build fast enough to pay off the loans. I guess I just want to hear some more arguments in opposition to the BRRR strategy. To hear them talk on the podcast it's a full proof plan with no drawbacks. I know this isn't true. What are some worst case scenarios? What would you tell someone who is an avid Dave Ramsay type of financial strategist?

This is great.  I have been living in the Portland Hillsboro area for about 5 years now going through school and getting my career going.  I have looked at places and realized that about the only way for properties to make sense would be to rent out individual rooms.  I looked into it a little bit but wasn't sure what the rules are regarding that.  I have a few questions.  

Does the property have to be zoned as a coliving?  

What type of upgrades do you actually do to the property to make it more friendly to the tenants.  

How do you screen your tenants?  Im assuming just like you would for any place but are there special considerations because they will be living so closely? 

Really inspirational post thank you for sharing.