All Forum Posts by: Will Pritchett

Seth Jacowski Brie Schmidt I think this is a great question. I am closing on number three next week and have the exact same question. I agree with what Brie said for the bank's requirements but still wonder what is prudent to protect myself (10k per house?). I know the answer will vary based on risk tolerance but would like to hear what some more seasoned investor's believe is wise. I wonder if at some point the amount can be less due to having "economies of scale" with income from multiple units available to cover catastrophic situations or prolonged vacancies in one or two units. Brie has likely reached this level after reading her posts. Thanks for any advice you seasoned investors can share.

I went traditional financing withers properties that were light cosmetic rehabs. Not cash cows but I think they are good starts. Northside school district is great. Lots more to know of course. PM me if I can help.

I agree with showing your wife what you like about RE so she may become more empathetic if not all out enthusiastic. Keep learning and your vocabulary will expand to better explain why you are interested. Listen to the latest podcast and learn what they mean by the acronym "IDEAL". These are some of the aspects of real estate that set it apart as an asset class. As far as your cash limitations listen to the podcast regarding sub 30K properties. I wish I could recall the woman's name who did that one but she is making that work in her area and she is a positive person that is fun to listen to. Lots of opinions here. Some say sub 30k won't work. Others do it every day. Find a starting point. I would focus on inspiring your wife to see what you see in real estate. Success is much better when it occurs because of someone's support rather than despite their roadblocks. You have my support! Stay the Course. Good luck!

Travis Fisher I have a couple of thoughts to add. If you are going to take equity in the near future, take it while you are an owner occupant for about a point lower rate. Either way, I would recommend having some reserves. If you don't have 5% saved for a down payment, it sounds like you probably don't have reserves. Just make sure you won't get sunk if you are working with thin margins and a major repair is needed. I have had the same questions lately. Taking the equity just for reserves after the purchase may be worth it if you are certain you won't spend them. You will need reserves again in the future if you are looking for more conventional type deals And you will already have some of them in place left from this time. I would still try to make the money for the down payment from selling toys and savings if I were you. Then you are setting yourself up for house number three sooner - if you plan to grow beyond these two. Just a few thoughts I had. Let us know what you decide and good luck with whatever you choose!

I agree with those that would refi existing amount due at a lower rate. Roommate would make you more money. I assume some loan payments on time etc. Will also help you with your credit score. I would do a written lease for roomates to show future lenders some experience with Landlording. I would read up on improving your score too. Maybe keep this house as a rental when you buy your next one and have a nice cash flow due to the amount financed. That equity will be there down the road (hopefully) after you have some more experience and you can take some out then if needed. I would try to squeeze your budget to save for another investment while you improve your credit score. Good luck!

My realtor's wife does commercial. Suzie Wallis at Keller Williams in the Chase building at huebner and I-10. She seems really knowledgeable but I haven't bought anything commercial yet. Her husband has helped me out quite a bit. How big of a project? By the way, we are planning on making the next meet up. Good luck, Will

Diversify. I prefer real estate because it has tax advantages and is "real" and "tangible". I have a pension and a tax deferred option I can borrow against. I wish I had done a Roth while I could first, then real estate. I use leverage and someone else is paying off my debt on an appreciating asset while I depreciate it on my taxes. Just wish I had started earlier. Now thinking how I may be able to show my kids these benefits before they are my age.

@Jon Mason I like your plan. You will find many opinions on any question you ask here. Surely some of the others who have chimed in have more experience than I do but you are doing what I did essentially. My first house is a rental I would not buy now because it has appreciated but I refinanced out some cash later to invest more. If you refi now you will likely be back in PMI. E. Also, my bank looked on rental income more favorably after two years of having a rental so you could start that clock ticking sooner if you start renting your house out now.

     How long to rent is local but if it is slow you have room to lower your rent to speed it up. Be selective - don't just take first applicant to get it rented. Screening tenants is the most important part of this to me. It can make this process much more enjoyable. 

     If you decide to refi soon, do it while you live there for better rates. Add about a point when it is non-owner occupied. Maybe you can qualify for a low down loan on your next residence too?  Just stash some reserves away before you take on your next mortgage. You will enjoy watching someone else pay off your house. I am hooked. Looking for our third one now. Feel free to message me if I can be of assistance. 

Good luck!

Will

great question. My good friend used this "good neighbor next door" program to start his investing. His required term was three years at that time but the rules may have changed. He now is free to rent the home out. He would have been ineligible for the program if he owned any other property but maybe rules are different now.  If that is still the case it would delay you buying another property until you have fulfilled their term.  Hope this helps. 

Good luck!

Will

Good luck! Thanks for posting and keep us updated. I want to do the same thing to find some off-market deals to keep. Please keep us updated with your progress.