All Forum Posts by: Zachary Himes

Quote from @Andrew Olmstead:

Zachary, I don't own an Airbnb in Cebu but my family and I spend a lot of time there and always use Airbnb to rent units in Cebu IT Park and Ayala Center.  I know from renting Airbnb over the years that nice houses and 3 + bed condos to rent on Airbnb are few and far between in Cebu so I think it might be an ok niche.   The main costs to turn the unit, such as cleaning, will be super low which should help your profit margin.  There are no property taxes either.  I would suggest that you do a great job on furnishing and do not skimp on the internet service as believe it or not a lot of airbnb Hosts there don't offer units with internet.  Those, I cross off the list immediately.      Just curious why you bought in Talisay instead of a closer in sub-division.

Thanks for your response and view on the area from experience that is super helpful! This house was gifted to my Wife and is sort of a family house, that has gone unused for 5+ years. We didn't have a choice of location obviously, but since we now own a nice house near a big city we are playing with the idea of redoing it and getting it on Airbnb.

- Do you have any suggestions as to how to price a place at 4 beds 3 bath but 15 minutes from the city? 
- Do you normally rent a car? or what is your family's mode of transportation?
- Would a nicely furnished house in a nice suburb, make up for it not being super close to downtown? 

Hi John! 

It's about 15 minutes drive from the biggest urban center, I would say where the majority of the action is at. It is right on the shore (not beach front) about 3-minute walk to the beach. It is in a residential gated community with a pool overlooking the beach and things. It has great amenities and things for what it is, but like you said and I agree with my biggest concern is the location. 

I'm leaning toward just risking it and furnishing it as the worst that will happen is I'll have a nicely furnished vacation house. I just am 22 fresh out of college and this is one of my first business ventures and am a little timid. I'll put some thought into it, I appreciate your input. 

I own a house free and clear in Cebu City Philippines. I have many many questions regarding the market in Cebu. The house is about 15 minutes outside of the city, in a smaller suburb named Talisay. 

It is a four-bed 3 bath house, that is currently unfurnished. I have the funds to fully furnish and get this up and running but I have some concerns about this particular market. I've tried looking on AirDNA at Talisay and it is not on there. Cebu city which like I said the house is about 15 minutes outside of the city seems to be an okay market I think I saw it was rated a B on AirDNA or something. 

My Questions:

1. Does anyone have experience with Airbnb in Cebu? How is it?

2. Is it work the risk of furnishing, I've budgeted about 15k or so to fully furnish the entire house, how would I way this investment as there isn't a lot of info on the area?

3. The profit margin is great as I have no overhead except the furnishing costs, once it's up and going as it's paid off. 

4. I would invest the 15k elsewhere if this isn't the case, so it wouldn't be sitting doing anything.

Thank you all for the replies! It seems like the logical thing to do is to pay off any high-interest loans (which I don't have_) following that pay the minimum and invest the rest into something safe with an average 8% return creating a nice 3.5% on my money. It would be nice however to just have the peace of mind to not have any student debt and start fresh at 22 or 23, with a full income to work with. I'm going to think about the two, one makes financial sense and the other some inner peace. thank you guys!

Here’s the situation: I'm 21, I make 90k a year (all remote work), I invested in Bitcoin in 2017, I’ve made sizable returns (at the moment 40k on my 6k investment)

I have 93k in student loans (4.5% interest). My plan is to pay 5k a month on them but that will be about 1.5 years to pay off. I just hate the idea of living paycheck to paycheck for a year and a half knowing I could be done in 9 months if I cash out my investments.

My idea was to cash out Bitcoin pay the cap gains and take a chunk of my loans out. This would reduce my repayment to about 9 months.

I would then cost average back into BTC till I hit my initial investment (in BTC). I’ve tried to do the math on returns but it’s super speculative, as far as I can figure out. Does anybody have any thoughts or ideas about this?

Also, I am moving abroad in August, to a families house in the Philippines, this will allow me to have free housing and a cheap economy to reside in (in case you're wondering how I am making 5k/month payments)

I've posted this elsewhere and some thoughts were to treat it like a mortgage, pay the minimum($1000) and instead invest heavily while I'm young? How can I compare the outlooks on both these routes?

Quote from @Luis Silva:

Quote from @Zachary Himes:

I am 22, fresh out of college, just landed a full-time tech job. I have a lender who will prequalify me for a mortgage of 450,000 or so (3.5% down or about $16,000). I can afford the monthly payments on the mortgage, but the problem is I have no way of saving the down payment in the next couple of months. (Hoping to buy by mid-July). 

I'm trying to find a house that I can live in for a year or two, then eventually use it as a rental. I want to do this instead of paying rent; that way, I can do a cash-out refinance at the end of living here and get into another house. 

What are your thoughts on this? I've looked into downpayment assistance programs, but they seem fairly complex, and the majority of them are income-based, which I would not be able to qualify for. For further context, I am getting married in August, so paying for that getting my student loans paid off is why I am strapped to save for the next couple of months. I don't want to pay rent next year, but should I bite the bullet and rent to save up, or are there some viable alternatives?

 HI Zach, hope all is well! here are some of my thoughts/ideas (for what its worth). 

Regarding down payment

- Is a gift from a family member possible? 

- you will need to account for 3.5% down plus roughly 2% in closing costs for a total of 5.5%. With that said, there are ways to have the seller cover fees (if you can get them to agree) or you could even look at taking a higher interest rate which will provide a lender credit and cover the closing costs that way. 

Regarding buying vs renting:

- not sure which market you are in but I would do some form of a cost/benefit analysis. for instance, you may look at RV ratios to determine if it is cheaper to buy or cheaper to rent. RV ratio = rent to value ratio. Example, a home rents for $2,000 per month and you could purchase the same home for $400k (2k/400k = .5%). That would be a .5% RV ratio which is not ideal as an investment... it basically means that it is cheaper to rent then to purchase. A decent RV ratio today might be somewhere between .7-1% (some people may argue this, but if you are in an expensive market this might be the reality). 

- if you are only going to live in the property for 1-2 years.. I would really dig into those numbers to make sure that you can, at minimum, break even on the property (as a rental) after all expenses so that you don't get stuck with a negative carry. 

- lastly, renting can give you really nice flexibility when you are just starting out. I was in a similar spot not too long ago and my wife and I rented for a few years before purchasing. Our initial focus was not incurring any debt for the wedding, paying off any credit we had, saving, and then eventually investing. Unless you are concerned about drastically higher rents in the near future, might not hurt to hold out a bit, save for a down payment and have a little extra financial runway before buying. 

Regarding cash out to buy another property:

this can be done, however, this would require a couple things... 

1. values would have to increase. If properties do not increase in price, there will not be enough equity for cash out. Cash out is generally capped at 80% of the homes value. 

2. Rates would need to stay roughly the same or go down. In other words, if rates go up from here, then refinancing to take out a bigger loan and restructuring the existing debt will end up costing you a lot more which may eat up any cash flow. 

Anyway, this is a valid strategy but it will take the markets to work in your favor. I wouldn't count on it, but if it happens, absolutely take what the market is giving you :)

Regarding down payment assistance

This is a viable option. There are income caps on some, but there are not on others. The challenge in this competitive market, is getting a seller to accept your offer. They understand there are a lot of moving parts and one slip up can unplug a deal. 

hope this helps... sorry for such a long winded answer

This was the best answer I could’ve hoped for! Thanks for being so in depth with the RV ratio I had seen talks about it but never applied it, I will start looking into that. 

You uncovered a lot of gaps in my assumptions with my plan to refinance and I hadn’t thought about if the market doesn’t exactly go my way, it would be quite difficult to cash flow the home following a refinance on a bigger loan. 

Im in the Seattle market, so not to many great cash flow properties. I’m super antsy to get into the market as I finally have the opportunity after being on the sideline. But you’re completely right in that waiting 6-8 months could save me a load of headaches if not having the proper financial backing to enter safely. 

Thank you for this!! 

I am 22, fresh out of college, just landed a full-time tech job. I have a lender who will prequalify me for a mortgage of 450,000 or so (3.5% down or about $16,000). I can afford the monthly payments on the mortgage, but the problem is I have no way of saving the down payment in the next couple of months. (Hoping to buy by mid-July). 

I'm trying to find a house that I can live in for a year or two, then eventually use it as a rental. I want to do this instead of paying rent; that way, I can do a cash-out refinance at the end of living here and get into another house. 

What are your thoughts on this? I've looked into downpayment assistance programs, but they seem fairly complex, and the majority of them are income-based, which I would not be able to qualify for. For further context, I am getting married in August, so paying for that getting my student loans paid off is why I am strapped to save for the next couple of months. I don't want to pay rent next year, but should I bite the bullet and rent to save up, or are there some viable alternatives?

Here is the situation:

I am 20 years old, I invested in bitcoin at $7000 a couple of years ago, I'm planning to cash out soon in order to pay off my student loans (64k total between both me and my fiance). Me and my fiance file taxes separately and since we are both in college are only making around 20k a year each. 

If I was to cash out at $70,000, I would have to pay capital gains of $43,000 (6k initial + 20k annual income) resulting in having to pay around $4600 in capital gains tax.

I've been trying to find the best way to save the most money on Capital gains tax. Here are some of my ideas:

• 1. Set up a wallet for my fiance and send half of the BTC to her and that way when we cashout it will only be taxed at 15% for 10k (35k investment + 20k annual income = 55k total leaving 15k a piece to pay the cap gains on), this would save a bit but I don't think enough to make it worth the hassle. 
• 2. Cash out and "Gift" the entire sum to my fiance. I understand 15k a year is allotted and anything after that, a gift tax is required. However, I have stumbled across an estate tax exemption or a lifetime gift exemption of sort. See this article: https://www.fool.com/taxes/202... with this, I would be able to apply anything after the 15k gift to my fiance to her lifetime total I'm allotted (that I'm assuming turns unlimited when we are legally married?). I'm a bit confused though I might have to pay taxes on it before I gift that to her...

Those are my two ideas, as our loans are done privately through discovery aside from 10k in federal loans, I wasn't able to find any tax exemption for education. 

I am a junior in college, I want to begin my journey but lack the income right now to do so. What's the best way if any for me to qualify for a home loan, when I still have a bit of student debt (will be paid off by end of school) and only making $20,000 as a student. Won't make a good income for another year and a half. Don't exactly have anyone around me that is willing or that I would be comfortable consigning with.