12 years until my son goes off to college
Flipper/Rehabber · Member since 2018 · 20 posts · 10 votes
12 years until my son goes off to college
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Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes
7y@Raul Cesar cortes adding a pool is great as the summer is so hot here, however, the rule of thumb with pools is that you take the cost of the pool and divide by two, the number you get is the amount of equity you add to your home. From an investment standpoint, you actually lose money. Seems like you just need to ask yourself what your goals are. Neither of these are the wrong answer, it just depends on what you want.
As far as Flipping in Calwa, it's never going to be a great area but I've heard the tenants are pretty low maintenance overall as most of them are farm workers who don't want any trouble. I know that property you are talking about, You certainly have room to move up in rents, i think you could push $800/month on those homes if you put some money into them. However, you can't plan on a lot of appreciation in that area, so make sure the cash flow is rather high. I would also make sure to get new leases in place as part of your contract, otherwise it could be a challenge to collect rent later if you get into a he said she said situation. At least get estoppels.
hope that helps. let me know if that doesn't make sense or if you'd like some clarification.
12 Replies
- Catskill, NY · Member since 2018 · 636 posts · 668 votes7y
This is always a tough situation. One on hand you want to reach financial independence/retire and/or be able to pay for your son to go to college; on the other, you want to enjoy life and give your family what they want. My view is this-I'm not going to "ruin" my kids' childhood in order to reach financial independence (my kids are by no means spoiled). I had an above ground pool put in a few years ago (I assume you're thinking of putting in an IG pool since you mentioned flipping the houses and IG pools are significantly more expensive). My wife, kids, and their friends love it. I got a really good pool that should last 25-30 years, so the cost of the pool amortized over those years really isn't that much. It's a small price to pay to see my wife and kids happy. Maybe when your son is 18 he may not even want to go to college. He may want to invest in RE and save hundreds of thousands of dollars on a college education. If he does want to go to college, there is student loans and scholarships. One of the recent BP Money podcasts had a guest that was talking about how to get scholarships that many people don't even know exist. Maybe give that a listen and you can rest a little knowing there are options on ways to pay for college.
Can you take out a loan for the pool, buy the 3 houses, and let the cash flow pay the loan payment?
- Investor · Panama City, FL · Member since 2017 · 45 posts · 19 votes7y
@Raul Cesar cortes First it is great that you are trying to find balance in all areas. Some people get so laser focused in one direction, its easy to let life pass you by.
Regarding your dilemma, I would first make sure that if you plan to buy and hold (which is what I would recommend if the property cash-flows properly) I would make sure that new leases aren't being put together now locking you in for another year at those rates. That could significantly impact your NOI. Second, I am in full agreement with @Chris Szepessy, that if you are able to buy the property and use the income to pay for a financed pool, you'll get the best of both worlds. Equity being built up while you are making your mortgage payments and the pool payments, and when the pool payments are done, you can either roll that into that house to further pay it down to have it paid off by the time your son goes to college. Then you can use the strategy that @Brandon Turner and @David Greene have talked about: refinancing the property and pulling that money out tax free to fund at least part of your son's college (who knows what college costs will be in 12 years!).
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes7y
Join a community pool .
- Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes7y
My kids went to college mainly from my income from my SFH income.
I have small amount of time left with the last child.
I have now taken upon myself to do a partial gut of my house
I live in.
- Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes7y
Looking at these photos of Calwa properties, it looks like it is in a C- - neighborhood with trash outside, weeds not meeting fire code and in front of each buildings have dry rot. Possibly section 8 tenants.
Economists are debating when the recession is coming in 2019 some claim mid year others say later. When it arrives what % of your current 12 tenants will pay their rent on time? Fresno had unemployment rates from 17.5 to 20% for years. While it is lower today it remains to be one of the highest cities in CA with limited job opportunities.
My advise is expect for contingency putting reserves in the right places. This home has been on the market 81 days and will stay on the market.
Pool-join the Y.
- Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes7y
@Raul Cesar cortes adding a pool is great as the summer is so hot here, however, the rule of thumb with pools is that you take the cost of the pool and divide by two, the number you get is the amount of equity you add to your home. From an investment standpoint, you actually lose money. Seems like you just need to ask yourself what your goals are. Neither of these are the wrong answer, it just depends on what you want.
As far as Flipping in Calwa, it's never going to be a great area but I've heard the tenants are pretty low maintenance overall as most of them are farm workers who don't want any trouble. I know that property you are talking about, You certainly have room to move up in rents, i think you could push $800/month on those homes if you put some money into them. However, you can't plan on a lot of appreciation in that area, so make sure the cash flow is rather high. I would also make sure to get new leases in place as part of your contract, otherwise it could be a challenge to collect rent later if you get into a he said she said situation. At least get estoppels.
hope that helps. let me know if that doesn't make sense or if you'd like some clarification.
- Member since 2016 · 13k+ posts · 12k+ votes7y
Get them a membership at the Y and when they are old enough get them out working to earn the money they need for college if they decide to go. Better yet forget college and get them into a trade. Too many over educated unemployed/underemployed kids already.
- Madisonville, LA · Member since 2018 · 125 posts · 71 votes7yThat's a personal decision, I am i. A similar boat. I am waiting until my kids are 8-9 so I dont have to think about drowning. So that's 3-5 years for me. Then would probably do an equity loan. So I would wait a few years if I were u and use the equity in the property u are currently in the process of buying to build the pool. That way u get both
- Flipper/Rehabber · Member since 2018 · 20 posts · 10 votes7y
@Sam hate to admit it, but i been using same model for 10 years. i purchase 2-4 unit buildings in need of work with low rents and bad management. i raise rents to market value deal with turn over and usually sell to a bay area investor who thinks we are all rookies in the valley. :)
- Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes7y
@Raul Cesar cortes pass on the pool at home. The Y is a good option, but I don't think there is one in Fresno. I would suggest you look into some of the local country clubs and join as a "social" member, unless you are into golf then go proprietary . I have no idea what the costs are in Fresno for this type of membership, but they are usually only a few hundred a month in SF Bay Area. You typically get access to the gym, tennis courts, and dinning facilities. Also, you can hold business meetings and other events for very reasonable costs. I have also heard of some clubs that will take corporate memberships, so there might be a tax benefit if you set it up right.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes7y
My thoughts:
1. If you have to flip/move a house to afford a pool, you probably can't afford it.
2. There are other ways to swim besides at home.
3. What if your kid is the next Michael Phelps?
So those thoughts all seem to contradict each other. I guess what I am saying is:
1. Can you comfortably afford it? Not only building the pool but maintaining the pool, paying for repairs & electricity, etc?
2. If the answer to #1 is no, then there are other less expensive options.
3. If the answer to #1 is yes, then you have to decide how that compares to all other leisure ways you can spend money - because all money, eventually, is/will be/should be spent on something. It's really not for us to say it's a waste of money if you can afford it, because that is a deeply personal choice. Some people like spending money on cars, booze, women, vacations, golf, Amazon, Crate & Barrel, QVC, Guru courses, and some people like spending money on a pool that their family can enjoy.
The point to all of this (to me) is to
A)Build up enough independent income such that you're largely immune from needing "a job",
B)Have enough money such that you can provide some security for your family,
C)Have enough money so that you can provide funds to things important to you (charity, church, etc),
D)Have enough money so that you can enjoy things in life that genuinely make you happy.
If you are all the way down to D, then I personally don't see what is wrong with it. Not every single thing you do in life has to have a financial payoff - just enough things such that, on balance, you come out ahead :)
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