37 year old married dentist trying to crest financial freedom

Member since 2023 · 20 posts · 12 votes

Hey y’all! I’m 37 years old. Graduated dental school in 2019. My wife and I got married last April. She’s PACU nurse. We are in the grind to start saving and begin real estate investing on path for financial freedom. Any guidance help would be awesome. Started Brandon Turners book today, so hopefully I’ll gain more knowledge soon. Brief about me: my credit was **** from mistakes I made. I was a late bloomer to dentistry and prior to that I was trying figure out my path. I’ve spent a lot the past 2-3 years and rarely saved. Wedding, honeymoon, full landscaping reno, my taxes etc… but past three months my wife and I are saving around 10-12k a month in a high yield interest savings account. November 2021 we bought a house. Now before anybody judges me there is a reason why house was bought all cash. Essentially my mother, god bless her, bought an investment condo in 2014 for 579k and sold it 2021 for 840k. She wanted me to have that money to buy a house for my engage wife and I ( yes she is amazing). My credit was **** and still is not great (getting better around 690 right now) so we couldn’t get a loan. I know it wasn’t ideal but we bought house all cash for around 850k. Now what’s done is done and I have this brand new development home and my only expense is 178 a month hoa and around 10k yearly taxes. In September we are relocating back to boston and will rent it for probably 4500 a month. I’m going to work my butt off for a year and then my intention is to buy an existing dental practice rather than continue associateship. Long term wise I don’t want to work as a dentist daily past 45 hence why I want to focus on real estate. I need help, mentorship, knowledge. I got so many little questions. Any help would be great. Thanks so much for reading.

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Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

Quote from @Ramin M.:

Jamin, Congrats on the marriage and the new house. An investment is an investment no matter how you structure it. For you case, many people buy homes cash to get a better price because a cash offer is always more appealing than an FHA/VA/Conventional loan. You can always pull a Heloc or Re-finance you current home taking into consideration that the property would still cash-flow positive.

Both the Boston market and San Diego market is very expensive. Yes, you will get appreciation but you will almost always cash-flow negative. I suggest looking into the Columbus, OH market. We are booming here right now in terms of appreciation and rent-growth. I am personally working with a lot of California investors and helping them find amazing off-market deals that they are buying pennies to the dollar.

Let me know if you want to connect over a zoom call and I can definitely guide you in the right direction in terms of investing.

[email protected]614-802-5698

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Alli Breighner
Lender · San Diego, CA · Member since 2022 · 587 posts · 298 votes
3y
Hi Ramin-
I actually recently relocated to San Diego from Boston! Too funny.
Congrats on your marriage, that's very exciting.
I'd love to offer guidance with real estate and offer advice where I can. Would love to connect.
1 Reply
Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
3y
Quote from @Ramin M.:

Hey y’all! I’m 37 years old. Graduated dental school in 2019. My wife and I got married last April. She’s PACU nurse. We are in the grind to start saving and begin real estate investing on path for financial freedom. Any guidance help would be awesome. Started Brandon Turners book today, so hopefully I’ll gain more knowledge soon. Brief about me: my credit was **** from mistakes I made. I was a late bloomer to dentistry and prior to that I was trying figure out my path. I’ve spent a lot the past 2-3 years and rarely saved. Wedding, honeymoon, full landscaping reno, my taxes etc… but past three months my wife and I are saving around 10-12k a month in a high yield interest savings account. November 2021 we bought a house. Now before anybody judges me there is a reason why house was bought all cash. Essentially my mother, god bless her, bought an investment condo in 2014 for 579k and sold it 2021 for 840k. She wanted me to have that money to buy a house for my engage wife and I ( yes she is amazing). My credit was **** and still is not great (getting better around 690 right now) so we couldn’t get a loan. I know it wasn’t ideal but we bought house all cash for around 850k. Now what’s done is done and I have this brand new development home and my only expense is 178 a month hoa and around 10k yearly taxes. In September we are relocating back to boston and will rent it for probably 4500 a month. I’m going to work my butt off for a year and then my intention is to buy an existing dental practice rather than continue associateship. Long term wise I don’t want to work as a dentist daily past 45 hence why I want to focus on real estate. I need help, mentorship, knowledge. I got so many little questions. Any help would be great. Thanks so much for reading.

Jamin, Congrats on the marriage and the new house. An investment is an investment no matter how you structure it. For you case, many people buy homes cash to get a better price because a cash offer is always more appealing than an FHA/VA/Conventional loan. You can always pull a Heloc or Re-finance you current home taking into consideration that the property would still cash-flow positive.
Both the Boston market and San Diego market is very expensive. Yes, you will get appreciation but you will almost always cash-flow negative. I suggest looking into the Columbus, OH market. We are booming here right now in terms of appreciation and rent-growth. I am personally working with a lot of California investors and helping them find amazing off-market deals that they are buying pennies to the dollar.
Let me know if you want to connect over a zoom call and I can definitely guide you in the right direction in terms of investing.
[email protected]614-802-5698
ReafCo | Ahmed Group 536 Reviews
Website View Page
4 Reply
Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
3y
Here are a few articles that you can go through on your free time with what is happening in the Columbus market today!
1. Nationwide Children's hospital is investing $3.3+ billion dollars which will drive the prices up in Southern Orchards, Driving Park, Old North, Franklin Park and Old Towne East. https://www.dispatch.com/story...

2. Intel is coming to Columbus and building a 20+ Billion dollars to build a computer child facility with high wages paid to employees. https://www.intel.com/content/...

3. Honda is building a $4.4 billion dollar plant in Ohio to keep up with production which will lead to thousands of jobs. https://www.cnbc.com/2022/10/1...

Is there a reason that you are not investing in Ohio?
[email protected]614-802-5698
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Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Hey Alli! That’s awesome. SD is great but home base feels like a better play right now. Yes I sent you a connect. Would love to keep in touch and pick your brain. Thanks!
1 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Alfath thanks for the reply. I’ll def look into it. Ya boston itself is so expensive so I won’t look much there but fortunately smaller cities in outskirts of boston are doing well from my understand. Providence Rhode Island as well. I have heard amazing things about Colombus and would like to pick your brain. For the next 6 months I’m trying to build more knowledge, continue saving and then hit the ground running.
1 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Alfath Ahmed:

Here are a few articles that you can go through on your free time with what is happening in the Columbus market today!
1. Nationwide Children's hospital is investing $3.3+ billion dollars which will drive the prices up in Southern Orchards, Driving Park, Old North, Franklin Park and Old Towne East. https://www.dispatch.com/story...

2. Intel is coming to Columbus and building a 20+ Billion dollars to build a computer child facility with high wages paid to employees. https://www.intel.com/content/...

3. Honda is building a $4.4 billion dollar plant in Ohio to keep up with production which will lead to thousands of jobs. https://www.cnbc.com/2022/10/1...

Is there a reason that you are not investing in Ohio?

Looks awesome! Development in community is key!
0 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Alfath Ahmed:

Here are a few articles that you can go through on your free time with what is happening in the Columbus market today!
1. Nationwide Children's hospital is investing $3.3+ billion dollars which will drive the prices up in Southern Orchards, Driving Park, Old North, Franklin Park and Old Towne East. https://www.dispatch.com/story...

2. Intel is coming to Columbus and building a 20+ Billion dollars to build a computer child facility with high wages paid to employees. https://www.intel.com/content/...

3. Honda is building a $4.4 billion dollar plant in Ohio to keep up with production which will lead to thousands of jobs. https://www.cnbc.com/2022/10/1...

Is there a reason that you are not investing in Ohio?

I haven’t started investing anywhere yet. I’m trying to learn, save more and then focus on a target market to begin. I don’t care where it is. But yes somewhere cash flow positive with appreciation would be ideal.
0 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Alli Breighner:

Hi Ramin-
I actually recently relocated to San Diego from Boston! Too funny.
Congrats on your marriage, that's very exciting.
I'd love to offer guidance with real estate and offer advice where I can. Would love to connect.

Where in SD are you? Did you find the transition worthwhile? You investing here? I used to live in high rise in Marina district downtown. But a house seemed more practical and a new development became the play for us. Spring Valley traditionally doesn’t get much love but we are in the good part of town and KB and Lennar are building bigggg projects.
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
If we estimate your expenses as 50% of rent (Property tax, insurance, HOA, vacancy, maintenance/cap ex, PM) your return is ~3.2%. This is terrible especially if you can get ~5% with no effort and virtually no risk from either money market or CD. Note there are other options that also seem far better than the return you will achieve on your home without leverage.
If you sell you will meet the 2 of 5 years occupancy requirement in November 2023 to have no tax based on gain. I would live in the house until at least November and sell it. I would not try to operate such a house as a rental from a far (exception for if you plan to move back to SAn Diego in the future). If you are moving to Boston, you would be better served buying a home in Boston than renting out one in San Diego while renting a RE in Boston. Especially seeing that after renting 3 years, you will lose your owner-occupied gains exemption. Also your rent to value ratio on your home is poor. This is common with ex-homes. This is because the RE was purchased to be a good home for you and your family and not necessarily to be a good RE investment.
If RE is your goal, keep educating. Start by considering and researching what I indicated above. Look into expenses and the 50%. Look into 2 of 5 year rule. Look into what is considered a good rent to value ratio. Research the power of leverage.
Good luck
0 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Dan H.:

If we estimate your expenses as 50% of rent (Property tax, insurance, HOA, vacancy, maintenance/cap ex, PM) your return is ~3.2%. This is terrible especially if you can get ~5% with no effort and virtually no risk from either money market or CD. Note there are other options that also seem far better than the return you will achieve on your home without leverage.
If you sell you will meet the 2 of 5 years occupancy requirement in November 2023 to have no tax based on gain. I would live in the house until at least November and sell it. I would not try to operate such a house as a rental from a far (exception for if you plan to move back to SAn Diego in the future). If you are moving to Boston, you would be better served buying a home in Boston than renting out one in San Diego while renting a RE in Boston. Especially seeing that after renting 3 years, you will lose your owner-occupied gains exemption. Also your rent to value ratio on your home is poor. This is common with ex-homes. This is because the RE was purchased to be a good home for you and your family and not necessarily to be a good RE investment.
If RE is your goal, keep educating. Start by considering and researching what I indicated above. Look into expenses and the 50%. Look into 2 of 5 year rule. Look into what is considered a good rent to value ratio. Research the power of leverage.
Good luck

Thanks for the feedback. I'll look into all that. How are you getting those numbers though? House is 840k cash. HOA 178 and yearly tax is right at 10k. Rent should go for around $4500 a month. No matter what it's still about $3500 cash flow positive monthly. It's brand new development and don't got too much expenses for maintenance or anything. I'm not worried about renting from afar personally. I agree, I don't plan on holding this property forever because I think the equity alone can help build a better portfolio with better rent to value ratio. It's in upcoming area but I don't foresee appreciation to skyrocket ever.
0 Reply
Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
3y
Quote from @Ramin M.:

Quote from @Alfath Ahmed:

Here are a few articles that you can go through on your free time with what is happening in the Columbus market today!
1. Nationwide Children's hospital is investing $3.3+ billion dollars which will drive the prices up in Southern Orchards, Driving Park, Old North, Franklin Park and Old Towne East. https://www.dispatch.com/story...

2. Intel is coming to Columbus and building a 20+ Billion dollars to build a computer child facility with high wages paid to employees. https://www.intel.com/content/...

3. Honda is building a $4.4 billion dollar plant in Ohio to keep up with production which will lead to thousands of jobs. https://www.cnbc.com/2022/10/1...

Is there a reason that you are not investing in Ohio?

Looks awesome! Development in community is key!

Yes it is! Development is what creates economic bases which fuels the economy and in turn we have rent growth and appreciation as investors.
[email protected]614-802-5698
ReafCo | Ahmed Group 536 Reviews
Website View Page
0 Reply
Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
3y
Quote from @Ramin M.:

Alfath thanks for the reply. I’ll def look into it. Ya boston itself is so expensive so I won’t look much there but fortunately smaller cities in outskirts of boston are doing well from my understand. Providence Rhode Island as well. I have heard amazing things about Colombus and would like to pick your brain. For the next 6 months I’m trying to build more knowledge, continue saving and then hit the ground running.

How is the appreciation in the smaller cities around Boston? What is the rent-to-price ratio? And, anytime man. Shoot me a PM, always willing to help however I can! I honestly believe once you get started and put your foot in the pedal you will be rocking and rolling!
[email protected]614-802-5698
ReafCo | Ahmed Group 536 Reviews
Website View Page
0 Reply
Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
3y
Quote from @Ramin M.:

Quote from @Alfath Ahmed:

Here are a few articles that you can go through on your free time with what is happening in the Columbus market today!
1. Nationwide Children's hospital is investing $3.3+ billion dollars which will drive the prices up in Southern Orchards, Driving Park, Old North, Franklin Park and Old Towne East. https://www.dispatch.com/story...

2. Intel is coming to Columbus and building a 20+ Billion dollars to build a computer child facility with high wages paid to employees. https://www.intel.com/content/...

3. Honda is building a $4.4 billion dollar plant in Ohio to keep up with production which will lead to thousands of jobs. https://www.cnbc.com/2022/10/1...

Is there a reason that you are not investing in Ohio?

I haven’t started investing anywhere yet. I’m trying to learn, save more and then focus on a target market to begin. I don’t care where it is. But yes somewhere cash flow positive with appreciation would be ideal.

Ofcourse! Make sure to find your core 4 in whichever market you are searching. This will not only ensure that you are successful in your investments but help you build confidence to take on larger deals. My core 4 is what allowed me to succeed in real estate so quickly.
[email protected]614-802-5698
ReafCo | Ahmed Group 536 Reviews
Website View Page
1 Reply
Calvin OzanickBusiness Member
Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
3y
I would love to connect. We work with quite a few employed professionals seeking to establish financial freedom. I am located in Rock County, WI and we often assist clients in finding their first few properties and beginning to find units which can help them begin their financial independence journey. I would love to connect and explain how this market can be beneficial to you. One major part of the attraction, is assets tend to trend much cheaper here, while still being a strong market for buy and hold investors!
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Ramin M.:

Quote from @Dan H.:

If we estimate your expenses as 50% of rent (Property tax, insurance, HOA, vacancy, maintenance/cap ex, PM) your return is ~3.2%. This is terrible especially if you can get ~5% with no effort and virtually no risk from either money market or CD. Note there are other options that also seem far better than the return you will achieve on your home without leverage.
If you sell you will meet the 2 of 5 years occupancy requirement in November 2023 to have no tax based on gain. I would live in the house until at least November and sell it. I would not try to operate such a house as a rental from a far (exception for if you plan to move back to SAn Diego in the future). If you are moving to Boston, you would be better served buying a home in Boston than renting out one in San Diego while renting a RE in Boston. Especially seeing that after renting 3 years, you will lose your owner-occupied gains exemption. Also your rent to value ratio on your home is poor. This is common with ex-homes. This is because the RE was purchased to be a good home for you and your family and not necessarily to be a good RE investment.
If RE is your goal, keep educating. Start by considering and researching what I indicated above. Look into expenses and the 50%. Look into 2 of 5 year rule. Look into what is considered a good rent to value ratio. Research the power of leverage.
Good luck

Thanks for the feedback. I'll look into all that. How are you getting those numbers though? House is 840k cash. HOA 178 and yearly tax is right at 10k. Rent should go for around $4500 a month. No matter what it's still about $3500 cash flow positive monthly. It's brand new development and don't got too much expenses for maintenance or anything. I'm not worried about renting from afar personally. I agree, I don't plan on holding this property forever because I think the equity alone can help build a better portfolio with better rent to value ratio. It's in upcoming area but I don't foresee appreciation to skyrocket ever.

Prop tax is ~19%. Vacancy to include unit refresh time, finding tenant (including credit/back ground checks, and waiting for tenant notice period with current LL) will be at least 5% (possibly less if you were large enough to have employees already available to do the work but that is not the case with 1 unit), HOA 4%, maintenance/cap ex 10% ($450/month on a house of your size. Even though items are new their lifespan has started. Example if you have asphalt shingles and replacement is $10k (you may have tile with longer life and higher cost so works out to be close to same) at 20 years is $500/year or just over $40/month. Do this for all items and you will get ~$450/month for your RE. I used to do spreadsheet on each of my offers as part of underwriting but after a half dozen or so I could estimate fairly accurately what the spreadsheet would show. My lowest pro forma for a unit that HOA covers no maintenance is $250/month for a small, attached studio), Pm 8% (include it even if self managing because it is work and requires effort. It may also have some challenges from a far that lead you to desire to hire a PM (PMs are not getting rich on their fees), insurance ~4%, miscellaneous ~3% (things like LLC, umbrella policy, rental unit tax, accountant tax person, etc)
Roughly: 18+5+4+10+8+4+3=53%.
If you want to self manage and not allocate any value for your time, subtract 8% and you are at 45%.
The 50% rule seems to be fairly accurate with a quick estimate of your expenses not including mortgage service (which you currently have no mortgage).
Good luck

0 Reply
Sean Kelly-Rand
Member since 2019 · 73 posts · 53 votes
3y
@Ramin M. - I'm an investor and lender in Boston and can introduce you to few resources/networking events when you get here on the ground. We host events for developers every so often so worthwhile to follow us on IG and LinkedIn for announcements.
I own multi's and am starting to see a few good deals prices and interest rates are high but so are rents (and by the time you are ready to buy prices should be even more interesting). I'm actually looking at a few portfolios in Providence as well, and Worcester has also seen tremendous growth. Personally I'm a big believer in the Roxbury market in Boston - its reasonably priced and the rents are good. Regardless feel free to reach out and I'm happy to introduce you to the right people.

@Alli Breighner - I was just told I should spend my winters in San Diego I hear its gorgeous!
0 Reply
Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
3y
@Ramin M. Definitely continue on investing where ever you will be. Investing far away makes it a little more difficult so you'd be better off investing in Boston and surrounding vs here in San Diego. I'd suggest starting there with house hacking a multifamily if you guys are ok with it to kick start it off. After that, focusing on growing your dental business would likely be more beneficial than spending time on real estate investment. As you get a great business established you can always use excess profits to continue investing in Real Estate. Your business can get you to financial freedom faster than real estate.
Good Luck!
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Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Dan H.:

Quote from @Ramin M.:

Quote from @Dan H.:

If we estimate your expenses as 50% of rent (Property tax, insurance, HOA, vacancy, maintenance/cap ex, PM) your return is ~3.2%. This is terrible especially if you can get ~5% with no effort and virtually no risk from either money market or CD. Note there are other options that also seem far better than the return you will achieve on your home without leverage.
If you sell you will meet the 2 of 5 years occupancy requirement in November 2023 to have no tax based on gain. I would live in the house until at least November and sell it. I would not try to operate such a house as a rental from a far (exception for if you plan to move back to SAn Diego in the future). If you are moving to Boston, you would be better served buying a home in Boston than renting out one in San Diego while renting a RE in Boston. Especially seeing that after renting 3 years, you will lose your owner-occupied gains exemption. Also your rent to value ratio on your home is poor. This is common with ex-homes. This is because the RE was purchased to be a good home for you and your family and not necessarily to be a good RE investment.
If RE is your goal, keep educating. Start by considering and researching what I indicated above. Look into expenses and the 50%. Look into 2 of 5 year rule. Look into what is considered a good rent to value ratio. Research the power of leverage.
Good luck

Thanks for the feedback. I'll look into all that. How are you getting those numbers though? House is 840k cash. HOA 178 and yearly tax is right at 10k. Rent should go for around $4500 a month. No matter what it's still about $3500 cash flow positive monthly. It's brand new development and don't got too much expenses for maintenance or anything. I'm not worried about renting from afar personally. I agree, I don't plan on holding this property forever because I think the equity alone can help build a better portfolio with better rent to value ratio. It's in upcoming area but I don't foresee appreciation to skyrocket ever.

Prop tax is ~19%. Vacancy to include unit refresh time, finding tenant (including credit/back ground checks, and waiting for tenant notice period with current LL) will be at least 5% (possibly less if you were large enough to have employees already available to do the work but that is not the case with 1 unit), HOA 4%, maintenance/cap ex 10% ($450/month on a house of your size. Even though items are new their lifespan has started. Example if you have asphalt shingles and replacement is $10k (you may have tile with longer life and higher cost so works out to be close to same) at 20 years is $500/year or just over $40/month. Do this for all items and you will get ~$450/month for your RE. I used to do spreadsheet on each of my offers as part of underwriting but after a half dozen or so I could estimate fairly accurately what the spreadsheet would show. My lowest pro forma for a unit that HOA covers no maintenance is $250/month for a small, attached studio), Pm 8% (include it even if self managing because it is work and requires effort. It may also have some challenges from a far that lead you to desire to hire a PM (PMs are not getting rich on their fees), insurance ~4%, miscellaneous ~3% (things like LLC, umbrella policy, rental unit tax, accountant tax person, etc)
Roughly: 18+5+4+10+8+4+3=53%.
If you want to self manage and not allocate any value for your time, subtract 8% and you are at 45%.
The 50% rule seems to be fairly accurate with a quick estimate of your expenses not including mortgage service (which you currently have no mortgage).
Good luck

Thanks for that thorough analysis. I really appreciate it. You are right about the value of this property. 900k can go along way for me in more rural areas of Massachusetts, New Hampshire, Rhode Island. I’ve literally been seeing multi families in providence (9 bedrooms) going for 500-600k with average bedroom renting for $800 a month. Same for areas like Worcester Roxbury dorchester. I would never buy in boston proper area. But you got me thinking. I should sell. Hit the Nov 2023 mark for 2 of 5 rule. Pocket 900ish cash and begin my journey on investment in east coast. I’m going to DM you. Have direct question about two of five rule.
0 Reply
Kenneth Donaghy
Real Estate Broker · San Diego, CA · Member since 2016 · 355 posts · 195 votes
3y
@Ramin M. You are doing great. Give yourself credit, you are off to a great start with lots of options. One step at a time, will create giant leaps! You at the right place at the right time.
0 Reply
Alli Breighner
Lender · San Diego, CA · Member since 2022 · 587 posts · 298 votes
3y
Quote from @Sean Kelly-Rand:

@Ramin M. - I'm an investor and lender in Boston and can introduce you to few resources/networking events when you get here on the ground. We host events for developers every so often so worthwhile to follow us on IG and LinkedIn for announcements.
I own multi's and am starting to see a few good deals prices and interest rates are high but so are rents (and by the time you are ready to buy prices should be even more interesting). I'm actually looking at a few portfolios in Providence as well, and Worcester has also seen tremendous growth. Personally I'm a big believer in the Roxbury market in Boston - its reasonably priced and the rents are good. Regardless feel free to reach out and I'm happy to introduce you to the right people.

@Alli Breighner - I was just told I should spend my winters in San Diego I hear its gorgeous!
Definitely recommend spending your winters here! I grew up in Boston for the majority of my life so it is a drastic change for sure!
0 Reply
Sean Kelly-Rand
Member since 2019 · 73 posts · 53 votes
3y
Quote from @Ramin M.:

Quote from @Dan H.:

Quote from @Ramin M.:

Quote from @Dan H.:

If we estimate your expenses as 50% of rent (Property tax, insurance, HOA, vacancy, maintenance/cap ex, PM) your return is ~3.2%. This is terrible especially if you can get ~5% with no effort and virtually no risk from either money market or CD. Note there are other options that also seem far better than the return you will achieve on your home without leverage.
If you sell you will meet the 2 of 5 years occupancy requirement in November 2023 to have no tax based on gain. I would live in the house until at least November and sell it. I would not try to operate such a house as a rental from a far (exception for if you plan to move back to SAn Diego in the future). If you are moving to Boston, you would be better served buying a home in Boston than renting out one in San Diego while renting a RE in Boston. Especially seeing that after renting 3 years, you will lose your owner-occupied gains exemption. Also your rent to value ratio on your home is poor. This is common with ex-homes. This is because the RE was purchased to be a good home for you and your family and not necessarily to be a good RE investment.
If RE is your goal, keep educating. Start by considering and researching what I indicated above. Look into expenses and the 50%. Look into 2 of 5 year rule. Look into what is considered a good rent to value ratio. Research the power of leverage.
Good luck

Thanks for the feedback. I'll look into all that. How are you getting those numbers though? House is 840k cash. HOA 178 and yearly tax is right at 10k. Rent should go for around $4500 a month. No matter what it's still about $3500 cash flow positive monthly. It's brand new development and don't got too much expenses for maintenance or anything. I'm not worried about renting from afar personally. I agree, I don't plan on holding this property forever because I think the equity alone can help build a better portfolio with better rent to value ratio. It's in upcoming area but I don't foresee appreciation to skyrocket ever.

Prop tax is ~19%. Vacancy to include unit refresh time, finding tenant (including credit/back ground checks, and waiting for tenant notice period with current LL) will be at least 5% (possibly less if you were large enough to have employees already available to do the work but that is not the case with 1 unit), HOA 4%, maintenance/cap ex 10% ($450/month on a house of your size. Even though items are new their lifespan has started. Example if you have asphalt shingles and replacement is $10k (you may have tile with longer life and higher cost so works out to be close to same) at 20 years is $500/year or just over $40/month. Do this for all items and you will get ~$450/month for your RE. I used to do spreadsheet on each of my offers as part of underwriting but after a half dozen or so I could estimate fairly accurately what the spreadsheet would show. My lowest pro forma for a unit that HOA covers no maintenance is $250/month for a small, attached studio), Pm 8% (include it even if self managing because it is work and requires effort. It may also have some challenges from a far that lead you to desire to hire a PM (PMs are not getting rich on their fees), insurance ~4%, miscellaneous ~3% (things like LLC, umbrella policy, rental unit tax, accountant tax person, etc)
Roughly: 18+5+4+10+8+4+3=53%.
If you want to self manage and not allocate any value for your time, subtract 8% and you are at 45%.
The 50% rule seems to be fairly accurate with a quick estimate of your expenses not including mortgage service (which you currently have no mortgage).
Good luck

Thanks for that thorough analysis. I really appreciate it. You are right about the value of this property. 900k can go along way for me in more rural areas of Massachusetts, New Hampshire, Rhode Island. I’ve literally been seeing multi families in providence (9 bedrooms) going for 500-600k with average bedroom renting for $800 a month. Same for areas like Worcester Roxbury dorchester. I would never buy in boston proper area. But you got me thinking. I should sell. Hit the Nov 2023 mark for 2 of 5 rule. Pocket 900ish cash and begin my journey on investment in east coast. I’m going to DM you. Have direct question about two of five rule.

100% @Ramin M. - that's a huge consideration if it's been an owner occupied property. Sell it today save on taxes and then redeploy in a year or two when it's cheaper in and around Boston. Once you start looking you may find a few really good deals. Providence is a good option but I'm still partial to the lower cost areas of Boston as you are right there in the center of all the economic activity.
2 Reply
Ken Maguire
Realtor · San Diego, CA · Member since 2020 · 14 posts · 9 votes
3y
@Ramin M. One thing to look into for yourself since your wife and you are both in the medical field, is a physician loan. They can provide you with 100% financing depending on your specific financial situation and standing. They can be used for SFH, 2-4 units and second homes last I checked. Definitely want to confirm with your lender but might be great for you to get some more doors and allow you to keep saving for your business. Hope this helps!
Cheers
1 Reply
Palmer Thomas
Member since 2015 · 53 posts · 88 votes
3y
Ramin,

I'm a dentist turned real estate investor. There are a couple of points you might want to consider.

I started buying houses and soon after quit dentistry, or at least quit being a full time dentist. This ended up being an impediment to investing as my personal income dropped and banks were much tighter with loans than they would have been if I still had a more dentist-like income. Since you have 6 years before your planned retirement (or semi-retirement) I would make sure to use those years of high income to acquire a lot of properties. Once you cut back, banks won't look on you very favorably.

Second, I would make sure it makes financial sense to purchase a practice rather than associating, especially since you want to quit full time dentistry in 6 years. The cost of purchasing, financing, and, most importantly, running a dental business can be draining. I would check the numbers. It wouldn't surprise me if you would be better off associating for those 6 years rather than buying.
1 Reply
Ramin M.
OP
Member since 2023 · 20 posts · 12 votes
3y
Quote from @Ken Maguire:

@Ramin M. One thing to look into for yourself since your wife and you are both in the medical field, is a physician loan. They can provide you with 100% financing depending on your specific financial situation and standing. They can be used for SFH, 2-4 units and second homes last I checked. Definitely want to confirm with your lender but might be great for you to get some more doors and allow you to keep saving for your business. Hope this helps!
Cheers

Thanks Ken! My wife is also army vet so she has VA loan. Which do you think is better? Can we use both simultaneously for different properties?
0 Reply
Hamp Lee IIIPro Member
Real Estate Agent · San Antonio, TX · Member since 2019 · 1k+ posts · 832 votes
3y
Quote from @Ramin M.:

Quote from @Ken Maguire:

@Ramin M. One thing to look into for yourself since your wife and you are both in the medical field, is a physician loan. They can provide you with 100% financing depending on your specific financial situation and standing. They can be used for SFH, 2-4 units and second homes last I checked. Definitely want to confirm with your lender but might be great for you to get some more doors and allow you to keep saving for your business. Hope this helps!
Cheers

Thanks Ken! My wife is also army vet so she has VA loan. Which do you think is better? Can we use both simultaneously for different properties?
Not unless you’re living in separate locations. There’s a residency requirement to move into the property as your primary home within a reasonable amount of time. The VA considers “reasonable” as 60 days.
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