Introduction - Eager to learn!
Hi all,
I am a 29 y/o male with a young family (a 2 year old and 5 month old). I bought my first house which my family lives in almost 2 years ago. I utilized a VA loan since I am a veteran and the loan is roughly $228k with the house being valued at $233k currently.
I am very eager to learn about REI (assuming this means Real Estate Investing, I've seen it used on the forums among numerous other acronyms). Between the wife and I, we earn a respectable income, at least for our area and we would like to begin to use some of additional income for some investment opportunities once we finish off her school loans in 18 months. My goal is to rent out the current home, my current mortgage including PMI is $1,248 and the rents listed on Zillow for my house as well as most of the others in my neighborhood are $1,500 +/-. I have refinanced the loan under the VRRL (I believe is the term) so I shouldn't be tied to living in the house and should be able to rent it. With that said, I need to look into if I am eligible to use the VA loan again since I used it but then refinanced to VRRL. If so, then that may be an option for a $0 down loan.
I plan to begin listening to the podcast ASAP and I just purchased "The Book on Rental Property" by Brandon Turner as well. I live in Virginia Beach and would be interested in pursuing a buy & hold strategy to generate long term passive income for my family and ultimately long term financial freedom.
I've ready tons of threads on the forums already, primarily in the success section to see what I can glean from it.
One popular strategy seems to be Buy, Repair, Rent and Refinance, if I am getting that right. I do have some questions about this though since I am new to it all.
- How do you handle the repairs if you aren't exactly a handyman yourself. Do you seek our a General Contractor to do the work and to help you determine what repairs need to be made? How do you handle the costs associated with this, do you have to have the money yourself or do you take out additional funding beyond the cost of the property to cover repair costs?
- When you refinance, my understanding is that it can help get the rate down on the loan but also pull cash out against the value of the property to be used on another purchase. Does it ultimately end up increasing the amount owed as well? I would assume so, e.g. you have a $100k home loan, take a $30k refinance out for downpayment on another adventure, now you own $130k.
- I also see people tend to use some sort of formula to determine if a rental will be cash flow position, where they factor in repairs, capex, management (i think to do that part myself), etc. What is this formula and what %'s are usually used apply against each factor you must consider and account for?
Any other recommendations based on my circumstances would be appreciated. I plan to attend TRIG in the near future to begin to learn from experienced investors so that i can be educated enough when the time comes that I can begin to make some moves and to try and build wealth through REI.
Chris