Investor Psychology

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Chris Mackinlay
  • Midland, TX
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90
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Is this a beaten path for starting out?

Chris Mackinlay
  • Midland, TX
Posted Sep 1 2019, 12:32

Hi BP. I'd like someone to sanity check this for me.

I live in a house with a solid amount of equity. I'd like to keep that as is for a bigger deal that may come along.

We have been able to fight and save a decent amount of money. We have four kids and I work 40-50 hours a week.

I found a property that would net me $400/month after saving for cap x, maintenance, vacancy, etc. It's about a 12% cash on cash. (Like how I used all the BP terms? lol) So by all investment metrics, it's sound.

To purchase this, I would need to significantly deplete our savings.

The math just feels weird. Essentially, I write a check for $25k, and it takes me a long time to replenish that money.

I feel it's a solid investment because that CF number is pessimistic and I can endure a downturn if needed.

Obviously, long term the house would cashflow more, appreciate, loan paid down, etc, which is great. But it's tough to write that check in the now for the later because it makes the savings so much less.

Any thoughts on this or similar experiences?

Thank you.

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