All Forum Posts by: Alexander Monnin

@Frank Chin 

@Levi T.

@Chris Mason

Thanks for the replies guys.  I am plan on investing in appreciation plays for some of the reasons you guys have noted.  Its good to know that when the time comes I will be okay given my day job.

So I was wondering how appreciation investors satisfy the debt coverage ratio?  I keep seeing that banks require a 1.2-1.3 ratio.  I know that a lot of appreciation plays barely break even on cashflow or are sometimes even negative at first.  Obviously this would not satisfy the ratio requirement.  So are there ways to work around this?  Do I just have to find a small investor friendly bank?  Will banks overlook this if I have a high enough income?  Also, I know that you could just make a bigger down payment but that would be less than ideal for my situation.

@David D.  There's no reason you cannot find a trustworthy friend to partner with.  The %return doesn't change when you have partners.

@Andrey Y. 

https://www.amazon.com/Estate-Investor-Financial-M...

Get the kindle version.  Its $9.24, you just have to download the amazon kindle app (which is free).

@Andrey Y. The book "What Every Real Estate Investor Needs to Know About Cash Flow" is great for learning IRR. I read it in 2-3 days and created my own spreadsheet for calculating IRR by the end of the week. Definitely worth the $10.

@Kevin Coggins  You seem to not understand that we are on the same page.  The only analysis I did was on the opportunity cost.

@Paul G.  In any investment case, I believe its best to model your returns the best you can.  In the scenario of 1000 vs 1000 I did not factor in the pre tax dollars for the sake of simplicity

But,

In the formula I provided a couple posts up

y = ((((Pv*(1 + R)^n) / C)^(1 / n)) - 1) *100

I did factor in the pre tax vs post tax dollar scenarios.  "C" is the after tax dollars of your contribution.

Pv is your contribution plus the company match.

R is the assumed rate of return.

n is years.

The formula gives you the equivalent yearly return.  It works.  Try it.  The only thing left is to compare end taxes which is possible to do.  Also, I have not advocated for either side.

@Clayton Boyle I though it applied to all of them.  Obviously if the account is with pre tax dollars, you would still pay tax on contribution withdraws.  I guess I could be wrong about all of them.

@bryan wilson True, I just the formula because it allows you to compare the two.  You're always going to have to assume a return for an investment.  So if you can confidently assume a 8% return on a certain real estate deal, you can choose the better investment based on the holding period.

@Clayton Sneider You can also withdraw contributions penalty free but not earnings.