All Forum Posts by: Andy Vasquez

Welcome to the community! 

Your goals are exciting and ambitious - love that! 

As others mentioned, there are so many ways to invest and build wealth - it will really depend on a multitude of factors to determine which method will be best suited for you. (income, cash on hand, market conditions, skill set). 

Perhaps BRRRR will work, or fix and flip, or LTR vs STR rentals. Many things to consider. Perhaps locate a mentor in your market or financial specialist to discuss your options and run some numbers?

Quote from @Andy Vasquez:

Quote from @Shane Kelly:

As mentioned above, a single family worth almost $1 million will likely make for a terrible rental. Will you even cashflow at all? or will you just be spending money with a rental? If the latter, then maybe moving and selling is a better strategy. Either way it sounds like you're in a very high price market, so investing there may not be wise if cashflow is your goal, but I'm sure appreciation is easy to find. And I do respect your aggressive goals! However, REI is a "get rich slow scheme" as you may have heard before. Play for the long game and you will win.

 I live in the DC area. Prices here just keep getting higher and higher because of the Federal Government. My house valude went up approx. 15% in two year (7.5 per year). I have a 30 year fized at 3.25%. Seems like I shouldnt sell it. I think I can get 4100 per month on a 4000 mortgage. I think it is worth it for the Cap. Accum.

Keep the property for sure and buy properties in gentryimg areas of the city and suburbs, (Ne dc, route 1 and 50 in pg and Georgia ave and Gaithersburg in moco are my favorite for long term growth.) 

@Andy Vasquez "I bought my first house for $858K" - How much did you know about REI before you bought this home?

"I plan on moving out and renting." - How does this move the investment needle in a positive direction? The numbers better justify holding said property or you sell and find a better deal.

As mentioned above, a single family worth almost $1 million will likely make for a terrible rental. Will you even cashflow at all? or will you just be spending money with a rental? If the latter, then maybe moving and selling is a better strategy. Either way it sounds like you're in a very high price market, so investing there may not be wise if cashflow is your goal, but I'm sure appreciation is easy to find. And I do respect your aggressive goals! However, REI is a "get rich slow scheme" as you may have heard before. Play for the long game and you will win.

Quote from @Andy Vasquez:

Total newbie here. In real estate, it seems getting Cash Flow and Appreciation is the dream. When talking about finding a market that still offers Cash Flow, I am a little confused. Cashflow is dependent on how much you put down, if anything. For instance, I want to only put 5% down and build equity while I live there and rent out in a year or two. Cashflow with only 5% down is very tough, but with 75% down it is fairly certain. Am I missing something? When someone says great area for Cashflow, should I assume they are putting 20% - 25% down?

Look at cash on cash return.

For example, if you put down 100k and make 10k a year your CoC return will be 10%. Cashflow is important but so is taking into account how much capital you are locking up during it. 

House hacking is great. Make sure you take into account you are living there. So if you are "-400 cashflow" that in essentially a 400 monthly rent payment. Best way to get your foot in the door! 

@Andy Vasquez You are right, a huge factor of cash flow is how much you put down. Another large factor is your rental strategy. If you rent long term it can be difficult to get cash flow, but if you rent short-term or medium-term it is much more attainable.

Quote from @Andy Vasquez:

Total newbie here. In real estate, it seems getting Cash Flow and Appreciation is the dream. When talking about finding a market that still offers Cash Flow, I am a little confused. Cashflow is dependent on how much you put down, if anything. For instance, I want to only put 5% down and build equity while I live there and rent out in a year or two. Cashflow with only 5% down is very tough, but with 75% down it is fairly certain. Am I missing something? When someone says great area for Cashflow, should I assume they are putting 20% - 25% down?

https://www.calculator.net/ren... I use this to calculate my numbers. When I got started investing my sophomore year of college, I had $500 to my name, My grandmother lent me $12k for the downpayment on a duplex on OSU campus in Columbus. Over the course of a year my wife and I fixed it up, rented to friends, ate peanut butter and jelly, did everything we could. We then refinanced the property and it has given us $140k in cash back and continually produces $1,800/month in cash flow.

@Andy Vasquez Putting 5% down on an owner occupant and house hacking is a great way to lower or eliminate your living expenses! Some markets / neighborhoods allow you to do this and positive cash flow.

When investors are talking about a cash flow market, they are generally talking about 20-25% down as this is the standard for investment properties. While putting down this much down increases your cash flow, you still need to pay attention to your COC to make sure you aren't patching up a hole with your money.

@Andy Vasquez Depends. Cash flowing with 5% down or less is possible but a lot more difficult than just 3-5 years ago. If you put 75% down, you would probably cash-flow in any market, but your Cash on Cash ROI would be so low that it wouldn't make sense to deploy all of that capital on one deal.

In my analysis, I combine all advantages of real estate towards establishing a "Bottom-Line ROI". I find this number by dividing my total annual gain (cash-flow + equity/principal pay-down + appreciation) by my cash invested up front (down payment, closing costs, renovations, etc). Since you can't always count on appreciation, I use a very conservative annual number. I like this "Bottom-Line ROI" analysis more than solely looking at cash-flow or just appreciation because it gives a more wholistic view of the deal and how it adds to my overall net worth.

With that said, if you 5% down on a SFH or a small multifamily and decide to house-hack while you live there, you may not cash flow but your cost of living will certainly decrease and of course you'll be paying down the equity, have access to the property's long-term appreciation, and be able to reap the tax advantages afforded to owners of real estate investment property. Also, if you are able to add value to the property and increase the rents, you may see some cash-flow once you leave the property and have it fully rented to tenants.