All Forum Posts by: Arthur Means

Hey Stephen thanks for the reply. I think that's kind of why I'm here. I'm still looking for guidance on how much operating capital or cash reserves I might need. I'm also trying to get some opinions on whether or not the 2% rule is enough when it comes to generally evaluating properties. I think some of the biggest questions I have revolve around, is this a good deal or not?

Thanks for that clarification @Kyle Kadish

Hello fellow BP'ers,

First let me say that I am a frequent reader of BP blog posts, and through those posts, I have been steered more toward multifamily properties lately.  I used to think that I wanted single family properties because they were easier to sell, but through my reading here, I feel like Multifamily is ultimately more profitable and the costs per door seems to be far less.

Currently I have one rental that I have been successfully self-managing for about 5 years (60K equity).  All rent is collected online and any maintenance is farmed out to someone local, I do not have dedicated people that I call..  I also just sold my primary residence in the St. Louis Area for a 70K profit (paid off all debt with it).  I have been relocated to Charlotte for work.  I now have zero debt (renting) and have about $5,000 per month in expendable income.

At this point, I would like to focus on St. Louis and Charlotte since I am familiar with one, and local to the other.  Part of me wants to dive in with both feet and buy a mobile home park, or storage units, or even a small apartment building.  The other part of me says I should slow down and maybe start with a duplex or at most, a quad.

But, like most here, there is alot I do not know.

First on the list - Save some backup funds, establish some kind of formal business, and find an accountant.

Next - Search, research and offer on a property.

So, I am looking for good guidelines on how much money I should expect to set aside for operating funds.  Ultimately, I would like to establish business credit for property financing that is not personally guaranteed by me (not sure if this is possible, especially immediately)

As far as evaluating properties, I have read alot about the 1% and 2% rule, and they seem to be good guidelines to follow. I have also tried to understand CapEx percentages, but everyone seems to have different thresholds for what they consider a "good deal." My goal is a property that cash flows. I am not looking for flips, or huge appreciation. I just want to acquire enough properties to live on the proceeds. I would like to be able to look at a property and within a short time, determine if it should be profitable. Is the 2% rule enough for this?

I would like to finance all properties in this scenario and I expect the properties to be managed by a PM. And the rental house I do have should sell to its current tenants in June. So a 1031 may be an option there, but im not sure if I can exchange a SFH to a multi, ill be consulting a 1031 expert on this.

So - How much operating capital?  Is the 2% rule enough? How aggressive should one be who is relatively new?  I have been a landlord.  Should I play it safe on something like a duplex? Or dive in on a 6-unit villa?

Thanks so much for any input!  Sorry for the long post

I paid for a home warranty to offset the maintenance. They literally cover all other expenses

Okay, okay. I'm with you now. First let me say that this reply is from my phone. So forgive me if I'm a little short. Secondly, let me think all of you for being patient with me, I'm clearly new :-)

So here is some more background on my situation. My current rental house used to be my primary house. I bought it for $85,000, I lived there for about 5 years and then we turned it into a rental. It has been a rental for about 3 years with a positive cash flow. The mortgage on that property is about 695, All In. I only charge $800 a month, but for the area, that is not bad. Perhaps I should charge more, however the tenants are responsible for all of the maintenance.

Here's where it gets interesting. The house that I am considering selling is a very large house. It is 5 bedrooms, five bathrooms, and about 3200 square feet and a very desirable location.

That square footage does not include the full basement that is underneath. If it were finished out, the house would be close to 5000 square feet. We bought this house incredibly cheap, I paid $145,000 as a short sale, and the mortgage and taxes are less than $1,300 a month. I do think it is possible to make a lot of money on this particular rental, as long as I could find someone willing to pay 2500 to $3,000 a month. Do people really pay that much for rent? Again thank you all for your reply

We are getting way of topic here guys...   That, or I am super dense.  Everyone is talking about "Investing" and "Rental property".  I am talking about selling my primary home for a profit.  If my new home is 250K, the question is, do I put 75K down on the new mortgage and finance 175K, or pay off the student debt and finance 250K.

Thanks again for all of your replies

Does the PSLF factor into this at all?  Should we avoid paying off the portion of the loans that could be forgiven?

Hey all,

New here.  I am hoping some of you can help provide clarity to my situation.  

I currently own two homes.  One is a rental with about 40K in equity.  The other is our residence with 75K equity.  I am in my early 30s.  My wife has about 75K in student debt.  My question is simple...  If we sell our primary house, is it better to pay off the student debt or put a nice downpayment on the next house?

I have been leaning towards paying off the student debt, primarily for tax purposes.  The student debt only lets me write off a very small amount of interest but the house would let me write off basically all interest.  Also, paying the student debt would free up about 500-600 per month.

Now, there is a wrinkle here of course.  There is a possibility that about half of this debt could be forgiven after 10 years under PSLF.  But that is way up in the air with the new administration.

I welcome any insight.  Thank you all