All Forum Posts by: Terry Eriksen

@Ali Boone  15k for a private? That is ridiculous! Seems to me you might be better off buying something to get checked out in and then selling it once you hit 100 hours. No wonder GA is suffering. I'll have to check with the local Aero Club and see what they are charging. Yikes.

@Curt Davis , Oh my goodness, I have no clue where $160 for insurance came from. Its $540/yr. If I increase the allotment for maintenance up to $100/mo and recalculate the proper insurance at $45/mo, my expenses go to $368/mo and with $600/mo gross rents, leaves me with $232/mo in positive cash flow. That number sounds a bit better. 

I think that I may also be able to do a wrap mortgage as an option on this home, so that is something I am considering also. 

That gives me $2784/yr off of an $8,000 investment which is still 34% COC! Not bad for a cheap, small market investment property.

@Adam Haman , As for paying it off early, is that something I should be looking at? I could pay cash for this house, but not sure I should tie up that much capital in one property.  Thoughts?

Thanks in advance again!

Good Afternoon,

I come from a very small town in the Midwest and still have some friends that live there as well as family. One of my friends dropped this in my lap last night. 

There seems to be a shortage of rentals for families with pets in that area, and I have received two offers to rent should I decide to go forward with this deal. I know both families and have been friends with them forever as we went to school together. Before we get to the numbers, is doing business with friends a good idea even when it will benefit both parties?

Ok, on to the numbers.

House is a 3/2 on .33 acre. It could use a little lipstick, but doesn't seem to have any major issues other than an older AC compressor. Furnace was replaced in 08. Has a new roof two years ago, siding at the same time. Other people have already had inspections done on the home. 

Asking price is 29k. I have already talked to my hometown bank- gotta love being able to call the president of the bank directly. He approved me for whatever I want without going through the normal B.S. because I have had an account with them for over 30 years. Found out that they also do Portfolio Lending. Score!

With 20% down, that is $6,000. Plus maybe another $2,000 to get the home move in ready

(I can pay my labor in pizza and beer!). Estimate $3,500 in closing costs (Not sure if this is right or not)

Both families are willing to pay $600+/month to live there. 

Taxes @ 1.2% (Assessed for 45k right now) $540/yr or $45/mo.

Insurance $160/yr or $13/mo

Repairs 5% (Is this really right? Seems low to me) $30/mo.

Vacancy 7% (Although I don't think it will be that high) $35/mo

P+I on $23,000 loan + $3,500 in closing costs (or should I pay this instead of putting it into the mtg?)  $142.26/mo.

Monthly Expenses:

Taxes: $45

Ins:     $13

Repairs: $30

Vacancy: $35

Total  $123.00  

Mtg: $143.00

Property will cost me $266/mo total. 

$600/mo in rent. +$344/mo cash flow.  Is this right? Am I forgetting anything?

$344 X 12 = $4,008/yr. With $8,000 invested, that is a 50% COC return.

I feel like I am missing something major here.

I'd really appreciate if someone would look over the numbers for me and let me know if there is anything that I am leaving out. Thanks so much in advance. 

@Ali Boone  Nothing wrong with the 172, but I understand the draw for the tail wheel. They are just so much faster and almost all of your experimentals are tail draggers. Eventually I am hoping to buy a Bellanca Super Viking to tour in, and then maybe a Harmon Rocket to play with just for fun! What does it cost these days to get your private? Gotta be in the 4-5 grand range right? 

I'm lucky in that my significant other is wanting to travel even with an infant so I can go do stuff like that. Hopefully next summer we will be off and running to Mexico, then Thailand, then who knows? Loving your idea of a pina colada trailer on the beach!

@Account Closed   thanks for the suggestions! I'll definitely start looking at some of those books.

Wow, thanks for all the responses. Gerald Harris, I hadn't considered being a lender for a fix and flip. I'll have to look into that. That idea has some merit. 

@Ali Boone I was ATC at SoCal Tracon. I worked BUR, VNY, SMO, and all of that airspace north of LAX. What are you current in? I am considering getting my GA Lic since I have some time now. I'm particularly interested in Multi-family units. To be honest, I want a new C7 corvette but don't want to pay for it. I'm hoping to have enough cash flow in the first couple years to make my payment for me! Why not get the LLCs started when I begin buying properties?

I'm also in a unique situation where my Significant Other wants to get her PhD and be a therapist. She has found a school that meets her requirements for licensing in CA, so we are considering selling everything and living abroad until she finishes school. I write poker theory and am a very good player and I believe that I can make enough playing poker to cover our expenses while we are traveling and this will free up my retirement checks to be invested in more real estate. Even if I don't it will still be cheaper and I can invest more living in Playa del Carmen than I can living in San Diego. Things are looking good for me right now, I just need to find a direction and go.

@Dmitriy Fomichenko thanks for the info, especially how to tag someone, I'd have never figured that out on my own!  

Thanks again everyone for the warm welcome!

Terry

Hello everyone,

 I am in a unique situation. I am 38 and just retired from the FAA due to a work related injury. I have a very nice pension that I can comfortably live off of. When I turn 65, it will go down approximately 1/3. I have been a landlord in the past focusing on housing near Military bases, and I grew up building homes with my grandfather. 

I have a TSP account which has just shy of 90k in it that I am eligible to take all of it out in a lump sum or leave it in. If I leave it in there, I cannot make contributions. Not sure if this is the right thing to do or not.

I am considering taking the lump sum, eating the taxes and penalties and investing the balance in real estate. I am considering multi-family properties out of state since I am in California. I have several factors that can help reduce the amount I pay in taxable income. I have a home (That I am considering selling next year) that my significant other generally takes as a tax break for her income and we are expecting our first child in Sept. The distribution from my TSP would be my only taxable income for the year.

I'd like to start a couple LLCs and put my baby on the face of the business with me so that by the time she is college age, the real estate will pay for her tuition.

Any thoughts, comments, or questions are greatly appreciated. 

Thanks so much in advance,

    Terry