All Forum Posts by: Shari Posey

Marco, you really didn't address Raymond's experience. You can have a tenant lease for a year and then that tenant moves on his own into another of the developer's properties.

Bottom line is the rent must be market rent and not more than what any prop management company can find a renter to move into it for. I read on another thread that I should call 3-4 prop mg companies to get their take on rent price for the unit, which Ali alluded to as well.

I like that advice about not getting locked into a rental agreement.

Another concern I have had is why aren't the turnkey companies keeping these properties if they are so great? Or selling the best deals to their family and best friends?

I've been thinking about turnkey properties and one thought keeps popping up in my mind and I wonder if it's valid...since these props come with a tenant already installed, have some made a side deal with the tenants to slide some money under the table and beef up the rents for the length of the lease? Obviously I will have to do my own due diligence on rental prices but some that I've seen seem higher than market, which is what makes me wonder.

Also, how long are you locked into their property management system typically? Some of the management fees seem on the high side as well.

I've been waiting for short sale approval since January on a crappy townhome in Vegas. I bid on dozens and this is a good deal in my perspective (3BR/2BA $43k purchase price, HOA $200, $5k to fix up, rent for $850). Now I find out squatters have been living there, are gone now but will probably be back since the door jams are busted. I've never had this problem in Long Beach. I think I'm about ready to give up some cash flow to invest closer to home.

Will F.--Where are you finding $500k 4-plexes in LB that rent for $1000 per unit?

I tend to agree but we've got multiple offers over the asking prices and many of the offers are all-cash. There's a ton of cash out there. The rest of the offers are usually 10-20% down.

I've had a few clients try to us USAA and in the end, it has usually been a problem and they ended up with a better rate from another bank. I don't understand the love affair with USAA.

Also, regarding problems to fund the loan--if possible and the seller agrees, do them yourself. I've had buyers paint and do quite a few cosmetic changes to get their loans done.

One look on the bright side--Now you have a 100% tax free retirement account and will continue to build tax free. If you put it in the right investment(s), you will more than make up for the taxes you have to pay over time. A lot of people intentionally do what you did.

I'm in ET now but I switched from Sterling Trust which was HORRIBLE. They are associated but different.

Ali--Are you sure about those property taxes in Chicago? Both Du Page and Cook counties are notorious for high prop. taxes. That's one good thing about CA--prop taxes are straight forward thanks to Prop 13.

Marco--Can you give some specifics on where you are investing these days?

Interesting post because I actually emailed this question to Dave Ramsey the other day. My husband and I read his book, Total Money Makeover, about 4 years ago. At that time we had no credit card debt, no car payments but we had mortgages on 2 rental properties and one mother of mortgage on a principle residence! The RE market was changing and I had already been working 70-hour weeks for years and the prospect of keeping up my income level while sales prices were dropping (i.e. having to do even more transactions) was a horrible feeling. We did the snowball by paying off the lowest mortgage on one of the rentals first (paid it off in 2 years!) and we downsized into a property we could pay cash for. What a relief!!

For me, paying down that mortgage debt, downsizing and saving a big pile of cash made me feel so good and at peace.

We've got some cash and I really want to pay cash but that is very limiting in this market so I have recently decided I will consider the right properties with 25% down and a 15-year-note that still flow a little cash to pay down even earlier.

We have one rental with a little left on it but it's at 2% so I'm not in a hurry to pay it off. And if I look back, we would not have been able to have the properties we currently own if it had not been for mortgages, although I am very happy we own several free and clear (also one owned by my IRA). So, I guess I'm 96% in agreement with Dave Ramsey.

There was a time after I bought my first house in my 20s that it felt like an anchor around my neck. It wasn't the payment but the fact that it could not be quickly liquidated (no appreciation and a slow market) and I wanted freedom. I vowed I would never buy a house again.

Fast forward 15 years having lived in 2 different countries, a new marriage, a different state and one day a For Sale sign went up in the "apartment complex." (It was really a condo complex but I didn't even know it.) I talked to the agent and asked the price, then went upstairs and took out my calculator to discover we were paying more in rent than if we bought that unit for sale. My husband came home from work and I said, "Honey, we're going to buy a house." He thought I had lost my mind after hearing my mantra--"a house is like an anchor around your neck." We decided we would only buy a house on a 15-year-mortgage that was no more than we would pay in rent so we could easily rent it out if we got gypsy fever and wanted to move somewhere else again. We don't own very many properties (4) but we've bought them all that way...except for one...

More recently we made your mistake and I knew it within a few weeks of buying "our dream home on the beach." Ug! That anchor again! We got rid of it, lost money and are back on our sound principles of cash-only or maybe a 15-year-mortgage with a payment cheaper than rent.

I think emotionally you might feel o.k. if you buy a house to live in if it's one that could very easily be rented for more than the PITI. Someone earlier said, "Even if you rent, you are paying for the house you live in."