All Forum Posts by: Cheryl Packham

Hello everyone!!

I am writing a research paper for a strategic economics class.  My focus is on how real estate investors decide whether to hire aspects of their business or do it themselves.  What I would like is for people to walk me through their process on how they make these decisions.  For example, if you decided to hire a person to send out mailers, was this done because you no longer had the time, you didn't like the work, or you felt you were more valuable doing other parts of your business. 

I look forward to reading your responses and please let me know in your response if you are willing to be quoted in my paper.  It will not be published, just summited to my professor. 

Thank you in advance~

Hi Jon,  Sorry I couldn't make it.  How is that book?  I was very intrigued by the podcast.

Yes, we decided just to start doing some informal meetups because none of us have time to plan a formal meeting.  So many people with so many schedules we figure that if we keep doing several that we can all connect by proxy. 

Hi all you Cheyenne investors.  A few of us are getting together at Chili's on the 8th of April at 5:00 p.m.  If you can make come on by! 

Generally any investor is not going to base their required return on investment on the size of the investment.  They will review the risk involved in the investment and then require a premium for that.  At a bare minimum an investor will need a return higher than the risk free rate (generally the rate of a Treasury Bill for the same term length) plus a rate to account for inflation and then the a risk premium on top of that.  The risk premium would be calculated based on the terms of the deal.  

If you have enough equity to do a cash out refinance, then you should refinance and not do a cash out.  This will lower your payments and then you can put the extra towards your consumer debts.  Pay your highest interest first and when that one is paid off move all the rest to your next credit card.  I do not believe that bankruptcy is a viable option in this situation.  You just have to get creative and you can figure this out!  Good luck!

Hi there,

I have not actually received financing from this company yet, but I have spoke with them directly and they seem to be a perfect solution to what you are looking for.  The do lending to people who have or will have 5 properties or more at a minimum of $300,000 loan.  They only look at the cash flow of the properties and they must be currently cash flowing.  They are great to deal with and very helpful in figuring out what you need.

http://www.b2rfinance.com/

Roy,

I am no professional here, but I think you have the right idea.  The objective is to increase your income without increasing your expenses.  If you can do that then go for it.  You must take into account whether you are better off using all the money saved for the down payment or whether you could qualify a first time homebuyers loan with a 3.5% down payment.  Use a little extra to pay some points to qualify for lower interest.  Have some money for the repairs and use the rest to pay down your student loans, providing they do not have an early payment penalty.  The less money you put out of pocket on your property, the higher your cash on cash return on investment will be.  Just make sure your mortgage payments are lower than what you can get for rent when it is fully rented.  You don't want to move out and not be able to rent your unit for the $600 you were paying for rent.  While your property may not appreciate, neither will your  loan payments.  If you are looking for a long term investment and you are good at figuring out what a good deal looks like, I think you most certainly have a good plan.  

Good luck!  Very exciting.  

Hi Jeff,

Great Question! If you do not include your depreciation expense on your taxes, when you go to sell the property they will account for depreciation whether you claimed it or not. I agree with both Jesse and Jerry as well. Any good underwriter at the bank will look at more than your Schedule E when determining the income on a property. As far as I know, DTI is done from Gross Income not Net income which would make your expenses irrelevant.(See source below). SO, what matters more than what expenses you claim on your taxes is the amount of rent you receive on the property and the amount of your payments on the loan. Those are the two factors that go into DTI.

http://www.consumerfinance.gov/askcfpb/1791/what-d...

Also when you say W2s are you referring to your tax return form (like 1040)?  As W2s only report income earned from working at a business as an employee.  

The best way to minimize your debt to income ratio is to pay off any and all revolving debt you can (credit cards). These really eat up the monthly payments that go into your DTI. Also, if you have any other loans, consider refinancing them before your two year period is up. See if you can get lower interest or lower payments through refinancing.

Hope this helps!