All Forum Posts by: Chris John

@David Lant

I subscribe to the theory that there are two ways to pay off a house.  One is the traditional method where you don't have a mortgage.  In the other scenario, if I had a paid off house, I could take the equity from it and use those funds to buy another asset.  The cash flow from that asset could pay for the loan I took out so I essentially still have that house paid off (I'm still not making payments on it, the new asset is) and I now own 2 assets instead of 1.

A few thoughts are that every dollar of equity is a dollar invested at 0% and exponential growth (spreading money across multiple properties, profiting from appreciation and cash flow, refinancing, and doing it again) is much faster than linear growth (paying off one house at a time).

Of course, this is using leverage and using too much leverage can be painful and dangerous so I'd personally advise to not get too aggressive.  You don't want to lose everything because of a market turn, but I think a lot of people miss out on the "tool" that is leverage.

@Jing Chai  I think you're getting a lot of great advice here from @Darius Ogloza, @Justin Thorpe, and @Damon L. Davis.  I think this is an instance where you truly can have your cake and eat it too.  I'd strongly consider keeping it, borrowing against it, and buying more with what you've borrowed (wherever that might be). 

I discovered biggerpockets a couple of weeks ago and it's already changed some of my opinions on real estate.  I used to be all about cash flow (which I still think is very important), but it's been pointed out to me several times that often the real money is in appreciation.  I found that was true in my own investments.  Realizing that now, I would be EXTREMELY hesitant to sell a property in SF that had such strong numbers.  These guys know of what they speak.

Good luck with whatever you decide!

@Frank Connelly

I think @Jaron Walling is giving you some great advice here.  I'm a fellow teacher that was lucky to be able to have my wife stay home until our children started school, but it was financially TOUGH.  haha.  I wouldn't trade those years for anything though. 

If it were me, I'd definitely attack the debt with the higher interest rates first.  It's just the easiest way to utilize a dollar.  Once I had the higher interest rates paid off, I'd start saving money for a down payment on an investment.

Do you know what your current house would rent for? If it's even close to the $1200 that you mentioned you're paying for it, I might consider saving for a down payment on a house for you to buy as an owner occ. You can trade up a time or two and keep the old house as a rental. You might be able to utilize FHA a time or two and keep your down payments low. I just think it's an easy way to break into investing.

Also, once you get some of that debt paid off, I'd try to keep my expenses low so that you can save for the next down payment more quickly. I'm for investing off all kinds, so I don't think investing in the IRA is a bad thing, but like Jaron mentioned, you might want to consider skipping that for a while to get this ball rolling a little faster.

There are obviously more exciting investment opportunities and strategies you could pursue, but I personally left those for later when I was in your situation.  I knew better financial times were coming, so I just wanted to make sure I was taking concrete steps in the right direction without exposing myself too much.

Good luck and please feel free to reach out if you have any questions.

@Dustin Sanders 

This feels like a trick question.  A million in cash is a million invested at 0%.

My answer is that I'll never have $1,000,000 in cash.  As I accumulate money, I'm constantly reinvesting it.

@Dylon May  It's awesome that you want to help your wife's family.  Personally, I'd discuss this with my mother-in-law with my wife present.  If she expresses interest, you may be able to bring her current (or current enough) and buy yourself time to then just simply purchase it from her without the threat of foreclosure.  If she doesn't seem interested, I would steer well clear.  For me, there are too many opportunities in real estate to buy my mother-in-law's house out of foreclosure against her wishes.  That would create a lifetime of drama. 

Try to remember that she's probably feeling embarrassed and may not be thinking completely rationally, so proceed with caution. 

Good luck!

@Ifegwu Sampson Ifegwu 

Yeah.  Of the 200k, 160k goes to paying back your old loan and you keep the 40k (minus fees, of course).  haha

Please let me know if that didn't clear it up, but I think that's what you're asking.

@Collin Hays  I'll spare the details, but I had it out with a septic company once.  To this day, I feel like they tried to physically intimidate me to agree to their inflated price and extra work that wasn't agreed to.  I had a very uncomfortable discussion while being surrounded by some large dudes in my yard explaining why I needed to pay the money.  Stand your ground, for sure, but maybe over the phone...  haha.

@James Canavan 

If they do go away, I think we can all agree that there's too much money in the game for them to go quietly.  I personally don't see them going away though.

@Ray Danishyar  Great question.  I feel like I'm in a roller coaster that just pulled up the initial incline and we're just kind of hovering and waiting.  I've been hearing all of the clicking and feeling the jerky, pull up the top, but nothing has really changed too much yet...

...but I can't help but get the feeling like it's about to change a lot and quickly.  haha.

@CO Yilmaz  From 2009-2012 we lost so many potential rental properties to agents looking to double end it, it was ridiculous (we made a full price cash offer over asking at like 11am on the day a house was listed and were "too late").  Almost all sales in my area back then were short sales and foreclosures, so I don't think the agents had as much oversight from the banks as they probably should have. 

I was ok with it as I loved my agent (young guy at the time and a complete grinder), so we just made a bunch of extra offers to compensate for it.  When it came time to buy my owner occ though, I went straight to the seller and magically got my offer accepted out of the dozen or two offers.  Real estate can definitely have a dark underbelly at times.