All Forum Posts by: Chris Vail

I forgot to mention that there are generally 2 types of loans you can do out of your 401k short term which is less than 5 years payback I believe and long term I forget what the time frame is on these (20-30 years?)

I am also from an old school mentality on what the 401k is for, (Retirement). For instance I am in the process of purchasing my first rental, and the money I am using for a down payment is from a stock account not a 401k account.  So my reference earlier on time line, is related to the discipline of saving for some goal.  If you know that you need 20,000 for a down payment how long would it take you to save that money?  What sacrifices would you make in order to reach that goal? Why haven't you saved that money so far?  What can you change from here going forward to make that possible?  Not saying you shouldn't borrow from the 401k, if you have to borrow and the two options are bank or 401k I would say 401k every time as this way you get the interest instead of the bank.

Sorry I should have clarified. I see these people in the same light, uneducated about the truths of REI. Changing their mind in either case requires knowledge about the reality of the situation and generally people don't like to change their perception of reality, even if it is wrong.

@Joel Custodio 

You are better off having the down payment :) with out needing to borrow.  If you do not have the down payment I would look at why you do not have the down payment and what kind of time line you have to come up with the down payment.  When my wife and I purchased our home we did half from savings and half from my 401k, but this decision came from believing that the market was going to be doing garbage returns over the 4 years we gave to our selves for paying off the 401k loan, and the interest I would effectively be paying my self over that time frame would be better or equal to what the money would be doing in the market to begin with.  The only reason we even touched the 401k was this was during the housing crisis and banks were requiring 20% down which we were not expecting.

@Ceril S. 

This is along the lines of this thread that is already going.

http://www.biggerpockets.com/forums/311/topics/153...

long story short, don't try and change them, they will either understand or they won't if you want to try to change their mentality just know it will take a long time generally. 

@Joey Vasquez 

You have already received some great advice up above, so I will be brief.  IT is human nature to be afraid of the unknown its largely what has kept us alive as a species.  That being said, you are not afraid of this endeavor because of the research you have done (it is no longer an unknown) and you are expecting the people close to you to have the same knowledge base when talking to them.  

Once you have a proven successful track record more people will want to understand what and how, but until then take their bias and make sure you have planed for that scenario so that if it does come up you have a plan on how to handle it.  But don't continue to have a discussion with someone thinking that you are going to change their mind, as peoples fears are fairly strong and you will have a frustrating time trying to change them on the spot.

Welcome to the site @Bryan Lincoln 

Just an FYI if you want to tag folks in a post like I just did for you just type "@Name Here" and their name will pop up at the bottom of your text box after the first couple of letters of their name and you just have to click it.  This works if the person has already had an entry in the post or if they are part of your colleagues. 

And again welcome to the site.

Hello @Sergey Tkachev 

Property needs new flooring, baseboards, minor drywall repairs,texture, scraped ceilings, paint (3 tone inside, celling, walls, and trim), updated light fixtures, general cleanup of the yard, replacement of some dry rot, and a redo of the kitchen (small kitchen).

Some of the work I plan to do myself and that will ultimately depend on quotes I get back from folks on the work. I am putting together a full blown SOW, later today to get bids on, but the list above encompasses most of what needs to be done.  I could probably get away with doing less but I feel the repairs listed will allow me to rent the house faster and keep a tenant longer.

This was purchased via the MLS, not bank owned but the family needed to get rid of the property due to family issues.

I totaly forgot to put in the details:

SFH

3 bed / 1.5 Bath

1140 Sq Feet

Contract Purchase Price 125,000

Closing costs: ~4,000

Budget allowed for fix up: 8,000 (seeking contractors that are investor friendly in the Sacramento Area if you know any) 

Down Payment: 25,000

All in costs: 37,000

Expected rent: 1,200 per month

Less Vacancy allowance: 1,100

Income: 1,100 per month/ 13,200 per year

Expenses:

PM: 120 per month (even though I plan to self manage aka pay my self)

Repairs and maintance: 120 (using 10% for now as I will have a sizable reserve set aside to start but there should be very little needed after fix up)

Insurance: 63.75 per month

Utilities: 0 (I plan to have all utilities paid by the tenant, water I will cover and bill back to tenant on the next months rent, looking for insight on this from other Sacramento landlords)

Total Monthly expenses: 303.75

Net Operating Income (NOI): 796.25 per month

Debt Service (PI): 521.65 (100,000 @ 4.75% 30 years)

Property taxes: 130.00 per month

Net Cash flow: 144.60 per month / 1,735.20 per year 

Plus PM Fees: 264.60 per month / 3,175.20 per year

Estimated equity at purchase after initial fix up / rehab: ~75,000

Hello BP,

  I am happy to say that I finally have an accepted offer on my first rental property purchase.  This property will not conform to most of the rules out there in BP, however I feel it works for me and my situation out here in Sacramento.

I have had both the Wood destroying pest inspection (came back clean aside from a few dry rot locations which I already knew about), and a home inspection (also came back clean aside from some of the know issues before the inspection).

I am hoping some of the other Sacramento Investors / Landlords 

@Al Williamson , @David Hutson , @Dennis Lanni  can give me some insight into the forms that you use for tenant screening, leases, and general info on what you do to get a rental up and running in our Sacramento Market.  Also if there are any contractors that tend to be 

And a big thank you for all that have helped me in some way along the beggings of this journey.