All Forum Posts by: Daniel O.

As already alluded to above, it really depends on your personal situation and your goals. If your goal is to grow your portfolio, then yes, leveraging the equity you have in your existing properties might be a good strategy PROVIDED you have enough reserves to not be making yourself vulnerable to unforeseen events. But another consideration is your age and what you want to be doing with your time. If you are nearing retirement and just want the passive income from your existing rentals to fund your golden years, maybe it makes less sense. The more properties you have, the more involved in running them you need to be. You still have to manage a management company. So the question is, what do you want to be doing with your time?

The profits from real estate purchased using IRA funds must go back into the IRA. But that is the beauty of it. Those funds grow tax free or tax deferred. And you can keep reinvesting them in real estate more quickly since you aren't giving up a chunk of them in taxes.

I agree that a 3% increase might be a little optimistic. I would encourage you to run some different scenarios to make sure this works for you. For example, I like that you've calculated using 10% vacancy. What if it goes to 15%? I don't know whether your utility estimates are reasonable or not. Maybe bump them up? One thing that a lot of people do when they are starting out is they build optimism into their scenarios. I think you are better off building a little pessimism in and hoping to be happily surprised. If the numbers still look good with worst-case scenarios, then you probably have a solid investment. Your financing plan sounds reasonable. Have you looked into a self-directed IRA? If you can purchase a property with great cash flow through a self-directed IRA, you can really build wealth while sheltering it from the tax man. Unless your income exceeds the cap, you can contribute 5500$ to an IRA each year. Four years of IRA contributions would cover the downpayment on this property. Finally, if you haven't done so, there is a decent rental property calculator here on BP:

https://www.biggerpockets.com/buy-and-hold-calcula...

Best of luck!

There would only be a Schedule E if the seller was using this as a rental unit and was declaring the income. Has the seller been renting it out?  Has he made assertions about what it will rent for? If so, get copies of any leases. One doesn't file schedule E on a primary residence unless it is also rented out.  That said, you can't tell if he has been claiming mortgage interest, which would imply there is an existing lien. You could go through with this deal by verifying the numbers you have been given, but I would work with a title company and I would get title insurance, whether you are financing this or paying cash. Given the slightly sketchy nature of the seller, you might even insist that he pay for your title insurance and the costs of having the title company handle the transaction.

This seems reasonable as a short-term strategy to save cash. What is your longer-term goal?  A couple of things to keep in mind. A 35 minute commute will eat more than an hour of your day, 5 days per week. Lots of people do it, but it can be a big change. As you think about this, remember that your commute is not free. It costs you money. Will you be driving?  If so, look at what this will cost you at $.55 / mile. 

This could also be a good move in terms of building contacts in construction for when you decide to house-hack a place that needs some work.

Give Steve Raymond at Hill Point Insurance Agency a call. I use him for my Baltimore properties and he is great. He will shop your needs and get you the best rates. You can find their contact info online.

Under the sink there is a line connecting the water to the sink. Actually, two lines -- one hot, one cold.  These lines have valves to allow you to turn off the water. Check to make sure both are turned on. Counter-clockwise to open, clockwise to close. That might not be the problem, but if it is, there is no sense paying a plumber to give you a dumb look, fix it quick, and charge you a lot of money.

There are a variety of decent options out there. Not sure if BP will let me post links to some sources, but I'll give it a try. I have no commercial interest in any of these, and this is not an endorsement....

https://www.etsy.com/listing/124229662/rental-prop...

http://www.zillow.com/rental-manager/resources/ren...

https://answers.microsoft.com/en-us/msoffice/forum...

If the links don't work, try googling rental property template.  That said, I agree that using google sheets is very handy. The autosave feature is great, and you can access the document from wherever you happen to be.  If you do stick with Excel, I recommend taking a course or at least an online training. It is a very powerful tool, which most people don't use as effectively as they could.

As part of your due diligence, you should make sure any utilities in the tenant's name are paid in full at the time you close. If the tenant is behind in the utility payments, that is a sign of how they will be with the rent. And since you own the property, you could end up eating the bill that the tenant doesn't pay before skipping or being evicted.

You should be working with a mortgage company now, even if only to find one you want to work with and who will work with you on the kind of deal you have in mind. Why the long timeframe before you start seriously looking? I recommend you start looking now, even if only to build your familiarity with the area you are interested in. Don't just look, start analyzing deals now. Build your ability to spot a good deal quickly, and to estimate repair costs, so that you can make a decision quickly if the right deal pops up. Finally, now is the time to begin looking for the right real estate agent. Interview them. If you are thinking about a HUD home, make sure they know that process. Do they work with investors? That helps. Are they a good source of info for off-market properties? Also a bonus. And finally, do some reading about landlording, tenant laws in your area, etc. Lots of good info here on BP, but there are also some very useful books out there which are well worth what you will pay for them. Most can be had for a couple of bucks used. Good Luck!