All Forum Posts by: David Fernandez

Hi @Kaloyan Karamanov, I live in the US, but I am originally from spain and still owe and invest there. 

What do you mean by creative investing?

Not sure how it is in the Netherlands (I assume you live there by your location on your profile), but I find Europe, at least spain, to allow less creative investment opportunities than the US. In general, you will find that you'll have to pay more taxes when buying and selling, less financing options, the market is more regulated and laws are very tenant friendly  (again, spain at least). Also, I think people tend to invest more for appreciation and having someone paying debt down for them than for CF reasons. 

Looks awesome. Congratulations!!

Thanks a lot for the info @Ryan Camenisch! 

I did see that there's been quite an increase in prices there compare to the previous few years. I think this may be the case for most local markets in the US and, thus, is more important than ever to know your market and find good deals.

I will definitively let you know if we end up moving there. It will be great to get to know you and pick up yor brain about Lexington and KY investing. We visited the place briefly to check if we like it and it seems like an amazing place to live and raise kids. We really liked it. Now let's see if any of the two job offers pans out!

@Justin Cabral, I think Grant will tell you to sell your town home and buy a 20+ MF building ;-)

Now seriously, I face a similar situation like yours with my primary residence and these are the scenarios I run:

1. Rent it out and buy another property: You mention that you will have a monthly CF of $400-$600 based on your current payments and market rent. Keep in mind that your CF will be lower due to an increase in taxes as you won't be abler benefit from the Homestead exemption that you are probably currently taking advantage off (not only you get $25-$50k off assessed value, but your assessed value can't increase more than 3% year to year. This is huge is you bought it at the bottom). Also, you will have to have some capes reserves build up. 

If the tax increase you'll face is feasible and you still have a monthly CF you like, then you could rent it out and have this CF help you pay your next loan. 

2. Refinance: I got a 4.625% interest when I purchased my home. I refinanced it at lower it to 3.25% (both 30 year)  and got $80k out of it. That's the amount I needed to purchase another property and that kept my monthly payments the same due to the difference in the interest rate. 

You can explore this option. If you can find a lower rate mortgage, you may be able to keep the same or similar monthly payments and still get some cash out now that the market is still hot (starting to correct though). You will take advantage of the hot market by pulling equity off your home without increasing monthly payments and still keeping this property. Then, you can buy at a later date with this proceeds (if you think now it is not the moment and the market will correct in the future)

3. Sell and purchase another home taking advantage of the primary residence tax exemption up to $250k/$500k (single/married). You will need to find another place that meets your criteria and, as you mention, the market is hot now. 

There are many more options you can seek, but these are the 3 primary I looked at when trying to make a similar decision. At the end, it will come down with what you feel more comfortable with in your situation and future plans, if you can find another property you like at a good price or other investments that can return what you are looking for with the money you pull from the equity, if you sell/refinance. 

Welcome back to BP @Account Closed! 

It is really a great site to learn about REI and to meet people that can help you in your investment career. Take advantage of all the tools available to you (podcasts, blogs, forums, keyword alerts, calculators, etc.)

Good luck!

David

@Marquell Jones, what @Matthew Rollo meant by checking public records to have an idea of how much someone owes, is that liens are a matter of public record once recorded. To find if there are any liens, you can look online at the county recorder, clerk, or assessors office online.

Mortagages are a type of lien. By doing the above, you can find when and for what amount a mortgage (if any) was recorded. This can give you an idea of the amount owed. It won't be exact, but you will have an idea.

As per what to do if the numbers don't support the purchase price. Walk away. Do not fall in love with a property, numbers don't lie.

@Kenneth LaVoie Sorry I am not familiar with the Central Florida market, but I think they are still trending upwards, although at a slower rate than this past year. At least, this is what is happening in the Tampa/Saint Pete area that I am somewhat familiar with.

If you are planning on holding this property for a few years and you buy it at the right price for the current market, I am positive you would have built equity when you want to sell it. One unique trend about RE in Florida is that it swings probably faster than other states due to the amount of vacation properties people own here, but in the long run, values tend to go up. At the end, there are not many places in the US where you can experience summer weather and going to the beach all year around. 

That would be great, Carson. I sent you a PM with my email address where you can send the google hangout invitation.

Thank you very much for you reply @Carson Sweezy!

I knew that the multi-family game was hard in NOVA. As per some reasearch and from what I've read in the forums, it seems like your statement is very accurate about the lack of MF in this area. I didn't know much about the particularities of the flip/new construction market there though (thank you!). 

I was already thinking, and your answer confirms my believe, that if we end up moving to this area, I will have to expand my target market to the more rural parts of Virginia and all the way up to Baltimore. I don't like spreading too much, although I'm used to 90 minutes driving distance here in SF. I guess I'll have to drive around and get to know where do I really want to start working on. 

In regards to our budget, we just unloaded some properties as we are getting ready to move in the near future and the market is cooling off a little down here. I think I'll be able to answer this question better based on where we move, what opportunities are in each city (Nova or Lexington), how easy is to get financing, and what are the market prices, but I'd like to reinvest $200-$500k of our own money and leverage the rest. 

David

@Chad Duval, you should include it, but after your NOI. Your bank will be more interested in your current Income, Expenses, and NOI than CF.

Your  P&L should look something like this:

Total Income

- Total Operating Expenses

= NOI

- Mortagage (P&I)

= Cash Flow