All Forum Posts by: Patrick Donovan

I believe in only purchasing properties I could feel safe and comfortable living in. So low crime rate, better schools, hospitals and all of the above. I also look at college housing often which I know is not ideal for everyone, but they seem to rent out pretty easily when there are three universities within 5 miles of each other.

That 400 dollars may look good but you have to include management fees to pay yourself for your time spent on the place like finding tenants, repairs, and so on which 10% is a good rule for that. Also for maintenence which should be at least another 5-10%, capital expenses which are another 10% , vacancy factor at 8 %. These are percentage off of your rent so take that 400 and subtract 120 for management, 95 for vacancy, and another 120 for capital expense and maintenence. And that is on the low end for the last two. So cash flow would technically be around 65. Even though you won't use this money every month, you will eventually need to replace the roof , water heater furnace ect. You need to account or this or it could set you back in the future

The book on investing with no and low money down by Brandon turner would be a good place to start as well

Does the mortgage payment include tax and insurance along with the loan payment? Also with only 5 % down you would be looking at a PMI payment as well which I don't know how much the numbers differ in PA from IA. The paying 80 a month less might sound good but when you look at it from an investment standpoint, to me anyway, it doesn't look good. Eventually when you go to rent it out and say you're able to get 2600 a month in rent (1300 each side) it might sound good until you add in vacancy factor, saving money for maintenance, capital expenses and management fees since you should pay yourself for your time, this looks to me like there would be negative cashflow.

Someone please correct me if I am wrong but with the numbers that are here this is what I came up with.

Since I am not a home owner I am taking the money I have, which is 6 k, and moving into a duplex to get the other half rented out and save more money that way and hopefully within the next year or so I will be able to purchase another property strictly as a rental and keep doing that. Might be tough without showing income but there would be other ways to find money like seller finance, hard money and so on. I only have experience with conventional and FHA loans tough so you may want to look into and educate yourself on other types of finance before going head first into it

Thank you much. I will look into them more in a few years.

@Brian Eastman 

I have been reading about SDIRA and 401k and they sound a little expensive to get started. Since I only have $1100 in my account I feel like that would just cost me more than I would gain from it at this time. Do you suggest that I keep contributing to my IRA and in the future when I have more built up then looking into a self directed IRA or 401k?

So I have a Roth IRA that I opened in 2012 before I knew I wanted to invest in real estate. I am wondering, since I would like to invest as much as possible in real estate, is there a minimum that I have to contribute to my IRA? If so how much and is it a good idea to withdraw my funds from it after they have been in there long enough?

Thank you all this has been helpful!