All Forum Posts by: Doug Durgee

Buying a primary residence and then making a rental out of it is one of the simplest ways to afford a rental in the beginning. If that's your plan, I'd just say let the numbers influence the purchase more than emotions. 

I'd also suggest considering getting a HELOC on any houses while they're still your primary. That way, the money will still be available to you for years after moving out. And you can always get another HELOC on whatever new place you move into as well. In a market like NJ, appreciation will help you build equity quicker.

 Sage advice right here. Nothing more stressful than making moves without enough in reserves.

Another idea that's simple: buy a place as a primary for the best rates/terms, then save up and move out as soon as you have enough for another down payment. (Assuming that'll take at least a year.) Rent out the first place, rinse and repeat until happy.

I think rental arbitrage as mentioned above is a great option with little money down, if STR is the path you eventually want to take.

Another would be to just use the $10k as a down payment on a primary to get the better rates and lower down payment options. Make it something you can force appreciation by adding rooms/improvements. Either stay 2 years to live-in flip and repeat, or just apply for a HELOC once your equity increases to use for your first investment property.

The last way is to just save up more. If they got to $10k they could get to $20k or more given enough time. My first investment took about $25k.

I'm just looking into this now and keep hearing Smartbnb, which looks to now be Hospitable. Guesty seems pricey at $44/mo compared to Hospitable at $25/mo for 1-2 properties. I'm not looking to run a website though so the channel manager and automated messaging is good enough for me.

Hey @Vance Payne, did you find anybody? I have a few leads from Turnoverbnb and have also seen some on Taskrabbit. Would be interested to hear what you wound up doing--just down the street from you in Westminster.

I currently have about $130k in the bank, so I'm willing to let $10k pass. No further renovations needed.

As I say, I'm more interested in if I'm looking at the numbers correctly, and if not what I should do differently.

I currently have an offer in on a place and am trying to select between financing deals. One bank is pushing for 25% down, which in this case will give me 3.25%/30 years. The other is quoting 4%/30 years for 20% down. The difference in down payment is about $10K, and the difference in monthly payment is about $150/mo., which I think tells me 25% down will pay off if I keep the house for more than 5.75 years ($10K/($150*12)). 

Am I calculating that correctly? I ask because if I drop the rate on the 20% down option to say 3.8%, the difference in monthly payment drops to $120/mo., which would yield 6.9 years in the equation above and look worse in comparison despite being the better rate. Is there a proper way to evaluate the difference here that I'm missing?

I'm looking more for appreciation/net worth than cash flow/income replacement on this one, so I'm leaning towards the 25% down deal. More than that though, I'd like to know how to properly generalize this so next time I can let the numbers decide. I wanted to just throw it into an equation, but maybe there's a set spread or something else that works (e.g. for 25% down to work, the rate has to be X points better to make sense). Suggestions?

Hey Tomas,

I'm an American so didn't have a problem setting up bank accounts (from Japan), but finding lenders was a challenge at first. If you can find a good realtor that knows investors in whatever market you're looking at, they should be able to introduce you to someone. If you can't find someone online, I'd suggest planning a preliminary trip and meeting up with a few realtors/PMs locally to mine them for contacts.

You'll also either need to work on establishing US credit or expect to pay for your first property in all cash. Once you have a property for collateral, subsequent properties will be easier to finance.

Another issue will be contract signing from afar. Out here, that involves a trip to the Embassy in Tokyo for the only place that provides notary services. Not too big of a deal, but it's by appointment only and does involve a bit of planning. 

None of these are insurmountable hurdles though, and the benefits can be huge. Make sure to also check the tax implications in your country, negative or positive.

An advantage you have over me is the lack of time difference: you can call people at normal hours. :) Good luck!

Look up Ziv Magen for info on Japan. I know there's also a lot of activity in South Korea as well. Both are vastly different systems REI-wise to the US though.

In Japan, the big thing seems to be buying rental properties that are 15+ years old as that's how long it takes for the homes to fully depreciate, meaning the buildings themselves are essentially worth nothing in terms of equity--purely cash flow investments.

More here: http://www.retirejapan.info/blog/buy-to-let-in-japan-1