All Forum Posts by: James H.

Another indicator would be the cost of equivelant brand new homes compared to existing homes.In my area, it is still easily cheaper to buy than build. My insurance coverages tend to be around 30 percent higher in the estimate for replacement cost than what I paid. Granted, that accounts for demo of the existing structure, but it does not account for the cost of the land which is typically a little more than demo costs.

A lot of apartment complexes in my area divide the water bill by the number of units and bill the tenants for it. I don;t know if this is a legal practice in all states or with all utilities. I really like Amy's techniques. I would combine that with the utility averaging and billing back if possible.

You would make a better return on you money if you found a good deal on the second house and rented that out rather than the condo. You will likely have much higher rehab costs to put the condo on the market for resale if you start renting it out, plus it will cost you money every month if it only breaks even not counting vacany and maintenance.

I would try to get free help before looking to pay. This may require that you get to know multiple people rathter than one person to use as a crutch. You will find that people love to talk about themselves and explain things they know about to anyone willing to listen. I have never had a problem finding someone who could answer my questions for anything RE related. Chances are, when you are starting out, the stuff you do will be pretty basic and won't require as much "strategy" as you think.

Invite her to lunch? She might be worth getting to know even she doesn't sell you anything.

John Winston,

You make valid points. In fact, everybody has made valid points. This is obviously a subject that touches home with a lot of people since we all have thought about it. For myself personally, I have a car note at about 15K, 3%, and also have just enough cash in the bank to pay it off if I want to. The monthly payment is only 270 and it is really no skin off my back to pay it. I'm also under contract to purchase a new personal residence. I qualify for VA financing, so I don't need a DP. But I do need closing costs and buffer money. The way my situation is right now, the bank may ask for more DP or lower DTI ratio as I am on the cusp. I am waiting for the bank to tell me. At that point it's my option. But had I decided to pay my car off and it turns out the bank would have rather seen more cash reserves than lower DTI, then I would be screwed. I could also sell the car and pay the difference.

I think if you buy a car it is not unreasonable to think you would pay about 15K for something reliable that will have some life to it. If I spend 15K on a car cash, I'm still going to pay full coverage insurance on it until it has depreciated to less than 8-10K, so that point is null with me at least for the first three to four years of the car's life. I also have a paid off gas guzzling pickup I can use if I can't afford a repair on the 15K car. Shoot I had a third paid off car that I recently sold that we have had for the last 7 years.

Maybe I'm a sucker, but I absolutely love driving my shiny little (lightly used) Altima. It is so much more satisfying to drive than my Silverado single cab work truck or my wife's old Suzuki that had so many rattles it felt like some kind of chinese torture to drive it. I prayed that car would die and it never would so I finally just sold that darn thing! I will probalby keep the Altima for 10 years.

I notice the trend on this thread that the no-leverage guys for their investments are also no-leverage guys with their cars, which makes perfect sense. I have had paid off cars and I currently have a paid and clear rental, but I am also completely open to taking out reasonable mortgages. I am young (33 yo) and don't have kids yet. I'm willing to take on more risks than theh all-cash guys, but I am not nearly at the risk threshhold of the sub-2 guys and the super creative guys.

Point taken, but I feel that is splitting hairs. You need earned income to buy the car in lumpsum as well. So that 30% taxes being paid on the monthly car note is only marginally higher based on the increased interest. If you have a 3% interest rate on a 15K car, your finance costs are less than 500/ year. So the taxes on that additional earned income you need to pay is only 150/year. It's something, but when you are talking about the decision to absorb that cost and invest the 15K into real estate or to just pay cash for the car and wait and save up another 15K to invest, then I think the option is clear (to myself) that financing the car is a better decision.

Kyle Hipp,

If you had borrowed the 10K for your SUV and had a payment of 185/month assuming 4.25% interest rate, you could have easily made that one payment with the 10 grand you had sitting in the bank. heck, you'd have that payment for next 55 months...So you might have a little higher insurance that would push it down to maybe 48 months. Plus, if you really want to talk worst case scenario and self protectionism, if things really got bad, you could let the SUV go back and have 10K to feed yourself.

I think in our hard lessons learned from being hurt by debt or seeing others hurt by debt, we have skewed our logic so far to the other side as to not see a situation for its actual risks and rewards. I agree that people make this kind of decision as 90% personal, but I don't agree that this is correct logic.

Finally, if you are okay with an unsecured note to make a DP on a property such that you have 100% financing on the property that will have low cash flow to break even for the first 5 years but cash flow like crazy after the unsecured note is paid off, most astute investors would do that and work on maybe paying that note back quicker. To me, a car note with a great term is no worse than an unsecured note with a great term. So many people willing to jump on hard money lenders for loans, yet the same ones (many of them) would balk at car note. It makes no logical sense.

Nobody is parenting for anyone. It's called protecting your property. You may screen with a blind eye toward common sense, but I will not.

Read the book I suggested to learn how to pick and choose applicants as you desire and take control of your property.

My 401K gave a nice return of about 17 percent after fees this last year, not counting my company's 4 percent match. I don't know what stock investors will do, but I will continue to slowly build my real estate assets while contributing 6 percent of my paycheck to my 401K. My plan is 100 vested from day one, so it's hard to beat. I would like to invest in some blue chip stocks, but will probably wait until I have at least 4 rentals pushing out cashflow.