All Forum Posts by: James H.

Do a search to learn about the "50 Percent Rule". This is a good way to quick screen deals.

The rule basically states that 50 percent of the gross rents would go toward all expenses (on average) including taxes and insurance.

So you would take 2200 and divide by two. 1100 will go toward expenses and taxes and insurance. The remaining 1100 will pay the P&I portion of the mortgage. What is left over is the cash flow.

I suspect yours would P&I of about 800/month. Then your REAL cash flow would be about 300/month. You can recoup some f the expenses by self managing, about 150-200/month maybe.

I agree with Dawn. While some shelves would not hurt, most folks are going to want to see cabinets. People are pretty boring. I am one of them. Shelves sound cool, but I don't want to see the mess.

I wouldn't get all creative. Rates are higher and it makes it takes away most of the profit from what I have seen in any owner finance or otherwise creative deal.

You might consider going 3% or 5% down for an owner occupied duplex. This would reduce your down payment (if you can find a cheap enough duplex) and get you a place to live and your first investment property at the same time.

It looks like you are in the 50K market. This is a tough spot to start out with financing and still make money. It can be done though. Keep saving money. It's always been two steps forward, one step back for my wife and I, but steadily we move forward.

Don't make the mistake of reading these internet posts where anonymous people make real estate investing sound like cake. Most people work long and hard at it before it starts to really pay back. Don't feel bad or discouraged for taking time. Feel proud you are working toward something that 99 percent of the people you know will never do. Why? Because it is hard and they don't have the discipline or patience.

Real estate investing is not a destination - it is a process. You are experiencing the process. And good for you for saving $3,000! Just keep at it. Keep learning and keep your eyes open while you save and something may happen sooner than you think. This is how it has worked for me. I am on my third house now - living in one and renting two. I bought my first house in November 08 and the third one just recently.

You have to live somewhere. If it is a break even to rent vs own financially, I will take ownership almost every time. We all have different tastes, interests, values, etc. I'd rather have more control over my space than the ability to dump and run.

I guess the question is; what are you going to do with all this money you save? I think you had mentioned changing jobs and working as a teacher possibly in another thread.

I think your plan to buy something for yourself where you can put in some sweat equity and have a convertible investment is the best way to go. My though is that by the time I get to an income where I have the "problems" you have, I would probably be shopping around for land that is beautiful and with much potential - maybe even to build my own perfect little house to suit all my wants and needs.

If you take out the mobility issue, you can make a bigger DP to offset the PITI. This can even be beyond what makes a good return on equity in my opinion. I say this because usually when I buy stuff that I want, it is to be consumed and enjoyed. I would be okay with that in a house that I lived it too, as long as it is not to excess and to the sacrifice of my happiness in other areas of my life. I think the lower PITI for a nicer house is a great way to go if you can afford it.

This is what I learned.

You make sure to install the stems "open" or it will tear up the rubber washer when you tighten them in. I learned this from my neighbor and not the plumber.

I learned that the better stems from the plumbing supply store are better in that they don't require as many turns to turn the water on and/or off. This did not fix my problem, but it is still useful to know.

I also learned that next time I replace the stems and the seats, the next step is replace the valve. Period.

I also learned that plumbers and slower than me and that I can probably learn everything I need to learn without paying 110/hour for the privilege.

Follow up - so here is what happened.

I replaced the seats again. The problem persisted. So I decided to call the plumber before committing to a major tear out. The plumber bitched and moaned about the generic stems I used and said he was 85 percent sure the leak could be fixed using stems from a plumbing supply store. It kind of sucked to spend 110/hour just to have different stems put in, but I thought, hey better than tearing out the wall and now I know about generic stems not working.

As it turns out, the "good" stems did not work - so that was a waste of 150 bucks (minimum time charge plus the stems). They did quote me 450 to replace the valve with me doing all the work to remove and replace the wall....

I spent 12 hours today including packing the truck, the big Home Depot run and several trips to the corner hardware store replacing the valve and doing the wall demo and rebuild.

It works great! But then, it is all new...

Joel Owens, I mentioned high water pressure check to the plumber and they brushed it off. Of course when they checked it they said it was at 90 psi and quoted me 450 to put in a pressure regulator valve. I bought a gauge and checked it myself and it was at 80 psi. It's a little high, but still within spec.

I feel like these plumbers were pricing themselves out of the job because it's and old house with galvanized pipes. But really, the work was not hard. I think sweating copper would have been much more difficult.

I spent 90 on the valve assembly. Total costs were about 300 including miscellaneous plumbing fittings and the materials to redo the wall. I will be returning about 20 of supplies back to HD tomorrow. It was worth it to do it myself. Replacing the valve itself only took me about 3 hours including 2 trips back to the corner hardware store. I can't believe it would have taken the plumber more than about an hour.

So far, I have not had the problems you had. I would still buy in better areas (even if initial costs were higher) for other reasons. The problem is, I CAN'T AFFORD IT USING CASH OR TRADITIONAL FINANCING. It is not a question of it being an option from which I am choosing. It is a question of do I invest at all or not at all.

Anyways, my experience has been good so far. My first rental still has my first tenants who have been there two years and are wondering when they can sign a new lease. The place is payed off and spitting out 550/month. I did just spend all day today replacing the shower valve, but that's the first major repair I have done there since I bought and rehabbed it.

I have every reason to believe my new tenants in my new second rental (mortgaged) will be great, too. This house my wife and I just moved out of. These particular tenants were looking to upgrade from an apartment complex where they had 5 years with only one late payment.

I've had plenty of opportunity to pick terrible tenants and will have more in the future. I don't mind doing repairs and I don't mind sifting through the dirtbags to find who I believe to be clean and reliable tenants.

I am investing in low and low/middle housing because that is what I can afford to do.

I'd love to buy the house for 25K that rents for 800/month. I have a 25K (including rehab and total new HVAC) house that rents slightly below market at 550 and that was a lucky find.

Minh L.,

That's exactly what I was thinking.

Live on 3K a month, but have another 1 to 2 K coming in for safety and even the occasional toy.

What about health insurance and medical costs? Even in good health, unsponsored health insurance that actually works is quite expensive - 1000/month easily.

Pratt Aycock and Associates in Colleyville does work with wholesalers. Not sure about full disclosure to both sides of the deal. I know the wholesaler I bought a house from certainly disclosed to me what her gain was on the sale of the contract. Don't know if the seller was privey to that.