All Forum Posts by: Gretchen P.

Don't make assumptions about what anyone on this site knows first hand. 

My first primary residence was purchased in 1987 about a year after I graduated college. We were told by everyone, including the the lawyer at the closing we made a great buy and it could only go up, because real estate only increased in value in that "high appreciation market". It was in an area that was in commuting distance of NYC, walking distance to a commuter train, people were building everywhere, and real estate was HOT, as were job prospects. 

It was worth about 1/2 of the purchase price within 2 years when the market dipped. That was not fun. Luckily we didn't max out on debt and were able to save most of one of our salaries for a 20% down-payment on a house, but it took a few years. We moved out of state, and we rented the place out as it was too small to start a family  (at a loss, another lesson learned), and dealt with it long-distance for about 5 years until the market came back enough to sell it. (Sadly, you have to amortize the property at the value it is worth when converted to a rental, not purchase price).

We learned some hard lessons, and hope some other poster on BP will too from reading this. Obviously we continued to purchase real estate, however, we know the market is cyclical and even the experts cannot predict it. During the last dip in the market, we knew high-earners who purchased beautiful million dollar properties with low-money down who lost jobs and subsequently lost their homes and even marriages. High-income jobs are difficult to replace quickly, especially if you are tied to a location -- especially a location that corporations are fleeing. Having a strategy around how to deal with dips or loss of income is prudent if you decide to purchase property only for appreciation. Buying income property for cash-flow and using depreciation to offset rental income and tenants to pay off your mortgage is pretty fool-proof. There is a wealth of knowledge on this site, and the most successful posters are both teachers and eager students. 

Those rates are great. Unless you plan to move out of the area you could use your equity as a downpayment on a rental property, and you would avoid incurring capital gains. Part of it is a lifestyle question too, would you want to move to a less expensive home, or is your family happy where they are now, etc. 

Where would you live? Is $2400 the current payment or after a refinance? I think your interest rate for a cash-out refinance seems low right now, but not sure what they look like in other states. 

Hmm I have a similar question. My properties can pay themselves off in 10-12 years using only cash flow, and we plan to have them paid off roughly when we retire. We have planned for expenses, plus 5% repair, 5% cap ex, and misc at 3%, and still can pay the mortgages plus $1000-1200 additional principal per month. The mortgage interest rates are between 3.75-4%. Are there downsides to this? 

@Gwen Fyfe Good call, I think all of us have had that "oh c%@p moment when we realize an offhand remark just cost us time or money. Your tenants will appreciate your honesty and the AC, you can probably get a good deal on units this time of year. I don't think anyone needs to allow tenants to walk all over them, but being fair and seeing their point of view is not only the right thing to do from a human perspective, but is good business because it retains tenants and move/out/make ready for new tenants always costs time and $$$.

Welcome to Denver, Kemar. I am from a suburb south of Denver, but so far our investments have been in the Springs. 

I'd get some window units or a floor unit. It will increase the rentability of the unit in the future and go a long way towards keeping happy renters. One of my tenants called to ask how to turn on the AC because he saw "cool" on the thermostat. However, I never indicated the unit had AC so I didn't take action, AND there is no realistic way to add AC without converting the heat to a mini split or putting one in the wall, both of which would be expensive. 

@Irina Belkofer

I am not sure how this relates to Nick's comment. He said he'd get a check from the IRS because of depreciation on a future rental property to offset his spouse's wages, not a nontaxable capital gain on his primary residence when he sells it.

Speaking of learning and growing,  I am VERY interested in hearing how you plan to "get a check" from the IRS using RE depreciation to offset your spouse's wages.

@Nick Colvill Perhaps people were confused about your post because next to your name are the words  "rental property investor". 

99.9% of the people on BP invest in RE, and don't consider themselves "rental property investors" unless they invest in property they rent to others.