All Forum Posts by: Jake Young

Wow these mortgage guys are super keen for business!  I hit a few buttons on a Lending Tree ad and now getting 4 or 5 different companies competing for my business.

The crux of my operation at the moment is actually lining up solid long term renters. I just ran an ad on craigslist yesterday... we shall see who turns up!

So I just had preliminary convo with a guy from Rocket Money. He said he thinks if I show a new renter with a signed 1 year lease I will be able to use that income against new mortgage on Hawaii house without having to wait a year...?  Does that sound right?  Anyone have experience with Rocket Money?

I'd basically pull $350k at around 6% which would be $2000/mo and I could rent the place for $3000 +/-

Net positive cash flow AND funds for next house...?!  too good to be true?

 Ha yes , Alaska and Hawaii are the two outlier states which diametrically complement each other!  Lots of Alaskans in Hawaii and vice versa...

My impatient side wants to sell the house asap, capital gains tax be damned, and power move into the next phase. My practical, long term growth minded self recognizes the benefit of being patient and letting my options percolate for a while. Gotta get STR paper work sorted and fees paid etc Long term rental might be nice for the sake keeping things simple. I'm flying over in a couple weeks to do final paint job and beautification . We will see if a path presents itself...

I finally finished building this nice little 1000sqft, 3 bed , 2 bath house on Big Island Hawaii.  It is in small town of Milolii on south end of the Kona Coast and I could list it for about $600k.  I owe zero dollars on it as I put the $200k material cost to build on a remortgage of my primary Alaska house. Bumped mortgage from $170k to $370k.  I did all the labor my self aside from hiring certified electrician and plumber as per country permit regulations.

I live in Alaska with my family and work in construction in general (journeyman carpenter turned commercial superintendent turned GC and now rolling steady as one man 'handyman' doing lots of finish work the last couple years). I'll be 45 next month.

option A) Kiyosaki Model: Don't sell and run either long term or short term rentals through it for a year to show income on the property than pull a $300k mortgage on it to build another house in the same neighborhood... repeat

option B)  Ramsey Model, Sell it for $600k. (assuming market does not crash etc). Turn around and put $300k back on primary residence mortgage and use the remaining $300K to finance the next house.  

This time though I will be ahead of the curve in terms of not having to borrow from the bank.  Sell second house within a year, pay off remaining primary mortgage, build third house.  

sell third house this time dump half the profit into SnP 500 index fund, other half builds fourth house... repeat until satisfied with stock portfolio, retire at 50

option C) Aggressive model: sell house for $600k just keep carrying my primary mortgage which is $2900/month and dump the money into 2 properties and build 2 house at once that would each be worth $600k...?  sell the both at once and have a cool million to work with for next stage...?

option D) Ditch hawaii for now and use $2-300k to pay down primary mortgage and use remainder $3-400 ish as down payment on cash flowing $1.5m 10-20plex in Anchorage.  Goal would be to net cash flow $10k/mo and effectively replace my hourly income . I have found some deal and crunched the numbers that seem alright.

Pros/ cons. Building in hawaii is a lot of solo labor in the heat which I actually really enjoy but away from the family .  Gives opportunity for large chunks of capital to work with and stay free of the banks but at mercy of the market which I suppose we all are either way. It is very simple model with little interference from pesky renters. Though in theory, cash flow $10k/mo with out really working sounds appealing.

I feel like I will be 65 sooner than later and have zero retirement saved otherwise. I need to make some smart power moves!!

School me on tax strategies within each model.  I can show cost to build as write-off and then 1031 the rest of it?  Do you have to 1031 the whole chunk of profit and not divide it up? 

Thanks!

Hey thanks for the response!

Yeah Hawaii plan is my 'plan A' as I really love making excuses to go over there 5-6 times a year! 

On the other hand Im not sure that is most effective use of my labor.  At this point I have to sub out the electric, plumbing and septic install as per county permit regulations and that is fine as long as Im spending other peoples money. But in general I'm doing everything else.

  But part of me keeps thinking about going with a 4-6 plex in South Anchorage somewhere and maybe get a little more passive with income (and it would be easier for me to manage the property)

In the end the same build going through a HI certified GC would be in the $450k range so yeah my effort in the hot sun is the definition of 'sweat equity' lol. 

Id love to chat irl sometime as I believe you become what you talk about!

Ok, so I don't have the money yet but I will soon as I finish this house and pull a mortgage on it and I want to do this next step 'right'...

Backstory:  I'm 43 born and raised in AK and have been working in construction for the last 10 years. Before that I was a production logger among other things.

When I was 23 my Canadian wife and I bought first house for $63k in a small logging/mining town in BC. The next year they announced a ski hill development and mining operation.  We sold house 1.5 years later for $127k. (then they sold it for $154k, then 2008 hit)

A week after selling that house I read Rich Dad book which basically said I should not have sold UNLESS I could parlay that money out with sound strategy, which I think I did.

I turned around and bought a raw lot in same town for $20k (it was cheap due to setback restrictions for septic and well). we ended up installing tanks that need to be pumped out every 6 months, no big deal.  Build small 24' x 24' cabin on it rents for $800/mo now for last 13 years. And now worth $200k ish. Never gonna sell. If I could throw some capital at it and build 'real house' it would be worth $600k

Also at same time bought small chunk on the beach in Nicaragua for $40k split with 2 other people. General bad idea. No plans for future. languishing...

Also bought piece of  swamp land in lucrative market ski town market here in Alaska. 1/6 acre for $60k.  Put 50% on land (I was now broke again) then borrowed another $100k to develop land.  Moved small cabin there, drilled well etc.  Whole house done for $107k. Now worth $600k

Whew!  this was all back in 2003-20010

Next stage, borrowed on equity in that house and bought raw land in Hawaii for $16k.  (accidental bottom of market yay!) Now lots are going for $50k...

In the last 5 years I have out of pocket put in $50k in dirt work, septic, slab, framed first floor.  This last month I finally procured  $100k hello to finish, 3 bed, 2 bath will be worth $600ish when done (assuming market does not tank but prices have definitely been coming down)

My plan: finish this house by December 2023 only owing $100k on it. Pull as mortgage as much as possible $350k, pay the $100k off and have $250k to take this **** show to the next level!

My skills:  'journeyman carpenter' turned 'commercial superintendent' turned 'custom home GC' now purposefully downsized to individual worker building decks and small Renos and the like. Way less stress for more money and flexible hours.  (I ski a couple hours every day in the winter ;)

My options:

Buy another lot in Hawaii for $50k, build house for $150k that is worth $600k again (rent or sell?) 8 month turnaround after permits in place. repeat...

Or go local back to Alaska and use $250k parlayed out into multiple rental units?  

or downpayment on new to me house for $700k and rent this one Im in? The rental market is hot, hot, hot in this ski town. everyone does airbnb, long terms are hard to come by.

or, or, or

Question: if I were to buy a house for a renter, does the bank take the as of yet rental income into consideration of debt to income ratio?

so in theory I could like 10% down on 4-5 houses at once ($3-400k range in Anchorage). ?

??

Thanks!