All Forum Posts by: Jim D.

If your biggest desire is to get rid of the variable rate HELOC, it looks like by far the easiest way would be to refinance your primary residence and use the proceeds to pay it off.

Sorry to hear you're in a rough spot. You're only 30 and if you are committed to a financial change, you have tons of time to build wealth. For expense reduction, the first place I'd look is buying a much less expensive car. Save everything you can and pay that credit card off aggressively. If you don't eliminate it quickly it will become a monster.

Once you get your expenses down, it sounds like the primary problem is income. Everyone loves talking about passive income in real estate, but in reality before that can happen you have to first at least get out of bad debt and have some savings. If you can get rid of at least your CC debt and personal loan, and then save up a 5% down payment on a house, then you can make some magic happen by renting out rooms or units of your house.

You sound like a perfect candidate for a Dave Ramsey money makeover... get a copy of his book immediately if you haven't yet. 

Can you provide some more information on how your loans are structured? It's hard to answer without knowing what your HELOC is tied to, what you owe, etc.

If you can list the value of each property, what is owed on them, and what they rent for, people here can give you better advice.

I'd agree with Todd... both repairs and capex should be closer to 10% each, unless it's in really good shape and the big ticket items are all newer. 

Everything else looks right to me. It's not unreasonable to have cash on cash returns in the double digits on a good deal.

Are the two homes on one lot, or separate lots? If they are totally separate, I don't think you can use one single FHA loan for both of them.

@Tracy S. I'm not surprised to hear your experience. But I'm also sure you can find a great agent who will provide more expertise and personal service for you, provided you are a serious buyer and they can tell that. Keep looking. 

When I was starting out, I quickly became disillusioned with how little value agents seemed to add... until I found a great agent. Totally changed the game for me, and brought far more value than his commission. All a matter of finding the right one.

If you're looking for the best allocation of equity, I would consider doing a 5% down owner-occupied conventional loan since you are moving into it, and re-direct the rest of that down payment money towards your 6.7% student loans, paying them off immediately. (The car loan I wouldn't worry about so much since the interest rate is so low.)

Going below 20% down payment will add PMI to your monthly payment, but ask your lender how much it would be, and also how soon it could be dropped since you have so much actual equity.

Sorry about your place. That'll ruin a few weekends.

I have one house that always seems to have something going wrong. Sometimes when I'm over there snaking the same drain that always clogs, or whatever it is, I get to the point where I just want to sell the dang thing. 

Afterwards, I go home and pull up my spreadsheets, take some deep breaths, bump up the repairs budget, look at how great the IRR still is, and I'm good to go :)

You should also look and see if you qualify for the HomePossible conventional loan. You have to not have owned property in the last 3 years, make under a certain income, but if you qualify you can do a 5% down owner occupied 2-4 unit purchase. It's better than an FHA loan because the mortgage insurance is lower.

In a perfect scenario, one of you could buy a 4-plex with HomePossible, then the next year your partner could do the same, then the next year you could buy another with an FHA loan, then your partner the same in year 4. You could get 4 quads in 4 years with really great low down payment loans by house hacking them all (assuming you both qualify for the loans and are willing to move every year).

This all depends on your financial situations, but consider the advantage of only putting one person on the loan. If you can qualify for the FHA loan by yourself, that means your partner can then also get an FHA loan for your next purchase (since a person can only have one at a time).

I own several properties, but intentionally kept my wife off the loans and titles, and now she is still able to take advantage of nice first-time homebuyer loans still.