All Forum Posts by: Jason M.

Crash or not, the market historically trends upwards over time. Even if it does crash, dollar cost averaging should level out the investment over time making it a fairly safe bet if you don't need your money anytime soon. 

What scares me about the rental market right now is tenants that can't pay, laws preventing evictions, and the uncertainty around how long this will last. If we burn through our vacancy allowance, and our reserves, then what? Forbearance? 

I have less fears about the market crashing and more fears about rent holds, eviction pauses, and other tenant legal issues during COVID. I have decided to wait until at least Q1 2021.

Thank you for all of the quick responses, I appreciate the feedback. I figured that option one was the best option, but I needed to be sure that I wasn't making an obvious mistake.

@Matt M. a rental. Moving isn't an option right now. 

@Rocco Swinney no, right now I am using that money to pay the debt. Paying of the debt would allow me to max them out each month and still have the 2-3K disposable income. Before I took on this debt during my divorce I did max them out monthly and I want to get back there.

I have reserves on my primary. Putting 50K down would leave me 15 for reserves and closing. Plus the 1K of disposable income and would be saving and any cashflow.

I found some similar posts, but I also had some specifics that I would like to try and get cleared up. I am new to investing, in the Denver market, and looking for the right time to buy. I believe that we are about to enter a recession, if we haven't already, but COVID and the possibility of a second shutdown throw in a lot of unknowns that may not play out like past recessions.

Catalyst: I expect a roughly 65K inheritance around mid-July.

Option 1:

Pay off high interest debt and increase monthly disposable income; Save for a property 12 - 18 months from now.

$33K consolidation loan @ 9.9% ($1365/mo)

$15K 401K loan (Currently on pause until December. $940/mo for 16 more months. Interest is paid to my 401K.)

This leaves my primary mortgage at 2.75 %, and a leased truck payment. (Up in October and refi for ~400/mo. or 24K buyout.)

This plan would leave me $2500-3000/per month to invest after bills. (Current plan $2K to savings and 500 to E*TRADE, until I get enough for a down payment.)

Note: I am already maxing out tax advantaged accounts. (401K and HSA; ~$2200K/mo)

Option 2:

Us the $65K to buy an investment property and continue to pay on the debt. This leaves me $500-1000 disposable income to save/invest.

In the Denver market I would probably need around $50K to get started, leaving a 15K savings buffer.

Conventional wisdom says that heading in to a recession you should pay down high interest debts and save. But recessions can cause property values to drop and might be an awesome time to invest. 

If the interest on my debt is 9.9%, there is a good chance I could do better than that in CoC ROI + appreciation with a self managed rental property under $300K.

Thoughts?

Thank you. I figured that was the case, especially with 275 being the lower end of market here and 2200 being on the higher end of rents.

I'm curious what Denver area investors use for "rules of thumb" numbers since property cost are so high here. Obviously I'm pretty to new to this, but even when I come across a higher CoC ROI analysis (9 to 12% without PM.) the math on the 2% test doesn't even get close.

For instance: A 4/3 SFH in Aurora (No HOA) for $275K renting for $2200 would register .08% on the 2% test and around -7$ on the 50% test. Is my math wrong, or would this not be a decent deal after all?

Good morning!

I did a search of the forums, but I wasn't able to find exactly what I was looking for. If there is a better place to look, please let me know. 

I'm looking for CPA and legal advice for real estate investing (Specifically, rental properties and fix and flips.) in the south suburbs of Denver. (Aurora, Centennial, Parker, DTC, etc.) I would prefer a smaller firm or an individual so that I get the same council every time. And I would also prefer a firm that has the time to answer one off questions in addition to drawing up legal documents and doing taxes.

Thank you,

Jason 

Thank you for that, finding a local meeting is on my list; I assume they are all virtual for the time being.

On the buy and hold, it depends. COVID set me back a bit, but things are getting back to normal. I have a good chunk to set aside every month after maxing out tax advantaged accounts, but I need to work on my down payment since property in the area is so high. My current plan is late sprinh next year before the market starts to heat up.

Good morning! 

New (real estate) investor here, looking to get started in the Denver metro area. Like a lot of you, my plans have been set back a bit my COVID, but that just gives me more time to network, save, and learn.

A bit about myself. I am former Navy turned IT professional. I have been in IT for the better part of 24 years, and while I still like my work, I no longer love it. My plan is to continue working for the next five years while learning, and building up assets in, real estate. After that I would like to transition to full time real estate investing, with a goal of retiring at or before 60. (I'm 42 today.)

I currently live in the south suburbs of Denver and I'm interested in long-term rentals, and possibly flipping. Right now I am in the saving and team building phase of my journey. So far I have managed to find an amazing realtor and a mortgage broker; Still looking for the other seven team members. (Note: No #1 wife; Been there done that.)

Please feel free to reach out if you'd like to chat. 

Jason