All Forum Posts by: James Triano

@Andy Krzanowsky

It seems like you're leaning towards the lower down payment option.

Yes, you can write-off the PMI for tax purposes so this will save you a chunk of money.

My question would be, do you think that there is another deal out there that you can get with your $8k down payment where the ROI is sufficient enough to pay the extra interest and the PMI? I think in that analysis is where your answer lies. If there are other deals out there that you're dying to get after, then do the lower down payment and acquire another asset. Money is fairly cheap (by historical standards) so get it while you can.

@Alexis Miranda

Have you tried ToDoist?  I use it all the time with a combination of Evernote for note taking and it's the way I run my business and personal activities as well.  

Happy to help with ToDoist if you have any questions.  It's been a game changer for me.

@Omar Stoltzfus

It's going to depend on the business you're running.  If it's just for expense management and reporting, you can use a resource like Xero. 

If you're flipping and rehabbing and carrying an "inventory" of property, you pretty much need to use Quick Books.  I'd recommend using QuickBooks anyway.  There's a good recent thread below with some info to help:

https://www.biggerpockets.com/forums/519/topics/365217-accounting-programs

@Tea Marie

I've wrestled with this question quite a bit myself.  Here's what I have done:

I reduced the amount of my 401k contributions to the maximum required to get the employer match.  While there are great tax benefits from contributing more, your investment options are likely pretty limited and are going to be locked in there unless you switch employers.

Next, I opened up a Vanguard Traditional IRA account. This gave me the ability to contribute up to $5,500 pre-tax at my own discretion to limit my tax liability come tax season.

Then, I also opened up a Vanguard Roth IRA account. This allows for you to contribute after-tax dollars to retirement up to $5,500 as well. The combination of your contributions to the Traditional and Roth IRA's cannot exceed $5,500 though. This offers the maximum flexibility and tax benefits for contributing to a retirement account.

Now, you've got 3 options for contributing to retirement (401k, Roth IRA, Traditional IRA).

Once I did this, I determined exactly how much money I would need to save in order to save up my down payment.  I essentially reverse-engineered all of this and came back to the amounts I should then be contributing to my retirement accounts and the down payment savings account each pay period.  

Unfortunately you're going to have a bite the bullet and pay some taxes here but your investment returns should be adequate enough (hopefully) to offset your increased tax burden.  

@Eric DeVito Congratulations on taking the first step!

I would ask the following questions:

1)  Have you every worked with investors before and are you currently working with any?

2)  Do you invest yourself and if so, what areas?

3)  Where have you seen the most population and job growth in these areas?

4)  Take a look at a map and ask which areas he/she would consider A/B/C/D areas.

5)  What are the typical cap rates in the area (if you're looking for commercial)?

6)  What are the typical rent-to-price (Monthly Rent/Purchase Price) ratios in the area?

Just to name a few good ones.  Definitely sit down and try to think your way through purchasing an investment property and think of all the steps along the way.  Then, try to think about some questions you'd be asking during each step.  Good luck!

@Tajinder Kandola

Millionaire status is definitely not income related.  If you're interested there is a fantastic book called "The Millionaire Next Door" which you should check out if you'd like to learn more about millionaires and high earners.  The two are definitely not correlated.  

Have to agree with @Abdul Azeez as I'm finding this first million is the hardest to get to - from there, compound interest carries you away.  It's the most powerful tool out there and why the "rich keep getting richer". 

@Nicholas Misch

The ARM product was developed by bankers to induce folks to get a low introductory rate that they could get approved for based on their income and debt levels because of the lower payment terms. This way, they could generate revenue through service fees and then they were also hedged against interest rate fluctuations. When interest rates go from 4% to 5%, the bank with the most long term 4% fixed mortgages in their portfolio loses.

That being said, in the current interest rate environment, I would lock in as much fixed debt as you can and avoid ARM's completely. ARM's can make sense if you're a flipper where there is already a very short holding period and a significant holding risk because you're betting on the market being there when you sell. For rentals, even 5-7 years, I would still opt for a fixed mortgage. Your monthly cash flow could disappear quickly if rates go up at all.

@Marquell Jones

Portfolio lenders are simply lenders who make loans out of their own "portfolio" which means that they do not sell the loan to a big bank (Wells Fargo, BoA, etc.) They keep these loans on their own books - most likely this is a local bank.

They typically loan you 70-80% of the value of the property.  If you're looking at $100,000 property, you will put up $20,000 and they will put up $80,000.  You need to come up with the money for the down payment.  They may sometimes loan you the money on a rehab but it's not likely if you're dealing with a bank.  It's really going to come down to their policies and appetite for risk. 

@Kevin Trumbull

I've had some experience using Xero with a friend's rental property business.  I have personally used QuickBooks and Excel for most of my tracking.  

Xero handles multiple properties through Tracking categories.  It allows you to use a tracking category to label activity related to your property.  Each property would have it's own Tracking category (i.e. 123 Main Street, 456 West Street, etc.)

It does handle depreciation tracking as long as you input a Fixed Asset into Xero.  When you input the Fixed Asset you can then select a depreciation method you'd like to use and it will automatically depreciate your assets.

As a straight buy/hold investor Xero may be your best choice. 

 Only if the rule is for every $0.75 in debt, have $0.25 in equity.  If he said for every $1.00 in assets, have $0.25 in equity then you would be correct.