All Forum Posts by: Jeffrey Holst

Shouldnt be any issue with using it but you will need 20 to 25% down and if you dont have a history the banks are less likely to loan you cash.  They want to see that you have successfully managed and owned properties in the past before they will accept a deal from you.  So you might need to partner on the first few with someone who has done it before. 

@Eddie C. I cant add much here because I largely agree with the other posters but I would say emphatically you need to get in to multi-families.  With interest rates still being rather low you should be able to get a 500-600 dollar multifamily with the 150K down.  It is fairly easy to get cap rates in the 7.5/8 range in many markets and you need to be willing to accept those lower rates as long as you still cashflow.  

Best bet is probably a syndicated deal from some other investor or an area where you have some familiarity.  The main point is do it sooner rather than later because I dont see rents going down in next few years and interest rates will go up which means while you might be able to buy a 9 cap in a few years if the market corrects downward the cost of acquisition will be higher and that will off set the cap rate gains. 

I think selling individually and using proceeds to get closer to what you actually need is the way to go.  

Related to you underlying question as in what does your minimum retirement look like,  I think this is very fact dependent.  Some people live on much less than others.  Some people like you want a house paid for others like me could care less, My wife and I plan to rent in retirement while still holding our portfolio of properties (I think I should write a blog post about this) The short version is we plan to sign 6 month and year leases at various Caribbean islands and European cities, basically a life of travel, at a slow place, if we are liking a place we might stay a few years but in general we will mange our rentals via email and the like while traveling slowly around the world. This is not for everyone but its our plan, and we think it will work.

Do accomplish this we need have about 7K a month in cash flow after all expenses and a healthy reserve of cash and stock investments outside our retirement accounts.  (We plan to retire well before we can draw penalty free from our qualified funds).  

22 already very nice.

I don't rent there but I know several people who do and like it. My properties in Chattanooga are all in a compact area just off Webb Rd near 58.  I also have a few in Ringgold area

One of the main advantages of house hacking is being able to secure low cost low down payment traditional money, if you dont qualify for that I think its best to keep your options open and just keep looking for deals, maybe something to live in and hack maybe something just to rent.  

Also keep looking for traditional financing, once your taxes for 2017 are done and you show some income you might still qualify.  

So its probably too late to do it on this deal.  I mean you could just go get a heloc and put the cash in the bank but then you may have issues with writing it off since it wasnt used for a business purpose.  That being said I dont think you did anything wrong per se.  You used cash for the down payments which means you have greater cashflow (less interest and amortization expenses will do that for you) and you have an opportunity to take a heloc for the next deal if you want.  Although I dont think I would.  If the property has really appreciated that much it might be time to sell use a 1031 exchange and buy something even better.  

Your cash on cash return is pretty decent based on the 388 purchase price but would you buy the same property for 840K and rent it for 3200 a month?  I doubt it since the return would be pretty bad, this is a sure sign that you either need to sell or increase the income from the property.  With a decent track record and 500K to put down you should be able to 1031 in to a 1.5 to 2mm dollar property.  In context we are buying a 32 unit in that price range currently.  

Anyway I think you are doing great, having 125K to put down is awesome and having a big chunk of equity is also great so you have a bunch of options going forward.  

I am just finishing podcast 33 and about to start 34.  I have easily exceeded my posting goal for this month and can already see it paying off in the form of new connections locally.   

13.83% is still a very nice return and given local dynamics I think it's fair to assume some upside will occur over next 3 to 5 years.