All Forum Posts by: John Nachtigall

A few thoughts

- Your 6 year old does not care about your politics, they want a room with a their stuff and a dog just like their friends.   You may convince yourself that the inconvenience of a tiny home is worth the environmental impact/finance savings.   They just know they have to take cold showers.

- Even adults don't want to look at each other every day all day.  

- The mobility is unneeded for the vast majority of the population

- Biggest reason, indoor plumbing.  Running water and sewers were a huge advancement in technology and human comfort.   I have no idea why anyone would go backwards.

So for environmentally conscious, financially constrained, singles or couples with no children, who like to move around and who are willing to live without running water and sewers it is a legitimate choice.   For the other 99% of the population it is an interesting episode of tiny homes on HGTV.  

My free advice which is worth as much as you are paying

1. Stop the bleeding: starting now lower the rent back or at least back to rent + 10%.   In writing to the tenet and HAP.

2. Who sent the "notice" that you were illegal.   If it was HAP you talked with them already.  If it was someone else then contact them and explain.

3a.  It is the DA that prosecutes the case (the illegal part).   I would consider contacting the DA and walk them through how it was approved and you had no idea it was illegal and ask how they would like it handled.   You are then committed to do what they ask.   If they want it paid back then pay it back (presumably to HAP), if they say no more going forward then do that.   Whatever they ask get them to put the agreement in writing and make sure it includes a part about if you do your part they won't prosecute.   

Now do you need a lawyer for this part, ideally yes, but in practice they are not looking to go after you.   The tenet was not harmed in that they did not pay.  So if you trust the DA is not out for blood then I would just work with them.

3b.   If you don't trust the DA, they contact a lawyer (criminal) and do what they tell you to do.  That is the most expensive but least risky option.  

You should review this

https://www.consumerfinance.gov/ask-cfpb/my-credit...

I would send a written dated letter asking for the reason.   That way you have a record of the request and they cant string you along.  

But in the end, you can't force them to lend to you and you have no recourse unless it was because of a protected class.   I would just start with another bank

@Lee Fahy

Not all Hero's wear capes

Critical question....Is it still her favorite fireplace?

I don't think it is surprising at all.   Real Estate requires education, ability, persistence, and capital.   Where the intersection of those 4 things happen is the totality of the population that can succeed.   Now overlay that reality onto facts like 40% of the population can not handle a $400 expense and 23% of the population has no emergency fund at all.

Simply put, only a small percentage of the population has the requirements to succeed.  Which is why so many 2nd generation children lose the fortune.   Even with the capital and the head start if they don't have the other 3 they cant do it.  

@Frank Wong

There is no fun in waiting Frank, it is called investing not funvesting.  I plan on living well past 65, I assume you do also.

Your example is super and I sincerely congratulate you. But it is unsustainable. You only get 10 FHA loans, you can only put 3% down on owner occupied, and there are only so many BRRRR opportunities available. And you have to find and manage them, not passive. The stock market on the other hand provides an infinite pool to buy, no limits, completely passive

And your illiquid 198k equity gain is subject to the same inflation effects as my liquid 300k stock gain. So neither provides inflation protection. 

My point is both can make you rich.  There is nothing wrong with your beliefs but a 401k is not a trap, it is a smart choice for most people and can make you a millionaire quite easily in a completely passive way.   With free match and tax free growth it has excellent returns

 I agree.  Run the numbers.  30-40 years of compound growth, tax free, with a free match for a portion of the contribution.   If that is a trap then lock me up.   If you look above I calculated the 10k he wants to remove would earn him 300k in 35 years, just that 10k.   

With the free money match and the tax free growth the numbers are almost impossible to beat.   Add in that you can contribute small amounts at a time and the investments are 100% liquid it becomes unbeatable for the vast majority of people

My suggestion is to not take the loan from your 401k and continue to invest the maximum amount.    Simply put that is the best way you have to invest for the long term at the moment.

First, 401k loans are always a bad idea

https://www.investopedia.com/articles/retirement/0...

Second, at 7.5% interest, your "home" would have to cashflow more than that for it to make financial sense.   The Denver Market is red hot, there is no way you are getting a turnkey property with better than a 7.5% return.  If you are buying a "fixer-upper" you will not have the capital to fix it since you are already spending more than your available cash to buy it.   You simply dont have the capital to invest at the moment.

Take a deep breath, be patient.   Your financial plan is a marathon not a sprint.   Your 401k is giving you a free money (I assume there is a match) and tax free compounded interest.   Per your write up you plan on getting out about $10,000 (3% of 300k).   Given that you are probably 35+ years away from retirement, if you invest that in a S&P 500 index fund you are looking at 300,000+ in 35 years.   And that is if you don't add another dime.  the S&P has returned 10%, dividends reinvested, for 100+ years and the 401k allows it to compound tax free.  You dont have a better investment option at the moment.  Real estate is illiquid and capital intensive and you can't handle either, which is fine, this is just the beginning of your life not the end. 

My advice

- Make sure you have 6-9 months of living expenses in the bank, cash.

- Get rid of all debt, including car loan

- Make a budget and live below your means.   The delta each month goes into your Investment fund

- As your career progresses you will earn more, dont spend it on "nice trucks" keep your expenses the same and put it in investment fund.   I started my career at 45k a year, 21 years later I am earning 300k.   Your income will go up, make sure your expenses don't go up at the same rate.   No one is saying live like a monk, but decide early on that money in the investment fund is more important than a new car every 2 years.  

- When you have the capital you can then make intelligent investment decisions knowing that regardless you have a fully funded 401k and living expenses to cover any unforeseen circumstances.   That security allows you to take intelligent risks.   

Good Luck

@Carson Wilcox

the sales slowdown is quite widespread

http://fortune.com/2019/01/22/u-s-existing-home-sa...

I think it is too early to say if it is a blip or the beginning of the next downturn but the "doom and gloom" crowd is out in force.

https://seekingalpha.com/article/4240221-housing-m...