All Forum Posts by: Jonathan Marsh
Jonathan Marsh has started 4 posts and replied 16 times.
Post: Should I Sell This House in Austin?
- Posts 16
- Votes 12
I do have another one that cash flows $250/month so it doesn't sting as bad I guess
Post: Should I Sell This House in Austin?
- Posts 16
- Votes 12
Nothing extraordinary in the area until some of these developments have been completed.
I don't think I'd need a PM. I have a handyman if anything happens and a realtor I trust but I doubt I'll need any more support than that.
Post: Should I Sell This House in Austin?
- Posts 16
- Votes 12
Bought a new build townhome for $525k just over a year ago with 20% down securing a 4.2% interest rate. PITI is $3,100.
Moving out of state in a few months.
There are still new builds identical to my model for sale going for $475k and rental comps in the area are about $2,650-$2,750.
I don't need the money now but losing $400/month is not good.
The one saving grace is is that investors are bringing $300 million go my neighborhood to turn it into the next downtown. More bars, restaurants, apartments, etc.
Hopefully I can raise rents aggressively.
Post: Buying a house that will never cash flow?
- Posts 16
- Votes 12
The priority is living in a turnkey house/condo we like in a good neighborhood. The icing on top is that when we are ready to move out to the suburbs it will not be seen as a liability I wish I didn't have.
While househacking is cool, and I'm already a landlord of two turnkey houses in Austin, I do not have the time to rehab a new place or the desire to live in a B+ neighborhood.
Post: Buying a house that will never cash flow?
- Posts 16
- Votes 12
Quote from @Theresa Harris:
Don't worry about cash flow for a primary. Two things to think about-interest rates are higher which means mortgage costs are, but so too are savings accounts. If you are going to sell in 4 years, factor in closing costs on both sides and think if you will really come out ahead in that short period of time. Perhaps if you buy a fixer upper, but only if you do a lot of the work. Also if prices do go up, think about cap gain if you turn it into a rental.
What about looking to the suburbs so you could buy a home out there that will be a rental and possibly you move in there 4-5 years from now?
That's an option.
Everywhere I go I hear time in market > timing market. As long as I keep these homes for 20 years + I do not see a downside and believe I will come out on top by a long shot.
Post: Buying a house that will never cash flow?
- Posts 16
- Votes 12
Quote from @Stuart Udis:
Setting aside the cash flow component if you were to rent this home, it's also important to take into consideration the transactional costs. When owning a primary residence expect to incur between 10%-12% of the home value in transactional costs between the purchase and sale. Since most of the transactional costs are associated with the sale these cumulative transactional costs of owning a home are rarely taking into consideration in the decision making process when purchasing a home. I believe many would benefit financially from renting until they are prepared to purchase a home intended for a longer hold period as opposed to falling into the trap of becoming a step up buyer or purchasing a home due societal pressures which only really works effectively if you are able to take advantage of appreciation. Here it seems your desire to be a homeowner is potentially clouding your judgement & the better financial decision is to rent for the 4-5 years and invest the down payment money elsewhere unless a better acquisition scenario presents itself.
That's a great point I didn't think about. Closing costs when buying plus agent fees when selling will be another $30k+ I need to account for. That's 2 years of assumed appreciation right there.
To be fair, the goal is to hold for as long as it makes sense.
Post: Buying a house that will never cash flow?
- Posts 16
- Votes 12
My lady and I are moving to Columbus next year and will be buying a in the $450-$500k range. With 10% down, PITI will be about $4,000/month which is around 25% of gross earnings per month.
Comps right now for 2-3 BR houses and condos are in the low $3,000s.
When we are ready to move to the suburbs in 4-5 years I’m not sure rental comps will jump $1,000 more.
At that point we can either sell, Airbnb, or hold and rent at a loss until rents catch up and/or maybe interest rates have dropped by this time.
I’ve also been considering putting this money in the market and just renting.
$50k down, call it 4% appreciation per year, after 4 years on $500k is about $80k. After taxes, closed costs, etc would be $60k unless we 1031.
If I put that $50k in the market, maybe I’d earn $16k after 4 years figuring a 8% return.
Is there anything I should be thinking about here?
Post: Conservative investing or a different strategy?
- Posts 16
- Votes 12
Quote from @V.G Jason:
Quote from @Jonathan Marsh:
I've always been so impressed and inspired by those of you buying properties in LOC areas, fixing them up, and cash flowing or flipping.
I went more of a conservative route - Bought a $400k house in Austin, TX pre covid w 5% down and a 2.3%IR, lived in it for a year, then bought another $520k house w 20% down at 4.25% IR. The first house is cashflowing slightly and the one I'm in now will likely cost me $200/month for a few years.
I'm moving to Columbus, OH next year and am thinking about my options. Option 1 is buying a house in one the most desirable neighborhoods downtown for ~$450k with ~15% down and living in that for a few years before moving to the suburbs and buying again, or, renting a place and trying to buy a house in a B/C class neighborhood, renovating, and trying to actually have some short term gains.
Is there anything else I should consider or anything obvious that I'm missing?
You're in a great spot. I don't know your age but your ambition to buy & hold as long as possible makes me believe you are young(er). And if so, great.
For 1, I'd keep the Austin houses. No cash out re-fi's or selling.
Two, I would look at the better but not best neighborhoods in Columbus. Like B to B+. It should be about $100k+ less than A areas, given median home price in Columbus is $275k. I'd buy the ugliest one but with the best structure; put 10-15% down depending on how much you estimate you need for cosmetic and/or capex renos. Fix that place up a bit; floors, countertops, just cosmetics. Put some monies aside for roof, hvac, water and do that when you're sub 1 year from moving(assume 3-5 years). When you're ready to move, upgrade those capex items. Rent it out. Do a cash-out refi and take that natural + forced appreciation and move to the Burbs and do a similar thing.
Now if A areas and B areas are within 15% of each other in price, then I would reach for A areas.
@V.G Jason I love your perspective and agree with you totally but I also want to love where I live. I'm from NYC and miss walkability so i'd like to be able to walk to the best coffee shops, shops and restaurants. These areas are probably A.
I feel the tradeoff would be that living in a b - b+ area is a better financial move but not as good for quality of life, etc.
Post: Conservative investing or a different strategy?
- Posts 16
- Votes 12
@Henry Clark What do you mean by "When you get ready to sale use the 2 years primary residence out of 5 to avoid taxes."?
My strategy is to hold everything for as long as it makes sense.
And yes, I think I'm going to struggle soon with my DTI ratios and will need to pivot. I'm needing significant cash for each project now.
Post: Conservative investing or a different strategy?
- Posts 16
- Votes 12
I've always been so impressed and inspired by those of you buying properties in LOC areas, fixing them up, and cash flowing or flipping.
I went more of a conservative route - Bought a $400k house in Austin, TX pre covid w 5% down and a 2.3%IR, lived in it for a year, then bought another $520k house w 20% down at 4.25% IR. The first house is cashflowing slightly and the one I'm in now will likely cost me $200/month for a few years.
I'm moving to Columbus, OH next year and am thinking about my options. Option 1 is buying a house in one the most desirable neighborhoods downtown for ~$450k with ~15% down and living in that for a few years before moving to the suburbs and buying again, or, renting a place and trying to buy a house in a B/C class neighborhood, renovating, and trying to actually have some short term gains.
Is there anything else I should consider or anything obvious that I'm missing?