All Forum Posts by: Kevin Hunter

@Ryan Keenan, what @Tommy F.said about the 14K is the annual gifting amount the IRS allows.  What you are talking about is a loan.  Those are two different things.  Talk to a CPA and see what is legal before you make any decisions.  Just my two cents......Good luck.

@Account Closed, welcome!  This is a great site to learn and expose yourself to vast amounts of great info.  Listen to the podcasts, sign up for webinars and read the forum posts.  

  I have three investment properties in nova in my portfolio so I am glad to help in any way.  Please feel free to reach out.  Good luck!!

@Riku Kiyokawa, i believe real estate is a good investment but not one to be taken lightly.  Research, read alot on this website, and ask a lot of questions.  Make a decision that is right for you in your situation.  Good luck!!!

great work.  Keep moving that bar!

@Justin Young, one more clarifying point. The 50-50 rule is one that helps you buy the house at the right price. Add up your projected mortgage costs(principal, interest, tax, insurance((PITI))), maintenance fees/CAPEX (10%), and vacancies(10%) and you will arrive at a monthly cost. That cost should not exceed 50% of comparable rents.

Example:

Rental Comp for the property you are looking at = $1200

PITI, maintenance, vacancy should add up to no more than 50% of monthly rent collected, in this case $600.

At 10% for maintenance and vacancy ($120 each), my mortgage needs to be $360/month or less. **notice this does not include management fees or a HOA. If a property has a HOA or you don't plan to manage it yourself, you will need to plan for those costs.

It can seem a bit daunting at first.  This is just a stepping of point and you can tailor it to your particular area, comfort level, and experience.   It will help you to start looking for properties at the right price. 

Feel free to PM and we can talk through it more in depth if you like.

50-50 rule is a baseline. It makes the assumption that 50 percent of all rents collected will go to PITI, maintenance fees, management fees, and all other capital expenditures. This, for planning purposes, allows you to be extremely conservative when evaluating an investment property. In reality, I usually see much less than that, when I buy at the right price in the right area, etc.... Often times, if a property is bought at the wrong price, or the plan for vacancy or maintenance costs are wished away, then the actual(realized) profit comes it at much less than expected. The 50-50 rule helps you to avoid this scenario. Every situation is different, and you can tailor this numbers to whatever you are comfortable with, but if you use this as a stepping off point, it will help you to avoid making an emotional purchase. Hope this helps.

@Justin Young, as long as you intend for this house to serve as your primary residence than you can utilize the funds from your TSP loan toward the purchase of your house. I am curious why you are set on putting 20% down though. Unless you want to drive the mortgage payment down to a point which will help you cover the 50-50 rule on the backside. Based on your strategy, I would get a conventional mortgage with 10% down and keep the other 10% liquid. If you are planning to buy another property after the 12 month period than you are going to need that liquid for another down payment. Just something to consider. I know that wasn't part of your question, but just something to think about. Good luck!

@Kelly Elizabeth, welcome to BP.  This is a great site to learn and network.  NOVA market is tough right now so listen to all these brilliant people regarding ways to get in.  Good luck.  There is a great group in Fairfax hosted by @Roger Lin, @John Rubino, and @Justin Pierce.  Reach out to them and I am sure they will get you on the distro!

@Pearce G., great question.  I closed on a multi-family last month and got the same comments.  First, the property is cash flowing at $650, not $800, for negotiation purposes.  Although the rent potential is a consideration, it is not reality.  As the new owner, one apartment is renting for 800 and should be getting 1000.  I am treading lightly though because they are on a fixed income etc....  I am going to work with them to determine what a reasonable increase will be so as to not immediately scare them off.  However, if they will not budge at all, I am going to not renew their lease and re-market the property at 1000.  I would prefer it does not come to this, but ultimately it is a business and no emotion is allowed. 

I don't prescribe to the annual rent increases in any of my properties for one reason.  When I have a good tenant in my property who pays on time and takes care of it, 1% is not enough to warrant risking a tenant deciding to move on.  Secondly, when a tenant moves out there is the chance of a rental gap.  Even if it is only one month, that 1% increase is already lost for the year.  Doesn't make financial sense, in my opinion.

@Damon R., welcome and good luck.  You are starting early which is great.  Jump in and get started!!!