All Forum Posts by: Liam Goble

The W2 may be a tough nut to crack, but I'm sure you'll find a way around that.

Depending on how the bank decides to value your house (appraisal or bench appraisal), the LOC can take a few days or a few weeks. Mine was a bench appraisal, meaning they used the county tax records as the 'value' of the property. I didn't entirely agree, but it got me the money I needed at the time.

"Each mountain is scaled one step at a time" - Said some wise sage

I owned my first rental outright and got a line of credit on that house. I then used that LOC as a down payment on my next home. I'm currently paying down the LOC to use as another down payment.

I've read somewhere (and found it's true) that the benefits of REI really start hitting home when you reach 5+ units. I'm at 5 units, and it was about 1 month after I got the fifth unit rented that I was like "OH, this is why it makes a TON of sense to own property."

I've got my properties in an LLC, but will be getting an umbrella policy in addition to the policies I have in place. Cheap coverage for "Just in case".

Mark, I live and work (as a contractor) in State College. For a nicer place, we're currently building at about $150/sf. That would be nicer cabinets (not custom), possibly granite counters, wood floors, medium range heating system (minisplit or otherwise), etc.

Tim, Sometimes you can find a great deal quickly, sometimes not. When I run your scenario in my projection calculator, I get about the same numbers. However, here are my assumptions and concerns for you:

1) I have not found a bank willing to lend less than $50k for a mortgage (30yr). I have been told that $50k is the minimum Fannie and Freddie will consider a mortgage. I have used commercial financing for all of my sub-$50k lending. These loans are 5-5-5 ARMs with current rates hovering around 5% w/ 20% - 25% down (depending on the bank).

2) Assumptions:
- $1,000/year taxes
- $400/year insurance
- Renter pays for ALL utilities and you're still getting $750/month (electricity, gas, water, sewer, etc; note: water/sewer may be a lien on your property regardless of who pays for it, meaning that if they don't pay, you lose the property).
-When I use rentometer.com for Chattanooga, $750/month looks reasonable for right downtown. If we move outside of downtown (Dodds Ave), the rent looks less stellar.

3) The way I understand the 50% rule is that 50% of your annual income goes to expenses, not the mortgage/interest payment. The mortgage/interest comes out of the remaining 50%. That being said, my calculator also spits out about $200/month in net cash.

4) Your total cash into the property is low. You should include your closing costs. Using local numbers, I'm at about $12,600 for total costs to close. Maybe not a huge deal, just remember all the cash that goes into these deals.

Cameron, Welcome to BP. This is a great place to learn and ask questions. I joined BP in November and I am continually surprised at how much information is available.

Good luck with your REI activities.

Devonte, I'm not familiar with the DC Metro, but I know from experience that if you're ready for the investment and you're patient, the right investment will come your way. Assuming you're ready for it, you can jump on it before others can.

Rob, I (wished) I had done something similar when I was your age. I bought my first house at 23, just not a multi.

After purchasing my first rental property ($18,500 cash), as soon as I was able, I opened an LOC on the house for $20,000. I used the LOC to purchase my third rental, a duplex.

The advantages to this method are that you can rapidly expand your portfolio. The disadvantages are that cash flow may be tight to start, because you're paying on your LOC as well as any additional mortgages. However, if you're smart about your purchases, you can offset some of the tight cash flow (just be really smart about what you purchase).

Given your age, I would imagine cash flow today isn't as critical as it will be in say, 5 years. I would certainly caution though to not get swept up in the excitement of purchasing properties for the sake of purchasing properties.

I remember my first walk through. There were, no lie, mushrooms growing out of the ceiling on the 1st floor. I should have walked out, but for some reason decided to run the numbers anyway. Luckily for me, another house came on the market a day later, which was a much better deal.

Good luck with the walk through.

I will not purchase duplexes unless they have separate utilities. I like separate utilities because 1) tenants can pay their own usage and 2) if a tenant decides to NOT pay, it's only their side that is affected.

I have a duplex with a common water entry but two water meters (it's a strange set up). The water is metered for each side, so there are separate water bills, but if one side doesn't pay, the water is shut off at the street for both sides.