All Forum Posts by: Matt Johnson

@Cheryl Crockett Yeah, my current debt really concerns me.

I have $11,600 in credit cards ($3,800 is 0% no interest), a $5,400 car loan balance, and my student loans are a bear with a balance of $44,031.

With my current cash flow, I could pay all my credit card debt by May, then by November I'd have $18,000 in savings.

At that point, my credit score would be much higher than the 630 it currently is, I hope.

I love your advice to sit down with a banker too, and then shop for rates at other banks or credit unions.

I'll call my banker on Monday and schedule an appointment.

I'm making things happen this year, and it all starts with taking action and getting the knowledge I need.

@Jason D. If I decide not to buy in a few months, my plan would be to rent another room for 6-months at another place from April 2019 to October 2019.

If I do that, I would be credit card debt free and I would have around $18,000 in savings in October of this year. For reference, I currently I have $11,600 in credit card debt and just $4,000 in savings

My RE investment goal is to buy, hold, and rent multiple multi-family units; I want 10+ multi-family units in the next 5 years. By 2025, I want to earn at least $4,000 net profit per month from rental income.

The idea is to buy my first MFH with an owner occupancy loan, live in it for a year, rent out the other unit, then after a year I'd rent out my unit and buy another duplex or triplex.

With my $3,100 monthly net cash flow right now, I will have $18,600 in cash every 6-months (barring any unforeseen expenses). That isn't including any potential rental income or salary increases; it's just what my current circumstances are.

So, while part of me wants to jump at the chance to get a multifamily house right now since I'll need a place to live in just 3 months anyway due to my lease ending, the other part of me looks at how much better of a financial situation I will be in this fall and thinks I should just wait.

I totally agree though, if we get more good economic reports then the interest rates will increase, potentially negating any benefit I'd get in waiting until this fall.

My credit score is 630 now, and I can't imagine that paying off all of my credit card debt would catapult me into a 700+ credit score by this October for a considerably better interest rate.

However, right now, I'm only eligible for amongst the worst interest rates due to my poor credit score.

Sorry, this was super long, but I at least listed my main concerns and goals.

Regardless, I need a place to live in a few months though. So, I'm kinda leaning towards your idea of just buying now.

@Tanner Marsey, I've heard that a lot from many other people, "20% down is a waste of time."

Maybe I'm just accustomed to hearing people saving for 20% down.

The MIP would cost another $85 per month for the life of the loan. For a 30 year mortgage, that's another $30,600 just from mortgage insurance.

I don't know enough about the tax breaks, but I'm now under the impression that I could write this MIP off on taxes as a business expense?

Maybe my focus is just wrong; I'm looking at the debt rather than income.

I was just reading about 5% down conventional loans and the MIP falls off after some time. Maybe I should reconsider the FHA and just go for the 5% so I'm eligible for a conventional loan.

I also have so much credit card debt. $11,500 currently.

Whatup, Bigger Pockets Nation!

This year is finally the year I can get into real estate! I've been terrible with money in the past; mostly because I've been in low skilled, low paying jobs my whole life...until now.

I was jobless and homeless multiple times in my 20's. I even lived in my 4-door sedan for more than half of 2018 while I finished self-teaching myself to be a software engineer.

2019, things are much different! My current cash flow after expenses is $3,100. However, my credit score is just 625.

Oof!

I'm currently renting a room in a house from an old retired couple. My lease ends in April 2019, but they will let me stay until July if needed. They don't like to have a roommate when the live here--during the winters they live down in Arizona. So, I won't be able to stay much longer than June/July before I need to find another place to rent, or my own property.

I will have enough cash in June 2019 for a 3.5% down payment, closing costs, and still have 3-months of mortgage payments in savings. Thus, I'd need an FHA loan.

My credit score is still likely be 650 or less.

Mortgage would be around $1000 (more like $950, but I'm rounding up) with PMI, interest, property taxes. I can rent out one side for $700, then I'd live in the other side for a year.

So, my question is this: would you recommend buying my first rental property with a PMI or waiting a full year to avoid the PMI? I'd need a full year to get to 20% down.

Regardless of what I decide, I still need a place to live this summer. The question is whether I should rent from someone else, or buy my first property.

What should I be thinking about?

If I can rent out the other side of a duplex for $700 and my mortgage is $1000. That means rent is $300 for myself, then $50 for electric, $50 for water, $50 sewage, and $50 for internet, then I'm looking at $500 it will cost me, which is what I'm currently paying in rent now.

When I move out in a year, I could rent my side out for $500, and they would pay their own utilities. That would be $700 + $500 = $1,200 and my mortgage would be $1,000. Thus, a net positive of $200 (not including repairs, vacancy).

However, if I wait until January 2020, my credit score could be 700 or greater (I think). I'd have 20% for a down payment and I could avoid the PMI.

But, I don't know if mortgage interest rates will increase by then

If I get this first property, then I can more quickly get my second property. However, if I get my first property and I don't make money on it because of the higher interest (because of my poor credit score) and the PMI, then it's a bad decision to buy with PMI.

What's the consensus around here? Is PMI with a low credit score a bad idea? Or is getting that first rental more important because I'll learn the industry first hand by being in the game?

What are your thoughts?

Thanks, Katie! Many others around here have much better stories than I do, but I'm going to make it happen.

Step one always starts with getting the first property instead of talking about getting it. So, I'm not officially on the journey until I buy my first rental this summer, fall, or winter. Once I find the property I'm looking for, I'll pull the trigger.

That's so cool, Megan! You're making it happen like a boss.

I'd love to meet up with like minded people once I get to Lincoln. I'm moving this weekend and I start my new job after the new year. So, maybe sometime in the middle or late January.

A hearty hello everyone.

My name is Matt, and I'm moving on up.

I've been off and on homeless for the past 2 years. While I was homeless, I made my way to Mexico where life is cheaper and I began self-teaching myself to become a software engineer.

After I felt had strong enough skills and confidence to enter the software industry, I came back to the USA to find my first job. Strategically, I moved into my car and made my way to Denver, CO earlier in 2018 where the weather was bearable to live in my 4-door sedan while I networked and got my first job as a software engineer.

After getting my foot in the door and some experience as a junior software engineer, I began searching for a job in a lower cost of living area than Denver and away from the traffic.

Strategically, I was looking for jobs in midwestern cities with colleges and stable economies because my next goal is to own a home and rent out rooms in the home.

As luck would have it, I'm starting a new position in Lincoln, NE in January 2019 where I lived for 10 years before (I went to college there).

Now I'm seeking advice for my first rental property purchase.

My plan is to purchase a house around $90,000-$120,000 in June/July of 2019. The plan is that I will move into this property and rent out the spare room(s).

I only really care about cash flow of this first property and paying it off fast; then doing it again.

I don't care about how it looks really, it's all about income generation.

My goal is to have 5-10 single family homes in the next 5-7 years with a net cash flow of $3,000-$5,000 per month.

With my new career, high salary, and living in a low cost of living area, I'm preparing for the next phase of my life transition as a real estate investor and improving as a software engineer.

My current net cashflow per month is a minimum of $2,450. Some months I'll have $3,800 in cash flow; that is cash flow strictly from my current job after expenses.

I've been listening to Bigger Pockets YouTube Videos, as well as VIPFinancialEd, and Rent LIke A Prop for the past eight months.

I've been taking notes and what others have done, and now I'm about to make it happen myself.

Any and all advice would be appreciated.

I look forward to joining the rest of you on this journey to financial independence...even if I happen to be a late bloomer taking an awkward and difficult path to getting there.

Cheers,
"Makiing it happen" Matt