All Forum Posts by: Matthew Pinkston

I just looked at a 6-plex where one of the units is a separate above-garage unit. After doing the numbers and a bit of research I realized above-garage units tend to behave quite a bit differently than "regular" units. 

By the numbers, the cashflow may look better, but the turnover tends to be higher and you have a whole new set of CapEx expenses that have to be supported entirely by that one likely lower-rent unit (it needs its own water heater, HVAC, roof, etc.)

If the property isn't a great deal without the garage unit, it won't be a great deal with the garage unit. I'd suggest running two sets of numbers; one for the main building, and one for the garage unit - cap ex and all. That way you can decide if it's worth the extra expense.

Wow, talk about getting thrown in head first! That's an interesting situation to suddenly be in.

Have you actually approached any banks about financing yet? Although W-2 salaries are considered, it's not the only thing banks use to make decisions. If you can prove your properties are stable and significantly cash flowing, it could be enough to get that loan; especially considering that you have no other debts from the sound of it. 

Many banks require a year or two tax returns showing that you have experience managing the properties which may be the most difficult thing depending on how long you've had them (your income itself really shouldn't be a huge factor based on those numbers)

Your existing properties could be offered as collateral as well, but that's a bit higher risk and I wouldn't suggest it.

Another option would be to "house hack". Rent out your primary residence, and move to the duplex (or whatever property you're looking at). As an owner-occupant, some loans are much easier to get that way. 

You could also ask if the seller would sell on contract, which wouldn't require a bank directly.

Just make sure you've got the infrastructure and reserves in place to take on another property!

Best of luck!

I personally don't think there's a good one-size-fits-all answer for that (I think few here would claim there is). But in my opinion, it depends on where you're at in relation to your goals. 

If you're in growth mode, leverage is one of the best tools out there to expand. The buying power of your capital is much higher when leveraged with debt. If you find good deals, the income should be able to easily cover the debt service and expenses making the relative risk of owning that debt minimal. 

However, if you've reached your goals and want to coast, then paying down debt makes sense. Once the debts are paid, the cashflow can obviously increase significantly. But all that equity is just sitting around doing nothing for you (you can't exactly have an equity and cheese sandwich for lunch or anything). But that's ok, because you've planned for that.

There's plenty of strategies in-between as well. Pay down fast, and re-leverage with a HELOC or something to go into the next property, balance it out with a 15yr mortgage, etc.

I guess the most important thing is to figure out where you want to be, when you want to be there, and the debt strategy to use will become a bit clearer.

- I should add that if you're having a hard time with getting loans in the first place, it's ok to just focus on improving your credit before jumping into anything as well. It shouldn't take long and learning how that works is valuable too.

I wish I had joined a REI group when I was still in Iowa, but even now that I'm in Japan (and still focusing on investing in Iowa), joining a REI group has made a huge difference. Hearing new strategies, getting contact info for lenders/attorneys, etc., networking.. I consider it invaluable.

I know there is a group that meets fairly regularly in Iowa City, and I've heard mentions of at least one in Cedar Rapids as well. I know they're out there, and I'd highly recommend going to at least one meeting. In fact, I should probably hunt them down and make more connections myself. 

Welcome, Michelle!

Iowa's a great place to get started with REI. May your future be bright!

Hi @Dmitri L., 

I'll be there! Also, thanks for setting up the meetup.com listing. I think that's a good idea.

@Dmitri L., I've got it in my calendar and planning on it.

Happy New Year! 

Yokosuka may be a bit far for me to make it on weekdays (since I work 'till 7 in Ebisu), but I'm sure I can figure something out one of these times! Maybe another satellite meeting near Yokohama or something. I'm definitely excited to hear about your progress, @Pyrrha Rivers!

Also, I did remember to bring my copy of Cashflow from the US, so we'll have to find a time and a place to get some people together and play that!

Cheers,
-Matt

I'm extremely happy to see that there are so many options! I honestly thought that this might be one of the harder steps for a long-distance investor with foreign income. 

Thanks, @Jeff Sprunger! I'm definitely having a blast so far, and hope to stay for awhile. As Dmitri mentioned, if you have a chance to stop by Roppongi for one of our meetings, I'd love to hang out and meet more members.

@Dmitri L.; Thanks for the referral! Going from "is it possible" to multiple options is quite the motivator. I'd like to ask more about those remote deals you've done as well at the next meeting! Also, I think I may just have to read those Fanny/Freddie selling guides. May be good reading material for the trip back to Japan.

@Pyrrha Rivers, I haven't contacted him yet, but I've only recently gotten back into a position to start looking for my next property (also, I gotta fess up. I forgot I had that!). I need a personal organization coach as well it seems.. For some reason I had it in my mind that foreign income would automatically make this really hard, but I guess all I needed was to ask! I hope you have an awesome new year, and I hope to see you in 2016!

I still plan on coaxing my brother to think more seriously about his long-term financial health, but part of my own goals is to be able to provide for my whole family (including him) even if I have to do it myself. 

Now, to find a deal!

@Shaun Weekes, @Upen Patel Please let me know what you find out! I'd love to be able to approach the bank and describe my situation with a basic understanding of what's even possible.

@Erik Gray, thanks for the info! Once I understand my options with the bank, understanding my timing will definitely be a big part of this. I may have to wait until next June when I'm back in the US to make any big decisions anyway, but I'll know to have the funds in place well beforehand.