All Forum Posts by: Harrisen Hagens

@Ken M. Awesome, thanks Ken. This sounds as though it would serve both parties' interests here.

Ah, the equity peice was missing from my thought process. Thanks @Patrick Roberts.

Hi all—

I co-own an LTR with my parents, the property was purchased in 2022 for $240k and is currently assessed at ~$350k. The current loan balance is about $190k and is financed at 7.825%. The payment including insurance and property taxes is about $1700/month and the house is currently cash flowing about $200/month. When we purchased this property we were banking on interest rates coming down (RIP) to make a long-term venture worth the effort.

We've been discussing options to make this property more financial beneficial to all parties (e.g., my wife and I and my parents) and have been discussing a private loan wherein my parents would pay off the balance of the loan and then finance the property to my wife and I at a lower interest rate (4.75-5.25% for 20-30 years). My parents are approaching retirement age and this would set them up a secure source of recurring income and would set my wife and I up for stronger cash flow than we're getting now.

The current ownership is split about 40/60—this was how the down payment was split. So, I'm trying to figure out how the financing on this would work, because although there is only $190 on the loan, my parents are entitled to 60% of the total value of the sell price (appr. $210k).

Can anyone help me understand better how we would structure this arrangement? Would my parents pay off the $190k loan and we would open a private loan with them for $210k? Having a hard time wrapping my head around all the moving parts here.

Thanks so much!

Unless the the house is in the cemetery, probably not much.

The data are pretty inconsistent—some indicate slightly lower values and some indicate slightly higher. My general assumption is that there will be very few people that would just not consider a house near a cemetery but it's a non-sequiter for most.

12% Lower: https://www.adammerrick.com/blog/2020/10/20/the-pros-and-cons-of-buying-a-property-near-a-cemetery

6% Higher: https://www.redfin.com/blog/i-see-dead-people-do-homes-near-cemeteries-sell-well/

Hi Thomas—can you help me understand the math here: how buying an investment property in which you will not reside and renting is more cost effective than staying in an house hack investment?

Keep in mind, you don't have to house hack a multi family. You can house hack a single family property by renting out rooms rather than the whole unit.

Let's play extremes—let's say you have $5M to invest and the option to spend $5M on a property that cash flows $200/month or $100K on a property that cash flows the same.

The first option ties up all your capital for $200/month. The second option leaves you with 98% of your capital still in the bank—and available to invest elsewhere. Maybe you buy 49 more $100K properties that cash flow $200/month.

You need to also consider the nominal return on your money. Is $200/month from a $100K investment better or worse than $200/month from a $400K investment?

This being said (as has already been discussed here) there's more to consider than just cash flow. $400K is a lot to spend on a property that cash flows $200/month—probably. That deal is likely only attractive if the property will appreciate substantially and if the property and tenants are low maintenance.

Hi @Joanna Weber! 

Is there another meet up planned/scheduled yet?