All Forum Posts by: Account Closed

Can I trade up to a better gumball machine tax free using 1031?

How much equity are in these gumball machines that I can leverage for more gumball machines? 

A while ago I would listen to real estate investing audio books while on long drives required by my profession. One book named " The ABCs of Real estate Investing",part of the Rich Dad series, was one of my favorite to listen to over and over. I like it because it went into depth about the inter workings of taxes and wealth building in general. One thing that stands out to me every time I listen is an example of how to build your money through units. 

The example goes something like this. Buy a 50k property and hold it for 2 years and then borrow out the "appreciation" buy another property and then do the same every 2 years. Then he goes on to say " This is a way of increasing the velocity of your money".

Questions. 

Is this actually possible with only 2 years time?  And wouldn't a property not appreciate enough to borrow it out for another?

Wouldn't it make sense to borrow out the equity? or is that the same thing?

If this works is this common practice for buy and hold investors?

Wouldn't you want to pay off a property? or does it help to keep a loan on it?

Are the banks or lenders ok with this?

This seems like a good idea if the appreciation is enough to keep building with. I would think it wouldn't take long to build a mini empire off of this method. Im still learning how this all works so I would love some feed back.

coo.

@Eugene Beard I haven't done much more than looking online for duplexes but I know of 3 that are for sale right now and are newly renovated but yes not in the best part of indy. Im really waiting until i build my savings before I do some real shopping.

@Darren Budahn Jamal Okon basically said it all. I want to limit my interaction as the owner with the tenant as much a possible and Im willing to pay for it.

@Justin Owens Thanx for the info. I had no idea you could put whatever the seller doesn't pay on your loan. Now Im wondering if I could afford something bigger like a 3 or 4 unit property. 

I am trying to put together a Financial plan for getting a live-in duplex on a FHA loan. I basically what to get a FHA loan and live in which is required and have a the other unit rented out. I'm just starting out and I need to save up some capital so I'm not looking to buy for another year and a half but I am trying to figure out how much I need to put together. I'm also trying to learn the actual process of a "mortgage" or getting loan for a house.

I'm looking to get a duplex for 50k rent @ 500 per side. I also wonder if paying rent for you own unit is a good idea because I will be using a property manager for it.

This is what I think I need to know and some questions I have. If I'm missing anything or know where I can find them out please fill me in.

What are all the closing cost associated with a FHA loan? Estimates?

Does the required down payment change depending on your credit score? I read somewhere that it would require 10% vs 3.5 if you score is under 500.

This is how I see the numbers right now 

3.5% of 50k = 1800 for down payment.

3k for closing cost?

500 for inspection 

So with this I'm looking at 5300 to get the property. Just looking for some insight on the total cost of getting a property at 50k so I know what I need to put together. I will also be using a property manager with runs about 10% of rent. Any advice or info is appreciated. 

Thanx.