All Forum Posts by: Ryan Howell

It would depend on the numbers...I wouldn't want to put 30% down.  Why not ask him to seller finance?  He may not want a large capital gain, or have a place to put the money and monthly income could be desirable.  Also, maybe he could finance short term, if longer term isn't desirable and after 6 months or a year, you could refinance.  If you have a good deal with some equity built in, you might be able to refinance with very little money left in the deal.

Sounds like a solid deal to me.  I would keep it.  Your mortgage seems a bit high (not sure if its including escrowed taxes and insurance or not), but I would think you could refinance at a lower rate if you can get a traditional loan.  Either way, I would keep it, maybe hire a property manager depending on the mental bandwidth it will consume managing it from afar.  

I would look at it from an opportunity cost perspective...if you sell, will you be able to replace it with a better performing asset?  

@Brett Boyce - welcome!  I suggest reading the beginners guide and listen to every BP podcast.  Some good books are Rich Dad Poor Dad, Millionaire Real Estate Investor, and The Book on Rental Property Investing.

Try your local REIA...ours in Asheville has a private money sub-group specific for this purpose.

@Nathan Raisbeck - it doesn't have to be an either/or decision.  I have a masters in Mechanical engineering and I'm a full time Realtor and investor.

First of all, what is your college situation? Are you spending $100k in debt to get your degree? Is it paid for? We need to understand the possible ROI on college and how much its costing you is important.

I would also separate college and mechanical engineering.  If you don't like engineering, change your major to something that has a good career opportunity but aligns with your skills and talent, you don't have to give up college because you don't like engineering.  

Now, what are some of the intangibles of college?  The major one is how to think and problem solve (engineering especially for the latter).  It also teaches time management and hard work.  I learned all three of the skills and much of my success comes from these skill sets, even though I don't practice engineering anymore.  If you're wanting to quit college because its tough (engineering is definitely time consuming and difficult), you are making a mistake.  Learn how to push through the difficult struggles if you want any chance of success in any field.  If you quit because its hard, you won't develop the grit you need to succeed in other areas (I'm not assuming that's your reason, but want to be sure to clarify).

Most likely, you should get a degree.  The major, the college and the costs all need to be chosen wisely to give you a good return on your time and investment.  I thought I loved engineering, but after 10 years realized it wasn't for me and I wanted to be a full time entrepreneur.  Looking back, the degree was still worth it.  My background allows me to think and problem solve differently than other agents, and gives me appreciation for what I get to do now.

Best of luck with your decision.

@Clay Couvillon - 3 months is a good number.  I like to also know I have an emergency option if needed (line of credit, 401k loan, etc) if something major were to happen as well.

@Jazmin A Schaeffler - I'm an agent in the Asheville area.  The new Command CRM (KW), while still under development, I think is going to be very powerful (not sure if you're with KW or not).

Everything @Nathan Gesner said. After that, I would probably do a live-in flip / house hack to get started. It will be the lowest risk, allow the best financing so that you can take your time, learn the rehab side and possibly learn dealing with a tenant. If the deal is good enough, you can BRRRR out and move to the next deal.

@Frank Lo - If you can get a lender to lend you additional money at sub-3%, any investor can make that money achieve a higher than 3% return pretty easily.  I look at that as opportunity costs.  

Here is another way I like to explain it. For easy math, lets say you have $100k and are looking to buy $100k house that rented for $1000. Applying the 50% rule, for your expenses, you have $500 remaining per month. $6000 annually divided by $100k is 6% return (CoC). Now that property averages appreciating 3% per year, so your total return (long term average) is 9%. That's decent.

Now instead, let's assume you put 10% down and bought 10 properties with the same $100k.  Now each one has $500 after expenses, but you have to pay a mortgage of, let's assume, $400, giving you $100 per door cash flow or $12000 per year or 12%.  Now, all 10 properties appreciate 3% per year as a long term average, but you're leveraged, so you have $1,000,000 of assets of which 3% is $30,000 per year of appreciation or an additional 30% return.  So now your total return is 42%...to me, that is the power of real estate.  

All that said, you have to smart and play defense, by ensuring adequate cash flow if you're leveraging.  While 3% might be an average, it is not linear, but up and down, as well as rents, potentially so you have to make sure you have good deals and don't depend on the appreciation.

@Angelo Pompeo - I am an investor and agent in the area and happy to chat anytime. As Matt said, inventory is definitely low. Potential BRRRR deals are typically gone within the first day on market. I would also advise you to check out CREIA. Its a great resource to meet other investors as well.