All Forum Posts by: Jameson Wildwood

My credit score is actually quite good (~740 depending on who you ask), the sustained balance hurts me a little, but I've never missed a payment in 7 years on any of it so I have a good history.

And all of you are right the DTI is hurting getting loans. This is partly why I went in with my father on the last two houses, I was going to get just one, but the bank wouldn't loan based on my DTI so my father and I bought two instead and they like his DTI quite a bit. It probably wouldn't be an issue with small commercial loans though, so I guess I could always start looking at the small apartment building set.

@Sharad M. @Jason Hull was the one who got me thinking about this from his podcast about personal finance. I never really thought of the debt burdens as actual burdens, really just something to be calculated in an excel sheet with my monthly budgets. However when I started doing my financial freedom calculations (get out of the rat race, ala Rich Dad) I realized a big number of that included my student loan payments and other debt.

He answered quickly "pay off debt" before investing in the podcast, but then followed it up with a great answer on the podcast page.

So I have a very complex personal finance situation, one that's perhaps causing me more constraints than I'm fully aware of because of it's complexity and obligations. I feel totally ok with sharing some ballpark numbers because it puts things in context.

1) Student Loans,
I have 46k at 4.75%, and 15k at 5.5%

2) Credit Cards,
$23k in debt. I have a variety of credit cards, all the significant balances are being carried at 0-3% because of prolific balance transfer offers. However it still adds up to a fair amount.

3) Real Estate
I own 1 house on my own (~$100k value), and 2 houses (~$50k each) in partnership with my father. These were all bought last year. All of these have conventional 75%LTV financing. I bought these from my trading portfolios and ROTH withdrawals.

4) Good job, work in Software in San Francisco, but that also means my living expenses are high, probably reducible somewhat.

5) A business that I own that throws off a little cash, but it's mostly a "professional hobby" type endeavor. I run social dance events in the city.

Ok, so here's where I get to the crux of why I'm posting. I'm trying to figure out where to put money next. I could:
A) Pay off CC debt
B) Pay of Student debt
C) Buy more houses (I could probably grab two more this year in the market I'm looking in, if I really stretch)

Some of the things I'm considering while debating this in my head.
- Real Estate is much more mentally stimulating than paying off debt, but that could be reframed if necessary
- I'm concerned that if I pay off my CC debt that old habits will put me right back into it
- I'm a Math guy, so it feels difficult to justify paying off a loan at 5% than investing money at 15-20%. It feels like taking on debt to increase passive income is a better way to go. Even though the CC could be considered "bad" debt, and the Student Loans "neutral" debt.

Thoughts? Considerations? Opinions?

Since I last posted here, I ended up going house shopping in KCMO and picked up two single family homes in Raytown area of KCMO. So far they are cash flowing very well, we've got tenants in both of them.

3/1.5 $37,900 - Rents for $650/mo

4/2 $47,500 - Rents for $825

I'm getting these settled and all the initial set up/make-ready costs paid for, and then I'll probably be in the market for a KCMO duplex in a few months.

Also if you are looking for a fantastic investor oriented realtor in KC lookup Dan Goodwin at Keller Williams. Tell him Jameson sent you.

Definitely interested!

Does anyone have examples of these kind of operating agreements they can share?

I'm working on one with my father to acquire a couple investment rentals and would love to have a few suggestions of stuff to include like hold harmless language, buy-sell agreements, etc. I'm pretty legally savvy and would love to see some examples.

Buy a bunch of books as well with that. I really enjoy the rich dad advisors series of books. Start going to REI clubs and meeting people. Ask them about the deals they have done.

Here's something to consider, one of the reasons lenders require down payment is so that the investor has money of things start to go south. What happens if one of those units or even two of them go vacant for a few months? Can you float that property? Or if something major needs to be fixed do you have money to make sure it works? I recently gave up a deal that was too big because of these issues and making sure that if something went south I had the money to hold through the rough spots.

What are the financing options for this kind of transaction?

Ideally I'd like to get financing for the value of the property plus some repair costs, or atleast the property and I'll float the repair costs.

Is there ways of getting money for this kind of thing? Refinancing later? How does one get around the 1-year "seasoning" rule for this kind of transaction? I've only bought fixed up properties with conventional funding and I'm interested in getting more value for my money by doing Fix-and-rent.