All Forum Posts by: Tim Johnson

Gabriel, it's never bad to pay down a mortgage....and it's never bad to pay down a mortgage faster. 

But here's the scoop. For an investor, leverage is gold. Therefore in most cases you will want to get loan terms that allow the LONGEST payback with the LOWEST monthly payment.

1. This will make sure that you're not under more pressure than you need to be. During the big recession in 2008-11 a LOT of folks were able to keep paying their mortgage - even after losing a job - because their monthly payments were lower.

2. This will also make sure that when you rent your home - the rent income will be able to cover your PITI payments, maintenance, capex, prop management fees, and vacancy... as well as providing some monthly CASH FLOW, that you can use NOW.

3. But there's more.... there is NO penalty for paying this mortgage down early. In other words, when you're able to, you can effectively turn this "30-year / high interest loan" into a "15-year / lower interest loan" without any paperwork or permission from the bank. Just pay more down on the principal every month - as much as you want or are able - pay it off in 5 or 10 years.... your choice.... and on your schedule.

4. So, yes, thinking about all the interest you could possibly pay over 30 years can be heart-stopping... and it should be. But remember, you probably won't own it that long; if you do, you'll let the renters pay for all that interest; or, best of all - you'll find a way to pay it down faster than 30 years. No matter what scenario you choose - you'll win with longer terms up front.

What would the future rent demand and situation be in that St. Cloud development? 

You could 1. purchase an SFR in St. Cloud (allowing you to quit paying rent and pay down on a mortgage instead) - Is that close enough to the airport? 2. Next, you could take time to find just the right multifamily.....when you do, rent your St. Cloud home out (or sell it), and move into the multifamily as your primary. The picture's looking brighter now.... all while getting into real estate and flying an airplane.

So, back to first steps.... along with the other great ideas mentioned above - and that you've already taken action on...

- many begin with a househack. Would your wife be willing to move with you into a unit of multifamily? (you could even go FHA with a 3.5% down / 30-year loan)

- this allows you to both own and learn landlording

- you'll also learn about lending, different loan programs, and build a handy-man / contractor team

- if you own the home you're in, could you rent that out?   

I'd check with @Grant Schroeder (above) about that loan you're wondering about.... sounds like he might have just the product you need.....

Lenders won't frown because your first purchase is an investment property. They're interested in qualifying you and your financials as well as the property. 20% (or more) downpayment on a conventional loan for an investment property would be fine - as long as you qualify.....

but because of the higher downpayment and interest rates for a loan like this - most investors DO begin their investing through househacking a primary residence with a lower downpayment and better interest rates. In your case, Georgia or Tennessee might be just the ticket...

You can usually find this on the county site - often on the tax assessor's page. Most counties offer tax, assessments, and property information. They also allow you to search for your property via owner name, address, parcel number, etc. These numbers will not necessarily correspondent with a recent sales price but will show how the assessor has divided land and improvement values as of the most recent tax year.

Never too late to househack - if you really want to, that is. I'm in agreement with @Brooke Noth - turn your present home into a rental (in fact, that's the #1 way that most investors started), and buy a new primary (multi-family) at 5-10% down, househacking that one. You'll be shooting ahead in all areas!

Of course, if househacking is not possible for other personal reasons, putting 20% down on a value-add investment property is completely respectable. Best wishes!

Hey Chris, as an agent here in western Washington I can totally feel your pain -  low inventory, tough competition, and rising interest rates. Many of my buyers are struggling as well. Still, I would rather do almost ANYTHING than pay someone rent (even though I'm fully aware that there are many situations where that is probably best....)

Your own suggestion of going in with a partner could be a viable route. Any friends interested in starting this journey with you? 

Do you have any carpenter / handy-man skills? Or maybe you could find such a partner and offer the funds? That way, even if you bought a sub220K fixer-upper you could force some appreciation as you both take a first step and share the profits? 

Hi Brock, 

1. Keep digging here at BP - check out the BRRR textbook - "Buy, Rehab, Rent, Refinance, Repeat" by David Greene, listen to podcasts, connect with others right here.....

2. Join local REI groups via Facebook, MeetUp, etc. - as @Zachary Inman has already mentioned - local knowledge and connections will serve you well.

3. Get rid of consumer debt, save a bunch, get that "place of your own." If that means purchasing a home - all the better. You'll learn a ton just from going through your first buying experience.

3. Don't pay for courses and "mentors online" - you don't even know what you're really wanting to do yet. Be patient, study hard, meet other investors, don't panic, keep it fun - you're 20. 

I would never use a lender that charged me over 2% of the loan just for the origination fee. How many lenders did you shop? (and I don't mean applied for a loan - just checking on their fee structures?) The "other charges" are more difficult for me to comment on since I'm not in Florida. Hazard insurance seems high. Is this a SFR - or do you have some kind of big liability umbrella included with that?