All Forum Posts by: Tim Johnson

As you said yourself, not necessary. But it can help for a number of reasons already listed above - access to your MLS data, access to all "for sale properties" (within your traveling range of course...), and just because you're an agent - there's no need or obligation to broker your own deals.

If you file a joint tax return with your wife, there are GREAT tax advantages when one of you is a "real estate professional" (which of course is not limited to just being a realtor). Depending on your "active" or "passive" investing status (IRS rules), tax savings from depreciation on rental properties can sometimes be used to offset W-2 earnings.

Having both of you licensed may be unnecessary (unless you're both actively planning on pursuing income through that route) since the licensing fees and regular MLS dues and other dues to keep your license current can run up quickly.

As a RE agent myself, I vote "yes" to the many advantages of being a licensed investor. Best wishes...

@Julian Wyer  If the renters are paying for all the utilities, then it's not an expense for you to worry about - zero dollars. 5% for maintenance and 5% for capex are totally different from the utility costs. 

What I was attempting to show above is that even without a calculator (and they ARE super helpful - I use them all the time) - subtracting all the expenses from all your income will help you get to the same number - the profit (cash flow) you can expect to receive from this investment. 

Income =  total rent + other income (parking, storage, laundry, etc.) - vacancy

Expenses =  debt service (your principal and interest on the loan if you have one), taxes, insurance, utilities, maintenance, capital expenses, property management (if you don't manage things yourself.)

Of course, this is just one simplified way of looking at the numbers. Calculators will help you further manipulate the income, expenses, and finances in such a way that you can quickly see other numbers such as NOI, Cap Rate, Cash-on-Cash, various rates of return (ROI), etc.

Applying for a conventional loan and hard money loan simultaneously is not in itself a problem as far as I know. But not reporting the hard money loan to your conventional lender would be considered mortgage fraud. Unless you have tons of margin I would definitely get that conventional loan funded first...

Even without a calculator.... you can just keep it simple.

1. How much is the mortgage (PITI) each month?

2. How much can you rent your home for?

3. What kind of margin does this give you? If #2 is already less than #1, you can rent your home, but with a negative cash flow. 

4. If #2 is more than #1 you can add some further calculations: 

5. For vacancy, just try multiplying #2 X 11 (assuming 1 month each year that you're not collecting rent).

6. Now take the answer to #5 and multiply that by 10% / .10 - you could think of that number as needed for maintenance and capital expenses during the 12 month period. (5% for each)

7. If you assume all the utilities will be paid for by the renter, you can ignore that number.

8. If you're planning to manage it yourself, you can ignore a management number as well. Otherwise, multiply #5 by 8-10% to cover the cost of property management.

Now, somewhere in all of this you should be getting a sense of where you are..... #5 - #6 - #7 - #8 - (#1 X 12) = estimated cash flow. How is it looking?

Can you get a HELOC based on your equity / new appraisal to cover the new addition..... and leave the mortgage in place?

Some great thoughts Blake.... and congrats for thinking it through this far....

Here are a few of my thoughts that you can throw in the pot for stirring....

1. I assume you're interested in engineering since that's what you're studying. Are you aware that engineers and health care workers are the most sought-after workers in our present national (and most local) markets?  2. Wholesaling is WAY more difficult than most beginners seem to think. 3. Most BP podcasts and materials talk a lot about financial freedom and getting out of that W-2 job.... but the vast majority of investors start by raising capital and savings in that W-2 world. 4. My conclusion - I guess what I'm suggesting is that you at least consider a job in engineering - or anything else - as a possibly quicker way to your goals. 

Wholesaling could be the route for you.... not saying it isn't. But at 21 a "W-2 job" for a few years might not be a bad first step. All your other mentioned (and excellent) goals can be worked on simultaneously. Best wishes in a long and profitable REI journey.

1. Move to Florida, 2. quickly get that job....(possibly in the same line of work as before?), 3. Find a MF to hack with low downpayment 4. Use left over cash for 20% down on another (or multiple?)  investment props. You could be in great shape in less than a year.

For free sites, especially looking at rental rates and home prices add Zillow and Realtor.com to @Nicole Heasley Beitenman's list.

Hi Chris, Agree with @Michael K Gallagher - keep it simple. The biggest asset you presently have is time - and you're not wasting it so that's great. A house-hack with a 3.5% down FHA or even 5% down conventional has been a great first step for countless investors. A second big asset you'll want going forward is a great network - and BP is a great start there too. Get out and join local REI groups wherever you can find them. Best wishes.....

Not likely in my neck of the woods - huge shortage of housing. The question is YOUR neighborhood. Is it more "falling apart" or are there others like yourself, taking advantage of the city's incentives and helping your neighborhood "come together and rebuild" again?