All Forum Posts by: Mark S.

@Caleb Heimsoth,

Funny you should mention $10K as a threshold.  That’s the number I had in mind for my properties as well.  I currently take an amount each month (8% for vacancy, 5% for cap-ex, 5% for maintenance) and put the total aside in a separate business savings account for each property.   I feel like this is a good way to track reserves, not give myself a false sense of security by “seeing a big number” all in one reserve account which may not be adequate, etc.  

I guess my question is: do you feel that $10K in reserve per property is “enough,” where you fund to that level and then re-direct future funds elsewhere (and if you dip into them for property needs, you then replenish to $10K)?  OR Do you think this is a good “starting point” and you always add to the $10K reserve in perpetuity, knowing the funds will likely eventually get used?

I am still relatively new and trying to figure this out.  I buy turnkey and have a few “safe guards” in place:

- All of my properties are freshly rehabbed (lower initial cap-ex expenses)

- Most of my properties have a vacancy guarantee with the PM company (if property were ever vacant for 90 consecutive days, PM pays me full market rent starting on day 91)

I’m just trying to figure out what is “enough” for reserves, if there ever is such a thing, and balancing that with expanding my portfolio.  

Any ideas or thoughts on these items are welcomed from the community.  Thanks in advance.  

@Richard Escajeda, great book and very basic.  I don’t agree with all of his ladder steps.  I would tweak the steps by putting maxing an HSA before post-match 401(k) contributions, mixing in non-retirement (ie brokerage, rental properties, etc) investing before maxing 401(k), and I absolutely would NOT accelerate paying down low, fixed interest rate mortgages.  For more info on that, look up Keith Weinhold’s Get Rich Education podcasts about home equity or read the book The Value of Debt in Building Wealth by Thomas J Anderson.  

Why? Chances are mortgage is fixed and HELOC is variable. What's the benefit?

local credit unions for sure. I got 90%LTV at Prime minus .51%, so 4.99% variable. No closing costs, no annual fees, ability to lock 3x over 10-year draw at fixed rate (if rates rise), 20-year repayment after 10-year interest only draw.

@Ned Carey, That’s interesting.  My understanding is that conventional loans are conforming loans and those loans must conform to Fannie / Freddie guidelines.  Perhaps I’m missing something. 

@Daniel Lynch

Gold digger alert! She shouldn’t want to “live for free” at your expense. She should WANT to pitch in.

@Anthony M Schlitt, do both: max your Roth IRA AND save outside of that for REI. No offense, but if you can't do both, your savings rate isn't high enough and you need to evaluate your income vs expenses. Worst case scenario, contribute to your Roth IRA and leave it in cash for the time being until you have a better handle on when you'll need the funds. You can until tax deadline of any given year to make a PRIOR year contribution, so keep that in mind as well. Best of luck with your decision.

@Ned Carey

Silly question, but if you get a conventional loan with 20% down, how do you know if it’s a “Fannie” loan versus a “Freddie” loan? The servicing of the loan typically gets transferred post-closing anyway, so I’m assuming maybe it’s in the closing documents? 30-year fixed rate conventional investment mortgage is what I’m alluding to. I guess it could be either? How do I know?

@Shane Colar, I do the same as @Heath M.

@Max Sherman, 

What kind of deals are you looking to do with partners?