All Forum Posts by: Will Kenner

If Bob owns 5 properties, all paid off, then take a loan on one of them, or a portfolio loan on as many as needed, to generate enough funds to buy another property that would in the end produce the extra $15,000/yr needed, "pay-down" and all. Trying to take money out yearly in some form of loan or LOC against equity is not rational. And as @Joe Splitrock mentioned, deductibility issues come into play if any monies are drawn for personal use. Thus any withdraw of equity is best put towards a deductible purchase and operation of an other property. Otherwise, sell the properties, invest in index funds, and follow the 4% rule. 

@Nathan Weber From your post it sounds like you are trying to buy in an area other than the one you live in, maybe out of state? Is there the option to research the market you already live in or a market you are already familiar with? That is always the best place to start. Otherwise you are at the mercy of second or third hand information, often times misleading and not to the resolution you need to make a sound investment. There could be drastic differences in a market by one or two blocks in a given neighborhood, which you wouldn't know from publicly, mass disseminated information. The best way in that case is to narrow down a geographic area, and call up brokers and property management companies to get the details you need.  

@Reagan Huefner Is the property on sewer or septic? Since both units seem to be backing up it sounds like it may be more than a snake fix. If you're on septic then a snake won't do the trick as the tank may be full. If you're on sewer, did you get a sewer scope during due diligence? If the property is older, then there may be roots in the sewer line, or collapse of the line feeding off the property. Either way you may have a larger issue on your hands. As @Nate Sanow mentioned, you may want to accommodate your tenants for the long-term gain of keeping happy tenants and showing them you care. 

@Rommel Pascual Going the subject-to route will keep the mortgage in your aunt's name. So it sounds like that is not quite what you are hoping to do. Would you qualify for a conventional loan to buy the property from her? You could avoid the real estate fees by doing as FSBO sale. You would still have the transaction costs with the state for the sale however. Not sure if these were also costs she was hoping to avoid. If so, perhaps increase the sale price to off-set those fees such that she gets the desired total amount?

Quote from @Juan Campos:

@Will Kenner

Which Rents do you invest in if you don't mind me asking ?

Currently I have a mix of residential and commercial investments across the cities or Burien, Des Moines, Leavenworth, and Belfair. These areas have seen significant growth over the last several years so often the residential properties don't pass the general 1% rule, BRRRR strategy, or low down-payment options. (Unless of course they are approached with an FHA/owner occupier strategy in which case you can find properties that fit these metrics.) On the commercial side, it's a similar story in terms of cap rates (they are fairly compressed, but like any general rule, not the only basis on which to evaluate a property) however this is offset by having NNN leases so increased gen-op costs are shifted to the tenants, and value-add opportunities as a way to "force" appreciation as well as generate additional income. 

@Juan Campos 

For real estate, I am in the Western Washington market (excluding Seattle proper). 

For non real estate investing, I maintain a mix of total US and World stock market indices, REITs, short-term corporate bonds (~5% of portfolio), mid-term investment grade bonds (~5% of portfolio), and unsecured notes. 

One caveat to high yield savings accounts is sometimes they have a limit to the amount you can withdraw per month. For example, some accounts have a $10k limit withdraw per month, so you have to take that into consideration as you near the time when you need your funds. Be sure to check that before depositing your funds.   

@Juan Campos That's great you're looking to make a move on a first property! I assume the savings you are referring to will be used for the down payment for your purchase. Although 10 months may seem like a long time, and it's tempting to get a return on that money while you wait, my advice is to keep it in cash in a savings account. 

CD's often require the money to be locked up for a year or more, and anything shorter really will not get you an appreciable return. 

Putting it in index funds can be fairly liquid, and I would recommend that if your time horizon was longer 3-5 years. But for only 10 months, there's a good chance you won't get much appreciation and risk having less for your first deal. Passing on any gains over the next 10 months would be worth it in the long run if it meant you are able to get into your first property. 

Good luck!

@Eric Chow I agree with @Scott Johnson. Locking in a 30 yr fixed gives you stability on which you can more accurately forecast expenses going forward. Most likely with our inflation, rates in 5 years will make 4.375 look like a rock bottom rate. There is the option to roll the dice with an ARM but in this environment I don't think that's wise. With the interest only, you have the worst of both worlds despite an initial low payment: you don't pay down principal nor build equity, and you will be faced with a higher rate in the future when you re-fi. That will equate to a steep increase in monthly payments.

@Jack Obert You'd probably want to look into getting an umbrella policy that would cover the portfolio, but then there would be sub-policies for each individual property. Policy underwriting can vary greatly from state to state however, so for the best information call a couple insurance agents and have them quote everything out.