Newbie Scared and Confused. - Posted by DX

Posted by kwack41 on July 31, 2004 at 13:40:09:

Are you planning on selling the townhouse or will you rent that out for positive cashflow? Your currently living in the TH for much more than a $400 a month payment. The association dues are more than your $400 alone and the mortgage must be at least $900.

The triplex sounds like a winner. If a few years down the road you find a property you would prefer to live in you can rent out your unit for $850 and have a monthly positive cashflow of $450. Thats not counting rent increases over the years.

Go for it!

Newbie Scared and Confused. - Posted by DX

Posted by DX on July 31, 2004 at 11:10:50:

Hello Everyone, here is the situation I would appreciate comments on. Currently live in a condo that has appreciated considerably in the last 3 years (215,000 to 305,000)with existing mortgage of 150,000, condo fees of 435/month. Just spotted a great triplex in a nice area selling for 414,000, Im thinking of living in one unit and renting the other two at 750 and 850/month. Although I dont imagine I will have positive cashflow with only two rents, my income can cover the difference ($300-$400/m outlay). Is this a wise move or should I focus on properties that provide cashflow or breakeven???

Re: Newbie Scared and Confused. - Posted by andrea ford

Posted by andrea ford on August 01, 2004 at 06:16:22:

i think you should do it

Don’t forget equity/rent increases - Posted by Farlee

Posted by Farlee on July 31, 2004 at 15:21:17:

Sounds like a good deal to me, as long as you can keep the two rental units filled.

  1. You will paying much less for your home (ie - the place where you are living now), which means you will have more money to invest elsewhere

  2. even with “negative” cash flow from an investment standpoint, you will still build equity. In fact, you could invest your extra money each month to pay off the mortgage. In 5 years, you can refinance and your monthly payment on the property will drop.

  3. If you raise rents $25 per year or so, you’ll be at a positive cash flow in approx. 5-7 years (with a refinance of the mortgage). That’s much better than the 25 years you mention. After that, it’s all gravy and your equity will continue to increase faster as well.

Go for it, but make sure you keep the units rented at the max rent! Low rents or vacancies will hurt.

Re: Newbie Scared and Confused. - Posted by a

Posted by a on July 31, 2004 at 11:29:56:

So you will reduce your mortgage to $400 per month while your tenants pay down the rest? Now think about this…what happens when you (with help from tenants) pay off the loan?

Re: Newbie Scared and Confused. - Posted by DX

Posted by DX on July 31, 2004 at 12:15:38:

Ok, I understand I would have positive cashflow after the loan was paid, but that is 25 years away, should that time frame not be considered as to whether this is a good investment?

Re: Newbie Scared and Confused. - Posted by E.eka

Posted by E.eka on August 02, 2004 at 12:44:27:

Yes, it should be considered. You also have to understand that this is also your primary residence. Your tenants will be increasing the equity in your home. Your mortgage is now $400 a month, opposed to $1000 or whatever you were paying. You can now use that extra $600 a month to invest in other real estate, save, go ona trip, invest in securities etc. Look at it that way. Also, you will have equity in an appreciating area. I think you should do it.