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Real Estate

Buying a FourPlex

buying a fourplex as an investment property

It’s no secret that I like real estate. I think owning investment property is a great way to build wealth and create semi-passive income. You get to enjoy growing equity and increasing property value over time, all while someone else pays the mortgage. What’s not to like? Well, plenty. We made a bad decision in trying to flip a house a couple of years ago, and had a huge repair bill on one of our rentals this year, which negated any profits.  Still, we are in this for the long haul, and like something out of a HGTV episode, we recently found a deal and bought a fourplex! Here is the story. Not A Good Realtor To Be Found As you might remember, Jim and I have looked at a few potential rentals over the past year, or rather, I look and he says, “OK” as he does not share my love of the hunt. Anyway, after the bad flip deal, I was a bit sour on our realtor and decided to find someone new. The problem was that they all sucked. I thought I had a good one who actually showed me a  few properties at the end of ...

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Housing Prices in Southwest Colorado

House on 3 acres for $290,000

  Since real estate is one of my favorite topics, I couldn’t miss the chance to add my two cents along with some other recent blog posts about how much house you can get for $150,000, $250,000, or $1 million. Make sure to check out these other areas if you missed them. Portland: Frugal Portland New York: Broke and Beautiful Life Denver: Shop My Closet Project Silicon Valley: Don’t Quit Your Day Job New Jersey: Red Debted Stepchild Central Indiana: Club Thrifty Aukland: NZ Muse Guatemala: Reach Financial Independence Colorado Housing Prices Southwest Colorado is a bargain in my opinion. That’s one reason why we live here. It’s rural, so if you’re looking for big city excitement, it’s no where to be found. You can, however, enjoy an outdoor paradise with mountain or desert terrain. Take your pick or do both on the same day if you’d like! With the money we save by living here, we can take a weekend road trip to the city when we feel the need. Denver, Phoenix, Albuquerque, Las Vegas, and Salt Lake City are all less than 8 hours away, and we can be in LA in 12 hours. Colorado is all over ...

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Deciding Not To Pay Off My Mortgage Early: Don’t Look a Gift Horse In the Mouth

should you invest or pay off the mortgage

This is a guest post from Sov at Break 50. Enjoy! Wouldn’t it be great if I paid off the mortgage? Remove those shackles – no more ball and chain – I could sit in the garden with a beer, no more worries – Financial Freedom – whoopee! These were my initial thoughts back in 2006 when I set out my Road to Financial Freedom. I got very excited by the on-line mortgage repayment calculators – look how much I’d save by paying the mortgage off early! ‘Mortgage-free’ became my first big goal I became obsessed. It took over my life. I cut expenditure wherever possible, focused on increasing my salary and bonuses, and stashed away any excess cash. She’s forgiven me now but I didn’t even tell my lovely wife about the secret mission. It’s amazing what you can achieve if you have a dream (mine is Financial Freedom) and a decent goal (ie. pay off the mortgage). It took me just over 5 years to save enough money to pay off the mortgage – wow, did I really do that? But was the ‘pay it off’ question really that straight forward? Unfortunately nothing in life is quite that ...

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My Rental Property Strategy and Property Management

rental property strategy

There are many so called RE investors that pretend to cash flow, and they are not calculating any of the soft expenses.  Management, Vacancy and Maintenance are the big three.  Maintenance being a thing you can put off, and see profit, but it is in actuality deferred maintenance.   I allocate 10% of rents towards maintenance in my budgets, 5% for vacancy, and 7% for management.   And I expect ~15% ROI if I make the purchase. Most of my time in regards to the rentals is spent on turning apartments.  Bringing them back to as close to 100% as possible.  Sometimes it takes only a couple of hours, sometimes a bit more.  I turn many in a day, and often have zero vacancy between tenants.  But it is a bit hectic with a full time job.  If it is much more than a few hours, I have a damage deposit.  I can paint with the best of them, and can fix most anything any handyman can. When a renter is in, I would guess it averages well less than one hour per month, per tenant.  A property manager who charges $80 on a $1,000 a month rental would not put in ...

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Why We Aren’t Paying Off the Mortgage Too Early

Mortgage payoff

After paying off our credit cards, we needed a new debt goal to focus on. When you pay off a bunch of debt, it makes you feel like you can do anything, so we set out to pay off our mortgage early. The idea of living in a completely paid for home is super appealing, however, after looking at 2013 and beyond, we’ve decided that maybe putting all our energy into the mortgage payoff is not the best use of our money. Yep, we’ve flip flopped like a politician, and here’s why. It makes more sense to invest in my solo 401k After selling my practice, I set up a solo 401k through Vanguard. The costs are very low, and the interest over time should be much greater than the guaranteed 3.25% (current mortgage rate) we’ll get from paying off our mortgage. It will also save a ton in taxes. If I can invest most of my 1099 income, it will decrease our tax bill by thousands of dollars. We can use Jim’s and my W2 income for living expenses. We Have Rentals With purchasing a commercial building at the end of last year, we now have more potential expenses. ...

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