Exponential Return on Your Investment

[colonialmike]

Thanks for the info Pyriel...as we know, I look at it a little differently.

I bought my rental for $115000, using my HELOC for the downpayment (write of interest on down payment). I will sell it for $165,000 in spring 07, profit of $50,000, on none of my money. My expenses have been and will be minimal.

As far as the Flip property, I will walk away with a profit of $20-25,000 which will cover taxes, closing costs and downpayment for the rental unit. So my actual profit in the rental will be $60-65,000.

So, I see it as $60-65,000 profit in appx 13 months. I'm going to use that profit in a 1031, on a $169,000 3br 3ba townhouse in an upscale community which will be going for $200,000 when I settle in late Spring 07.

I tally it as appx $100,000 in equity and using virtually none of my money.

Also, I guess I wasn't clear...the insurance is $254/year, not a month. So it comes out to costing me appx. $150/month. I look at this as $150/month to make $60,000 in one year - and that is before my tax breaks.

Look forward to seeing your future posts. What is the weather in Guam, I'll be heading there later this month.

Colonialmike

 

[pyriel]

Hey come on over so I can show you the island hospitality. I will be going to Arkansas on the 16th but will be back on the 24th.

As for our investment differences, you are right, we do look at them differently. I'm a buy and holder while you are a flipper.

RedPillow is also from around here so i'll try to contact him before you get here. It would be nice for us to meet while you are here. I tried to see Gilligan when I went to Austin sometime this year but our schedule just didn't match up....

Goodluck buddy and I look forward into your future investment. Unfortunately for me, i'm supposed to be deploying sometime early next year so I have to start clamping down on purchasing properties until I get back.

P

 

[colonialmike]

Too bad our schedules won't permit us to view the island over a few cocktails. I'll be arriving and leaving right around the same time as you are leaving and returning. If my plans change I will send you a private message.

Where are you deploying to? I'm a civilian and was in Iraq (we called it Paradise) for 3 months in 03-04. It was a little more stable then!

 

[pyriel]

Too bad our schedules won't permit us to view the island over a few cocktails. I'll be arriving and leaving right around the same time as you are leaving and returning. If my plans change I will send you a private message.

Where are you deploying to? I'm a civilian and was in Iraq (we called it Paradise) for 3 months in 03-04. It was a little more stable then!

Guam Guard has this rotational deployment in Africa (Djibouti). This will be our fourth rotation there. Our mission is to provide security within the base and to send teams to different countries such as Kenya, Nairobi, Ethiopia, etc. Our leadership, with their great wisdom (thank goodness), raised their hands and volunteered Guam Guard to do this mission in a rotational basis since we first started the war on terrorism. Their point of view is to try to bring everyone home alive during deployment. Of course, we've also sent people to Iraq and Afghanistan but majority of our people deploys to the Horn of Africa (as they call it).

As for your arrival here on Guam, I'm scheduled to go but it will depend how I close the book for the finance department due to end of the FY. If I see that it is not going smoothly, I will bail and stay.

I'm the comptroller here for the Guam Guard. I still don't know how I got this job since I can't count beyond four (4). Goodluck....

P

 

[Gilligan]

Gilligan,
Thanks for your help... I will have to relook at my investment strategy. Pricess are going up but the rental remains stagnant. This means less return on my investment if i decide to purchase properties on a higher price. What to do? Hmmmm.... Cya

Pyriel,
Have your considered new construction. Around here you can build a new house for less money that buying one that is 10 to 20 years old. I’ve seen a lot of apartment complexes going up that are 4 plexes so they can get by with the residential loan and they don’t need the 20% down that a commercial loan requires. Does GHURA have a long list of people who need housing?

 

[pyriel]

Pyriel,
Have your considered new construction. Around here you can build a new house for less money that buying one that is 10 to 20 years old. I’ve seen a lot of apartment complexes going up that are 4 plexes so they can get by with the residential loan and they don’t need the 20% down that a commercial loan requires. Does GHURA have a long list of people who need housing?

OMG. Its been awhile since i last checked this thread. Sorry for not writing back any sooner. I am currently talking with a friend right now. Plan is to subdivide a lot and build several houses on smaller lots.

GHURA do have a long waiting list for people trying to get into to the program. One thing i noticed here is that GHURA tenant likes to stay in a single residential house. This is what I am concentrating on right now because once you get them to stay there for a year, they tend to stay there forever;-)

P

 

[colonialmike]

Pyriel and all-

Looking for some thoughts and advice on my investment properties. As mentioned previously, I have a rental condo with 1st and 2nd mortgages totaling 120K. I have put in a total of 15K for ALL expenses since I bought it. Last month it was appraised at 165K. I took out the 2nd (HELOC) and paid ALL other debts and increased my cash flow by several undred/month. However, because of the second, it has negative cash flow of 250/month (not including tax benefits).

Yesterday I setted on another property for 134900 and had already put down 14000 (from HELOC on primary residence). It cost me only 1280 out of pocket at settlement because I bought it with a HELOC on the property so there were no prepaids. I never heard of this before- the rate is higher but it is for folks who want to flip the property and have less out of pocket when purchasing. It was appraised at 158K.

In any case, I intended to flip it and make a quick 10K profit. I was going to apply the 10K to the 2nd mortgage on the above rental, put that one up for sale and do a 1031 on a larger property I am having built.

However, I was approached by someone who wants to rent the unit. I would need to put more $$$ into it (HELOC $$$) and refi to make positive cash flow. There is already decent equity in the propety.

So, the question is, do I keep it, refi, and let it ride, or apply to the other property and go with the initial plan?

As far as the larger property, I could probably buy down a loan to make the payments low enough for positive rental/cash flow, and then I would have this property and the larger one.

Looking forward to comments...

 

[Gilligan]

Pyriel and all-

Looking for some thoughts and advice on my investment properties. As mentioned previously, I have a rental condo with 1st and 2nd mortgages totaling 120K. I have put in a total of 15K for ALL expenses since I bought it. Last month it was appraised at 165K. I took out the 2nd (HELOC) and paid ALL other debts and increased my cash flow by several undred/month. However, because of the second, it has negative cash flow of 250/month (not including tax benefits).

Yesterday I setted on another property for 134900 and had already put down 14000 (from HELOC on primary residence). It cost me only 1280 out of pocket at settlement because I bought it with a HELOC on the property so there were no prepaids. I never heard of this before- the rate is higher but it is for folks who want to flip the property and have less out of pocket when purchasing. It was appraised at 158K.

In any case, I intended to flip it and make a quick 10K profit. I was going to apply the 10K to the 2nd mortgage on the above rental, put that one up for sale and do a 1031 on a larger property I am having built.

However, I was approached by someone who wants to rent the unit. I would need to put more $$$ into it (HELOC $$$) and refi to make positive cash flow. There is already decent equity in the propety.

So, the question is, do I keep it, refi, and let it ride, or apply to the other property and go with the initial plan?

As far as the larger property, I could probably buy down a loan to make the payments low enough for positive rental/cash flow, and then I would have this property and the larger one.

Looking forward to comments...

CM,
Although I am not against flipping houses, I would probably rent this one out as long as there was a positive cash flow and I had a renter that would take care of the place and paid his rent on time. By the time the renter paid the mortgage off for you the house would probably be worth 10 times what you bought it for.