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A Wedding, a wife, a house oh my!!!

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Old 02-17-2012, 09:31 AM   #31
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Re: A Wedding, a wife, a house oh my!!!

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It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in? I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.

There is risk in everything. Even yours and S10 plan. Should I never have a child because it could have down syndrome or something else horrible? Life is risk, some people choice to hide from it others choice to accept it but regardless it is still there.

And you are right I am very lucky person and I remind myself ever day of it. I have a healthy wife, my own health and two very healthy children. As far as losing my butt I have safety measures in place but that is not to say the perfect storm would not wipe me out or yourself. Again, I feel very comfortable with my financial situation; there are other factors that I am not going to bring in like my savings and cash flow that help strengthen my safety measures.

You seem to be bitter by my choices and for that I am sorry. Is that you are afraid of risk? Without great risk there are no great rewards.

As far as Waldskins he too can make his own choices; either risky ones or less risky ones.
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Old 02-17-2012, 09:35 AM   #32
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Re: A Wedding, a wife, a house oh my!!!

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It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in? I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.

I actually lost my job after 9/11 and my rental properties kept me afloat for six months until my company hired me back. As far as losing money yes that will happen with any rental property from time to time you just have to have the savings/cash flow to ride that wave out. Anyone that has been in "business" has lost money it is the nature of the game.

You seem to believe I have no other forms of income other then my 9 to 5 and I do not have a savings account both are untrue.
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Old 02-17-2012, 10:38 AM   #33
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Re: A Wedding, a wife, a house oh my!!!

Skinsguy is right, that's a lot of risk, mredskins. Sounds like it has worked out well so far.

When you talk about risk in life - babies with down syndrome or likelihood of getting in a car wreck or likelihood of getting laid off - those are probabilities that are not easily quantifiable. However the risk that you'll lose a stream of rental income is very easily quantifiable.

Sounds like you're in good shape, but I'll say it anyway. You should make sure you always maintain an emergency fund that would cover 6 months of your own living expenses + 6 months of the cost of maintaining your rental properties + 6 months worth of whatever debt service payments you have on those rental properties.

If you lost your job and at the same time lost a tenant and still had to make mortgage payments on your rental properties, you'd be in real bad shape.

Sounds like you have some contingency plans. If I were you, I could sleep real well at night in your situation as long as I had 180 days cash on hand.

You were very very exposed to risk early on in this venture. Sounds like it worked out and paid off. But now you have taken steps, and maybe can take more steps, to minimize that exposure going forward.
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Old 02-17-2012, 10:53 AM   #34
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Re: A Wedding, a wife, a house oh my!!!

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I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.
That's true, your plan pretty much eliminates all risk. But it also means nobody would buy a home until they were like 40 years old.

Unless you come from old money, it takes time to build up enough cash to cover a 6-month emergency fund plus enough to put down a 20% down payment. While you're taking years to save all that money, you're missing out on the appreciation of home prices. Granted home price appreciation has been nonexistent for five years, but going forward it will come back around.

The practical analysis goes like so: if you build an emergency fund and buy a home with 5% down, you can probably accomplish that by age 28 or so. If you build an emergency fund and buy a home with 20% down, most can't accomplish that until 35. That's a seven year difference.

A $200,000 home will appreciate in value by $46,000 over 7 years, assuming 3% appreciation in home prices (about the historical rate).

If you buy that home with only 5% down instead of 20% down, you're paying:

PMI - $16,800 ($200 per month times 12 months times 7 years)
Interest on the 15% you didn't put down - $10,500 ($30K times 5% interest rate times 7 years)
Maintenance Expense for those 7 additional years: I dunno, call it $2000 per year to be generous - $14,000
Total - $41,300

That's less than the appreciation you missed out on. And then you get money back on your taxes on the PMI and interest you paid.

You're better off paying 5% down and not waiting to build up the 20%. At least most people are.

I agree there's some risk there, but the risk/reward pays off as long as you have an emergency fund and keep your monthly mortgage payment to less than ~33% of your net income.
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Old 02-17-2012, 11:11 AM   #35
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Re: A Wedding, a wife, a house oh my!!!

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There is risk in everything. Even yours and S10 plan. Should I never have a child because it could have down syndrome or something else horrible? Life is risk, some people choice to hide from it others choice to accept it but regardless it is still there.

And you are right I am very lucky person and I remind myself ever day of it. I have a healthy wife, my own health and two very healthy children. As far as losing my butt I have safety measures in place but that is not to say the perfect storm would not wipe me out or yourself. Again, I feel very comfortable with my financial situation; there are other factors that I am not going to bring in like my savings and cash flow that help strengthen my safety measures.

You seem to be bitter by my choices and for that I am sorry. Is that you are afraid of risk? Without great risk there are no great rewards.

As far as Waldskins he too can make his own choices; either risky ones or less risky ones.
I'm not bitter at all. In fact, you skipped over my last post that said I was happy for you that things seem to be working, but it's not a situation that I would advice others to pursue. Yours is based purely on luck. You were obviously wealthy enough to take the chance. That's fine for you. But, the advice I posted, and the advice that Firstdown and Schneed posted is not based on luck.

It was based on fiscal responsibility and something that does work for everybody if they are willing to do what it takes to follow each step. Saving up an emergency fund for six months to live off of is not based on luck. It's based on insurance that if I lose my job, I'm able to keep food on the table, a roof over my head, gas in the car, and clothes on my back for six months. I don't have to rely on any outside source of funding to keep things afloat. That means, I have hired myself to be an active job seeker for a six month contract. I don't have to rely on the hope that I'm going to keep enough tenants in my rental properties to make ends meet, because that money does not exist until it is in my pocket. So, I have to PLAN for the worst. That is really my whole point MRedskins.

I said that buying rental property, unless it is paid in full, is a bad, bad idea, and I stand by that statement regardless of the outcome. Because, until that property is paid in full, you're constantly chasing profit and having to borrow from Peter to pay Paul to keep everything above water. Being financially free does not mean you have to take large risks - that is an excuse and a myth that people use all the time to justify whatever mess they got themselves into. Does it work for some? Sure it does. But for ever one person that makes it work, there is at least three people who went bankrupt trying to do the same thing. It's not the best advice.

Again, there is no bitterness on my part, just a curiosity why someone would advice a person not to purchase a home in this buyer's market, a home in which that person is going to own and live in, and then turn around and justify owning several properties that are not paid for, and saying you're making good money off of it? It's just a bit hypocritical in my opinion.
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Old 02-17-2012, 11:33 AM   #36
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Re: A Wedding, a wife, a house oh my!!!

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That's true, your plan pretty much eliminates all risk. But it also means nobody would buy a home until they were like 40 years old.

Unless you come from old money, it takes time to build up enough cash to cover a 6-month emergency fund plus enough to put down a 20% down payment. While you're taking years to save all that money, you're missing out on the appreciation of home prices. Granted home price appreciation has been nonexistent for five years, but going forward it will come back around.

The practical analysis goes like so: if you build an emergency fund and buy a home with 5% down, you can probably accomplish that by age 28 or so. If you build an emergency fund and buy a home with 20% down, most can't accomplish that until 35. That's a seven year difference.

A $200,000 home will appreciate in value by $46,000 over 7 years, assuming 3% appreciation in home prices (about the historical rate).

If you buy that home with only 5% down instead of 20% down, you're paying:

PMI - $16,800 ($200 per month times 12 months times 7 years)
Interest on the 15% you didn't put down - $10,500 ($30K times 5% interest rate times 7 years)
Maintenance Expense for those 7 additional years: I dunno, call it $2000 per year to be generous - $14,000
Total - $41,300

That's less than the appreciation you missed out on. And then you get money back on your taxes on the PMI and interest you paid.

You're better off paying 5% down and not waiting to build up the 20%. At least most people are.

I agree there's some risk there, but the risk/reward pays off as long as you have an emergency fund and keep your monthly mortgage payment to less than ~33% of your net income.

Well, I think it depends upon the property. Is this a $150,000 home or is it $300,000k or more? I think it's entirely possible to save 20% down for a home that's around $150k. I'm assuming a couple brings in collectively $80k a year. It certainly takes being frugal and the willingness to pick up an extra income somewhere to help supplement. However, practicality? Most people don't want to do that. They would much rather continue going on vacation every year, spending money eating out every week, buying new cars, so forth and so on. It's human nature. I'm the same way. But, regardless of the amount that's put down, I'd not have that mortgage payment greater than around 30% of my monthly expenses. Think you mentioned that earlier as well.
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Old 02-17-2012, 12:07 PM   #37
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Re: A Wedding, a wife, a house oh my!!!

Save your self and just don't get married.
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Old 02-17-2012, 12:14 PM   #38
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Re: A Wedding, a wife, a house oh my!!!

Pay no mind to SBXVII. He hijacked my wedding thread a while back.

Enjoy your marriage and best of luck with the housing situation.
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Old 02-17-2012, 12:19 PM   #39
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Re: A Wedding, a wife, a house oh my!!!

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I'm not bitter at all. In fact, you skipped over my last post that said I was happy for you that things seem to be working, but it's not a situation that I would advice others to pursue. Yours is based purely on luck. You were obviously wealthy enough to take the chance. That's fine for you. But, the advice I posted, and the advice that Firstdown and Schneed posted is not based on luck.

It was based on fiscal responsibility and something that does work for everybody if they are willing to do what it takes to follow each step. Saving up an emergency fund for six months to live off of is not based on luck. It's based on insurance that if I lose my job, I'm able to keep food on the table, a roof over my head, gas in the car, and clothes on my back for six months. I don't have to rely on any outside source of funding to keep things afloat. That means, I have hired myself to be an active job seeker for a six month contract. I don't have to rely on the hope that I'm going to keep enough tenants in my rental properties to make ends meet, because that money does not exist until it is in my pocket. So, I have to PLAN for the worst. That is really my whole point MRedskins.

I said that buying rental property, unless it is paid in full, is a bad, bad idea, and I stand by that statement regardless of the outcome. Because, until that property is paid in full, you're constantly chasing profit and having to borrow from Peter to pay Paul to keep everything above water. Being financially free does not mean you have to take large risks - that is an excuse and a myth that people use all the time to justify whatever mess they got themselves into. Does it work for some? Sure it does. But for ever one person that makes it work, there is at least three people who went bankrupt trying to do the same thing. It's not the best advice.

Again, there is no bitterness on my part, just a curiosity why someone would advice a person not to purchase a home in this buyer's market, a home in which that person is going to own and live in, and then turn around and justify owning several properties that are not paid for, and saying you're making good money off of it? It's just a bit hypocritical in my opinion.

For the record I purchased all my homes prior to 2005. I am telling Waldskins if it was me now starting out again I would rent build up my finances then buy what I really need when the time is right vs. buying something now just to get into something then 5 years down the road need something else and realize his first investment has not appreciated.
Lets just agree to disagree. I will continue on my merry financial way and you continue on yours.

For the record I have never had to go to a Dave Ramsey or any class of that sort to figure out how to invest my money or spend it. To add I have never gone a day hungry, never had a late payment on any thing and I have a high beacon score. I got be doing something right???

If I am in the poor house I will give you a call. =)
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Old 02-17-2012, 12:20 PM   #40
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Re: A Wedding, a wife, a house oh my!!!

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Pay no mind to SBXVII. He hijacked my wedding thread a while back.

Enjoy your marriage and best of luck with the housing situation.
OMG that is right LOL! I forgot about that.
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Old 02-17-2012, 12:45 PM   #41
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Re: A Wedding, a wife, a house oh my!!!

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Really the best answer and advice that Dave Ramsey would give to everyone looking to purchase a home. I'm in the same boat right now. I have debt (a bit of credit card debit, student loans, car payment, house payment even though I have found a possible buyer for it,) and have not been able to save for a down payment for trying to pay for a honeymoon and all the trimmings.

We both don't like the idea of renting, especially when renting means spending $800 - $1200 a month. However, we both think it's important to pay off as much debt prior to the purchase of a house as possible. My goal is to at least have the credit card bill and the student loan paid off. I've just purchased my car, so it's going to be awhile before that gets paid off.

We're getting married in October, and I fear I'm going to be completely broke by then...lol!
Dude you are giving me all this crap and your up to your eyes in debit.

I have no revolving debit. My cars are paid off. No student loans, etc.. Other then that I have my mortgages and every day expenses. Let me add day care to that also.

I honestly don't care what your financial situation is but for you to come in here and poop all over me about how to spend and invest money is hilarious.

For the record I am 38 we are pretty close in age.
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Old 02-17-2012, 01:12 PM   #42
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Re: A Wedding, a wife, a house oh my!!!

let me congratulate waldskins and back out of this one. best wishes to you and your family.
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Old 02-17-2012, 01:19 PM   #43
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Re: A Wedding, a wife, a house oh my!!!

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Dude you are giving me all this crap and your up to your eyes in debit.

I have no revolving debit. My cars are paid off. No student loans, etc.. Other then that I have my mortgages and every day expenses. Let me add day care to that also.

I honestly don't care what your financial situation is but for you to come in here and poop all over me about how to spend and invest money is hilarious.

For the record I am 38 we are pretty close in age.
Well gee, I thought we were going to agree to disagree.

I said I HAD debt. I didn't say I was up to my eyes in debt. There is a difference. Secondly, I didn't HAVE to go to a Dave Ramsey class, I did so because I wanted to and it's the best thing I have ever done. Anybody can go to his class regardless of financial standing. Also, I would just about bet that what debt I have, mortgage include, is a mere portion of your mortgage on one property.

Your advice to WaldSkins was not to purchase a home in this market because you get nothing on a return of investment and you're better off renting. This is what you said. The home won't appreciate, so you won't make any money off of it. This is the bases of your entire argument against what I said. And I basically said, we need to wait and see what WaldSkins' intentions toward buying a home are before we say he shouldn't. Go back and read what I typed, don't just highlight the things that make you all butt hurt. I outlined a list of things that WaldSkins should do before he buys a home...you disagreed with it, all because you didn't like me saying one should never purchase rental property, unless it's paid in full, that it is a bad idea.

And again, I posted that I was glad it was working for you, and I hope it does continue to work for you. But, you're all defensive because we have stated that it is a huge risk and you could really LOSE A LOT in this if you're not careful. I'm just stating the obvious. It doesn't have to be Dave Ramsey or any other financial guru to tell someone taking out a second or a third mortgage on rental property is not a very good idea unless you absolutely have no choice for some reason. If you had said renting is the best option until you have enough money to afford to purchase a home, we all would agree with you, because that is what we have been saying...but that wasn't the argument.

Anyway, I'm tired of you...I'm going back to talk about quarterbacks in thread number 5 or 6......
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Old 02-17-2012, 01:31 PM   #44
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Re: A Wedding, a wife, a house oh my!!!

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Well gee, I thought we were going to agree to disagree.

I said I HAD debt. I didn't say I was up to my eyes in debt. There is a difference. Secondly, I didn't HAVE to go to a Dave Ramsey class, I did so because I wanted to and it's the best thing I have ever done. Anybody can go to his class regardless of financial standing. Also, I would just about bet that what debt I have, mortgage include, is a mere portion of your mortgage on one property.

Your advice to WaldSkins was not to purchase a home in this market because you get nothing on a return of investment and you're better off renting. This is what you said. The home won't appreciate, so you won't make any money off of it. This is the bases of your entire argument against what I said. And I basically said, we need to wait and see what WaldSkins' intentions toward buying a home are before we say he shouldn't. Go back and read what I typed, don't just highlight the things that make you all butt hurt. I outlined a list of things that WaldSkins should do before he buys a home...you disagreed with it, all because you didn't like me saying one should never purchase rental property, unless it's paid in full, that it is a bad idea.

And again, I posted that I was glad it was working for you, and I hope it does continue to work for you. But, you're all defensive because we have stated that it is a huge risk and you could really LOSE A LOT in this if you're not careful. I'm just stating the obvious. It doesn't have to be Dave Ramsey or any other financial guru to tell someone taking out a second or a third mortgage on rental property is not a very good idea unless you absolutely have no choice for some reason. If you had said renting is the best option until you have enough money to afford to purchase a home, we all would agree with you, because that is what we have been saying...but that wasn't the argument.

Anyway, I'm tired of you...I'm going back to talk about quarterbacks in thread number 5 or 6......

Clearly says have in your post. =)

And who is we are you french now? Only you said my rentals are a bad idea.

Just because Dave R came to your church and told you this is how you spend your money is not necessarily the only way you should do it or can do it.
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Old 02-17-2012, 01:47 PM   #45
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Re: A Wedding, a wife, a house oh my!!!

I am not the only one that finds Dave R kind of a joke.

Is Dave Ramsey A “Financial Expert”
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