Cash Flow Real Estate Investing in Utah

My goal of purchasing two properties per year to use as rentals is under performing right now. I have made a few offers, but most properties aren't cash-flow positive with only 10% down.

Let's take for example, a $200,000 home (below median home value in Utah). If I were to pay 10% down I'll be financing $180k. At 7.5% (a normal non-owner occupied investment property rate), my 30 year fixed payment is $1259 which does not include taxes and escrow. A quick search of the MLS shows 4 homes listed exactly at $200k today and all of them are 3 bedroom. There are several pages of homes for rent that have 3 bedrooms in the Daily Herald and the price range is significant. The 20 that I looked at had rents from $700 to $1450, with an average price around $1100. This means I am $159 negative cash flow per month without considering escrow, vacancies, and repairs. If I go with an interest only loan, my payment would go down to $1125/month which in the end still means negative cash flow.

Utah has become a market where you have to get a really good deal on a property, or pay 20% or more down, before you can produce a positive cash flow.

~Happy Investing

Prosper.com

I have been a lender and borrower at prosper.com for several months and am very impressed with their offering. I took out a loan for myself of $1000 and because of my AA rating received a rate of only 7%. I then re-invested this money back into prosper.com to lend out to other higher-risk borrowers at an average rate of 20%. I realize there will be several borrowers who will not repay these loans so I expect my actual returns will be 10-15%, but this is extra play money that I am willing to take a higher risk in order for potential higher returns.


If you are in need of a loan, I would love to assist you in setting up your loan request and getting it funded. Prosper collects 1% from all loans in order to run it's business. I receive a small referral bonus directly from prosper so I am motivated to help you get your loan. Follow the link below to sign up.



Otherwise, if you would like to lend money out in order to receive much higher returns than your bank is able to offer then the link below is for you. You and I both receive a $25 referral bonus when you are approved as a lender.



See you on prosper!
Please ask if you have any questions.

Tim
http://tmellor.com

New job -- more pay but longer commute

I recently accepted a job offer that will increase my commute from 34 miles to 45 miles each way. My current vehicle gets 25 mpg so I will be spending approx. $3000 in gas each year ($700 more than current job). If I decide to get the carpool pass, it will cost me $50/mo or $600/year but could save me many delays and aggrevations. Luckily the increased wages will pay for this increased cost plus some.

So now that I've defined my values, how will this decision impact them? The two hours of commute each day will limit my time with my family, but does give me the opportunity to listen to audiobooks (lately "The Work and the Glory" and other religious and financial books). It should definately help my financial goals as I will be bringing home about $800 more per month after tax. I plan to raise my retirement saving, and when applying for a loan they generally ask for gross income so I can potentially purchase more properties. Moving closer to work is an option, but we really like where we are right now with our home within 7 years of being paid off (and a great 4.25% interest rate). Another option would be getting a hybrid vehicle so I can always drive in the carpool lane and get better gas mileage. If I were to get 45 mpg and not buy a carpool pass I would save almost $2000/yr.

Core Values

While my family was gone to Montana and I had some free time alone to think and ponder. One of the financial audiobooks I'm listening to recommends setting five core values and make goals to achive those values. A financial goal to make $1 million dollars is not a good goal unless it reinforces a value such as financial security or freedom from debt. So here is my attempt to document my values:

1. God (Service in and out of the church, prayer, scripture study, temple attendance)
2. Family (Raise my children, spend quality time, build my marital bond and relationship, vacations)
3. Financial Freedom (Ability to retire early, travel, serve another mission, be charitable, cabin)
4. Education/Culture/Arts (Plays, museums, operas, travel, site seeing, drawing, photography, lifetime learning)
5. Nature (Hiking, camping, skiing, gardening, cabin, photography, travel)
6. Health (Exercise, eating right)

Now the next step is to have my spouse make her values and based on the two sets of values, make goals that will help to achieve those values. The audiobook makes the point that far too many couples never discuss finances or perform goal planning together (or even at all) and it often causes mid-life crisi and broken marriages since the spouses are moving to two different life targets.

I love google!!!

Google just added yet another feature that I love. Google maps now allows you to save your own custom maps with places you've been or places you'd like to go, or places where you know people, or whatever you want. I've created to personal maps; the first one shows places I've been and the second shows where properties I own are located:

My Wanderings

Trademark Properties Real Estate

You can also add pictures and html descriptions to the places on your map. I'm going to be busy playing with this new toy for several days at least.

Tim