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  1. #21
    Join Date
    Mar 2004
    Location
    Madison, Wisconsin
    Posts
    281
    I work with two guys who own rental properties. One is in the process of selling a four unit apartment. The other guy is keeping his two flat. He's quite handy with doing maintenance himself so he saves money by doing lots himself when required.

    Both guys have always said if your have rental properties you need to keep a chunk of money available to pay for unforeseen emergency repairs, and be REALLY careful about who you rent to.
    "We should always try to do the right thing and the moral thing and the legal thing, but first we should do the SMART thing."
    --John S. Farnam
    Defense Training International

  2. #22
    Join Date
    Oct 2003
    Posts
    3,144
    Quote Originally Posted by apamburn View Post
    I'd ideally like to have 6 months expenses in the bank, but I'm not sure about 12 months. Seems like that much cash could be put somewhere that will grow it faster.
    "In the bank" doesn't necessarily mean in your checking account.

    Ideally I would like to have 3 months savings in my savings account, 3 months (plus growth) in a money market account, and then 6 months in a better, but low risk investment. Then I can get to that first 3 months at *any* time, the second 3 months on short notice, and the reset of it in a couple days.

  3. #23
    Join Date
    Oct 2003
    Posts
    3,144
    Quote Originally Posted by apamburn View Post
    No, I will have a mortgage on my primary with some down payment between the conventional loan minimum (I think 3% == ~$15,000) and 20% (== ~$75000).
    With a full 20% down I'll have enough leftover cash to do some new-home maintenance (carpet, appliances, etc...) and put a 3 month reserve in the bank.
    With the minimum down payment I will have enough cash to do that, plus something else (real estate? stocks and bonds? I lean towards real estate / rentals). But as a consequence I have PMI and higher principal + interest that just about balances out any rental income.
    I think I'd rather put the larger down payment on my house, have more monthly cash flow, and save for rentals or whatever I want to invest in. But I'm no expert and I'm asking for opinions from people that might have more experience than me.
    My opinion: I wouldn't pay PMI. I would try to get the lowest down I could without paying PMI, but PMI is money that is going away every month, that doesn't protect ME at all, and that I'll never get back or see any benefit from.

    You could put that same money in either a tax deferred vehicle (401k, etc.) for retirement, or put it into some sort of non-retirement oriented investment until it grows enough to be a down payment.

    Also, of you're putting 20 percent down you're knocking down your interest rate a bit (IIRC), AND your monthly mortgage payment. This might get you into a place where a 15 year note is within your payment schedule.

    Be careful with financial advisers, some of them are Pirates, and not in a good way. Lots of them have some sort of magic investment that beats the stock market without any of the risk. Ask them how many mutual fund managers are invested in their product.

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