At Last, My Philadelphia Investment Property
Despite all of the talk about a housing bubble, I have decided to purchase an investment property, a triplex in the Philadelphia-area. (If you haven't already read my story up 'til now of the real estate search, click here.) I chose Philly because it's more affordable than New York, where I live, or California, where I am from. I may move to Philadelphia at a later date, but for now I intend on managing it from New York, only 2 hours away.
I need to come up with 5% down, and a few of the closing costs by the scheduled settlement date, June 13. It's going to take all of my emergency money and then some. As tempting as it may be, I am not going to withdraw any money from my 401(k) account or my Roth IRA. I plan on coming up with the rest of money in the following ways:
- I've been working all of the available overtime at my job, and for the last two weeks, I've averaged 20 extra hours a week.
- With the exception of last month's Puma shoes, I also have been on an extreme financial cutback, not charging any thing on my credit card and paying in cash for my purchases.
- My first June paycheck will be solely devoted to my plan. I may take all of my money from my brokerage account, and I'll take a draw from my business account, instead of spending that money on my business.
- I also have a freelance project in early June; that will add another $550 to my cash on hand.
Since I will have exhausted all of my money with the purchase, I need to act fast to replenish my emergency fund so that I don't have to rely on my credit cards. I'm really excited and hopefully everything will work out smoothly. I'll keep you posted.
This is also posted at Financial Freedom Trek.
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Overall, my net worth increased $562.40 since March 30th. First, in April, I worked about the equivalent of one shift extra. I would have liked to get more overtime, but it wasn't available. I contributed an additional $2000 in my Roth IRA, $1000 of which ... Read
At long last, here is a summary of my net worth as of March 31, 2005: Read
You are much braver than I am!!! I would never stretch myself so thin to get make an investment. But then again, I almost always take the more conservative approach, which will likely mean I'll still be working while you sip margaritas in the bahamas. :-) Looks like you've done your research, I hope it all works out for you.
Assuming you rent our all units fairly quickly, how much income will you get above the mortgage payments?
-Nathan
Thanks for your comment. After the principal, interest, taxes and insurance, estimated maintenance and other expenses I will have about $200 bucks a month. Initially, I need to put that back into the property (the current water heater is insufficient). I used my favorite investment property calculator to help me figure out the real expenses:
http://militaryfinance.umuc.edu/calculators/InvestmentProperty.html
The two things I have on my side are time and the fact that no one else depends on my income. In any case it's not going to be easy, and I have to work my butt off to create some serious reserves. It's not a ton of cashflow per month, but hopefully slow and steady will win the race.
I've linked to your blog on my blog!
Congrats on the investment property!
Someone wrote me having seen my e-mail address here, because I retired at an early age and that person is looking for advice on how to do it as well.
Rather than use the advertisement model as you are, I'd like to get "subscribers" who pay me cash for advice.
I also look at investment properties and have thought about Philly. I'm in Baltimore myself, not that far from Philly. In ways the towns are similar insofar as there is potential in the real estate market. I have a different approach- I find properties that will increase in value rather than the rental/cash flow approach. The Baltimore house that I bought five years ago has increased in value 400% since I bought it! Beats the S&P 500!
I believe in slow and steady too, don't get me wrong.
I've linked to your blog on my blog!
Congrats on the investment property!
Someone wrote me having seen my e-mail address here, because I retired at an early age and that person is looking for advice on how to do it as well.
Rather than use the advertisement model as you are, I'd like to get "subscribers" who pay me cash for advice.
I also look at investment properties and have thought about Philly. I'm in Baltimore myself, not that far from Philly. In ways the towns are similar insofar as there is potential in the real estate market. I have a different approach- I find properties that will increase in value rather than the rental/cash flow approach. The Baltimore house that I bought five years ago has increased in value 400% since I bought it! Beats the S&P 500!
I believe in slow and steady too, don't get me wrong.
Congrats on your first purchase! I hope this is one of many purchases you will make.
I'm 24 and I have purchased 3 properties around the country. I have taken a different approach to investing in real estate though. Instead of focusing solely on cashflow, I am investing in markets that have above average appreciation with little or no negative cashflow.
I, too, have a goal of retiring early, and I have realized that I needed to be super aggressive in order to meet my goals.
