Lo is in a good spot with her career, but she’s struggling with a ton of student loan debt, and consequently, credit card debt. What should she do to manage it?
Anonymous wants to know how to set up a backdoor Roth IRA.
Eric and his wife own a property in Savannah, GA that brings in more money as an Airbnb than a traditional rental. They want to invest in more properties and are wondering if this model is the best path to take.
James wants to own a vacation rental in the Vermont mountains that he can use when it’s vacant. What features or qualities would make a profitable vacation rental? What red flags should be on his radar?
Ayesha is looking at buying a rental property that has a partial HUD claim on it. What kind of complications should she anticipate? Or should she let this property go completely?
Shelbi and her husband own a rental property that they purchased for $178,000 that’s now valued at $300,000. They’re looking at a multitude of options – sell it, move into it, or keep it. What’s best given their FIRE goal?
Lo asks (at 01:36 minutes):
I’m making more than I ever made. I’m back to school and have a great career, but with that, tons of student loan debt. My monthly payment is $760. I’ve refinanced the private loans, and I have income-based repayment on my Federal loans.
My issue is that I have less in savings than before I went back to school and made all this money, and I also have more credit card debt. I earn around $80,000/year.
Should I put my loans into forbearance to increase my savings and pay off my credit card? (My credit card debt came from an injury and not poor spending habits.) I estimate that it will take around six months for me to pay it off. I’d love your thoughts on what I should do.
Anonymous asks (at 12:45 minutes):
I have a 401k at work that I max out, but I’d like to start an IRA to save more for retirement, and I want to do a Roth IRA. However, my earnings exceed the limit for a Roth. How can I fund a backdoor Roth IRA?
Ayesha asks (at 21:21 minutes):
My goal is to get into single-family cash flowing properties; I don’t own any yet. I live in an expensive metro area under a rent-controlled apartment on the East Coast with my husband.
I max out my Roth IRA and 401k totaling $24,000 so far. I also have $30,000 in savings including $10,000 emergency fund. We have $100,000 in student loans that we’re also trying to pay off.
I’ve asked for advice on our situation in local real estate groups, but haven’t found any sound advice yet.
I have extended family living in Gwinnett County, Georgia who own a single-family home. It’s a three-bed, two-bath with a bonus fourth room. This family can no longer maintain the house and is in the process of selling or transferring it.
The house was originally sold to this owner in 2003 for $153,000. The house went into pre-foreclosure back in 2013, and it was refinanced from a bank to an FHA loan for $100,000 as the starting principal. There’s partial HUD claim on it for $32,000. As I understand, this was removed from the principal to lower the monthly payment during this refinance FHA loan process. If this house is sold, this $32,000 would need to be paid to HUD.
The house has $85,000 left on its FHA loan at a 4.75 percent interest rate. The after-repair value of this house is close to $200,000. Rent for comparable properties in the area is $1,200 – $1,600 per month.
What are the best options on the table? Can this property be transferred to me under my name as-is? Or should I buy it via a traditional process? Or should I let it go completely?
Eric asks (at 31:40 minutes):
What are your thoughts on the Airbnb model as compared with a traditional rental property?
My wife and I own a house in Savannah, GA that we list on Airbnb. It does better there than it ever did as a traditional rental. Is this what we should look for in future rental home purchases?
We also wanted to know how the six month emergency fund should work with an Airbnb model. Do we base the six month figure on what the traditional market rent would be?
Once the emergency fund is fully funded, what do you do with the leftover profits? Do you continue to put some money in the emergency fund?
James asks (at 48:26 minutes):
I’d like to achieve FIRE – here’s my background. I make $143,000 plus $24,000 per year in RSU’s. My unmarried partner and I have good benefits: $1,400 per month in rent, free utilities, three meals per day most of the year, a cheap gym, and others. I have no debt, but I sold my car that I was underwater on, so my emergency fund is only about three month’s worth. I have excellent credit.
As my RSU’s vest, I cash them out and put them into a house downpayment fund, half of which is invested in REITs. The other half is cash. I have about $50,000 and am fortunate enough to get $15,000 per year from my grandmother’s estate. I max out my 401k which has a four percent match, and I also max out my Roth IRA and HSA. On top of that, I save with Acorns and cryptocurrency.
While my savings and job are good, I have a clear ceiling of two percent annual raises and no promotion in sight. Given that and my goal of FIRE, I want to buy a vacation rental in Vermont near a ski mountain. I’ve never owned property, but I love the idea of an investment that I can use for fun when it’s vacant.
I’ll live in Connecticut for the next five years – after that, it’s uncertain. Here are my questions:
- What should I be careful of here?
- Should I start with a small cabin, or go big with lots of beds?
- How do I determine potential income and ways to force appreciation and revenue given seasonal volatility?
Shelbi asks (at 01:05:47 minutes):
My husband and I have a rental property that we purchased for $178,000. We owe $134,000 on it. We have a long-term renter in the property who pays $1,400 per month, and the mortgage is $1,100 per month. Right now, based on the price at which similar houses in the area have sold, the current home market value is $300,000.
Knowing that we want to continue with rental properties in the future, should we stay with this rental as an investment for our retirement?
Or should we sell it because it’s worth so much and we owe so much?
We could use some of the profit to buy a lower-cost rental that could better benefit us, and use the rest of the profit to add to our downpayment savings for a personal home, and possibly to fund our IRAs.
Or should we move into the rental so that we can sell it in the future and avoid capital gains tax?
Or is there another option that we’re not considering?
Resources Mentioned:
- affordanything.com/balancetransfer for balance transfer offers
- Anonymous’s Question:
- Is a Roth Conversion Right for You? | Vanguard
- How to Convert a Traditional IRA to a Roth IRA | Vanguard
- About Form 8606, Nondeductible IRAs | IRS
- Ayesha’s Question:
- Shelbi’s Question:
- For more on 1031’s, check out Episode 235 at the 43:50 time stamp
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