This place truly is paradise, especially if you love the outdoors. Hiking, fishing, surfing......

With housing prices so high, what have you done to get ahead?  What worked? What didn't?

Even if you are fortunate enough to own a home in Hawaii, how do you get that 30 year fixed off your back?  You pay double if you let it ride.

Anyone do an Australian mortgage? 

Rentals, while a lot of work, truly are great if the tenants are good. 

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This place truly is paradise, especially if you love the outdoors. Hiking, fishing, surfing......

With housing prices so high, what have you done to get ahead?  What worked? What didn't?

Even if you are fortunate enough to own a home in Hawaii, how do you get that 30 year fixed off your back?  You pay double if you let it ride.

Anyone do an Australian mortgage? 

Rentals, while a lot of work, truly are great if the tenants are good.

I guess I'll take a stab at this one. First, what Q said is good advice IMHO. 

On the mainland in 1992 I divorced my wife (Best financial decision I ever made). I was probably a few months away from declaring bankruptcy. In 1993 the first thing I did is I started to eliminate all debt. I paid off my truck and all credit cards. I paid off the lowest balance first and when it was paid off I used that payment, added it to the next payment and applied it to the next highest balance, etc. I only charge what I can pay off every month now. I built up my savings and I live very modestly. I don't buy expensive cars and, I usually buy 2 or 3 year old used and keep them until they don't make sense financially anymore. I saved enough to buy my first home in 1999. I make extra payments to my mortgage. I think the formula is one full extra payment a year cuts down your 30 year mortgage to 22.5 years. But you must make sure the mortgage company is applying the extra payment to principal and not interest. I have to constantly fight with the bank to apply my extra payments to principal. Anyway, divide you monthly mortgage payment by 12 and add that amount to your monthly mortgage payment. If you can afford to make the same payment on your 30 year loan as a 15 year loan you will pay it off in 15 years. But you always have the option of making the lower 30 year payment on months where you can't make the 15 year payment. I keep the extra money I get from the federal tax write off for the house and put it in savings or use it to pay down my mortgage. Once you get to the point that you have more savings than you need (Usually 6-9 months pay) and a fair amount of equity in your house then you have options to expand your financial position.

To me real estate is the best investment. Better than the stock market IMHO. Hire a good property manager and you won't have to worry about bad tenants.

I guess I'll take a stab at this one. First, what Q said is good advice IMHO. 

On the mainland in 1992 I divorced my wife (Best financial decision I ever made). I was probably a few months away from declaring bankruptcy. In 1993 the first thing I did is I started to eliminate all debt. I paid off my truck and all credit cards. I paid off the lowest balance first and when it was paid off I used that payment, added it to the next payment and applied it to the next highest balance, etc. I only charge what I can pay off every month now. I built up my savings and I live very modestly. I don't buy expensive cars and, I usually buy 2 or 3 year old used and keep them until they don't make sense financially anymore. I saved enough to buy my first home in 1999. I make extra payments to my mortgage. I think the formula is one full extra payment a year cuts down your 30 year mortgage to 22.5 years. But you must make sure the mortgage company is applying the extra payment to principal and not interest. I have to constantly fight with the bank to apply my extra payments to principal. Anyway, divide you monthly mortgage payment by 12 and add that amount to your monthly mortgage payment. If you can afford to make the same payment on your 30 year loan as a 15 year loan you will pay it off in 15 years. But you always have the option of making the lower 30 year payment on months where you can't make the 15 year payment. I keep the extra money I get from the federal tax write off for the house and put it in savings or use it to pay down my mortgage. Once you get to the point that you have more savings than you need (Usually 6-9 months pay) and a fair amount of equity in your house then you have options to expand your financial position.

To me real estate is the best investment. Better than the stock market IMHO. Hire a good property manager and you won't have to worry about bad tenants.

Good stuff inspector and Q! 

Agreed.  Never had a car payment, only debt initially was my home, but now there are others pertaining to the home. 
What you stated is solid advice, and Dave Ramsey has some good ideas as well.  My only issue is it takes 22.5 years.  That's 12.5 years too long in my opinion. 

The principle portion is important advice as well.  I've made extra payments, but haven't stated where they should go.   

Along the lines of what Q mentioned, I attended (free) a sweep strategies class. What I liked about it was they show you one of their methods to pay off your home much quicker, and don't pressure you to sign up if you don't agree with it.  I couldn't wrap my head around it initially, as you are acquiring more debt to payoff your debt but it makes sense, especially when you analyze an amortization table.  That and the fact that several coworkers have gone through the the class, signed up and are using it to their benefit really opened my eyes.  With the right discipline and planning, one can do it on their own, but there are a lot of other things to learn to protect one's nest eggs, particularly when more than one property is acquired over time. 

I've learned money buys you freedom.  I don't care about money itself, but the pure unaltered freedom it can offer is what I'm really after. 

The house I picked up also provides rental income, and while initially it's required a lot of work up front, by year five I should really be able to start chunking this note down.  Tenants are always tough, and While I would prefer to live on my own, a mortgage is a much greater negative. 

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Good stuff inspector and Q! 

Agreed.  Never had a car payment, only debt initially was my home, but now there are others pertaining to the home. 
What you stated is solid advice, and Dave Ramsey has some good ideas as well.  My only issue is it takes 22.5 years.  That's 12.5 years too long in my opinion. 

The principle portion is important advice as well.  I've made extra payments, but haven't stated where they should go.   

Along the lines of what Q mentioned, I attended (free) a sweep strategies class. What I liked about it was they show you one of their methods to pay off your home much quicker, and don't pressure you to sign up if you don't agree with it.  I couldn't wrap my head around it initially, as you are acquiring more debt to payoff your debt but it makes sense, especially when you analyze an amortization table.  That and the fact that several coworkers have gone through the the class, signed up and are using it to their benefit really opened my eyes.  With the right discipline and planning, one can do it on their own, but there are a lot of other things to learn to protect one's nest eggs, particularly when more than one property is acquired over time. 

I've learned money buys you freedom.  I don't care about money itself, but the pure unaltered freedom it can offer is what I'm really after. 

The house I picked up also provides rental income, and while initially it's required a lot of work up front, by year five I should really be able to start chunking this note down.  Tenants are always tough, and While I would prefer to live on my own, a mortgage is a much greater negative.

I am 5 years from retirement. So I have stopped leveraging my properties and I have started using the rental income to pay off all the mortgages. I am on schedule to pay off the last one (Not including the house I currently live in) in approximately 3-4 years. I am not recommending you do this I am just saying what I am doing for myself. I prefer not having any mortgage and any debt of any type. The freedom aspect is why I am doing what I am doing as well. I don't want to have to work after I retire. I want to have the option if I choose but I will not have to work and I will have the money and freedom to travel as I choose after I do. That is my ultimate goal.

I listen to Dave Ramsey occasionally. He gives good advice for the most part IMHO. I am just not into the stock market and related investment strategies anymore. Too much work for so little return. I prefer real estate as having a property manager for each property allows me to not have to deal with the day to day headaches. I only have to deal with the big purchases and when a tenant leaves and trying to find a new one. I have had relatively few tenants since I started buying rental properties. I guess I have been lucky.

I am happy for you that you have rental income. The thing about having rental property is that it provides so many benefits that most people don't know. First is the passive income that my property manager deposits into my accounts every month. The second is the depreciation you get to take (Up to $25k per year) off of your Adjusted Gross Income (AGI). In most cases you won't have to pay taxes on the income. The third is the build up in equity that you get when your tenants pays your mortgage payment every month for you. And then another equity build up is when the property appreciates. All of these things add up over time. And all you have done is purchased some property and rented it out.

I am not sure the Sweeps Strategies will work very well during these times of low interest rates. I cannot see the benefits of it when all you could possibly gain is 0.25% or even 0.5% for a month while your money is in the sweep account.

Good luck with your new home and new found freedom! 

I am 5 years from retirement. So I have stopped leveraging my properties and I have started using the rental income to pay off all the mortgages. I am on schedule to pay off the last one (Not including the house I currently live in) in approximately 3-4 years. I am not recommending you do this I am just saying what I am doing for myself. I prefer not having any mortgage and any debt of any type. The freedom aspect is why I am doing what I am doing as well. I don't want to have to work after I retire. I want to have the option if I choose but I will not have to work and I will have the money and freedom to travel as I choose after I do. That is my ultimate goal.

I listen to Dave Ramsey occasionally. He gives good advice for the most part IMHO. I am just not into the stock market and related investment strategies anymore. Too much work for so little return. I prefer real estate as having a property manager for each property allows me to not have to deal with the day to day headaches. I only have to deal with the big purchases and when a tenant leaves and trying to find a new one. I have had relatively few tenants since I started buying rental properties. I guess I have been lucky.

I am happy for you that you have rental income. The thing about having rental property is that it provides so many benefits that most people don't know. First is the passive income that my property manager deposits into my accounts every month. The second is the depreciation you get to take (Up to $25k per year) off of your Adjusted Gross Income (AGI). In most cases you won't have to pay taxes on the income. The third is the build up in equity that you get when your tenants pays your mortgage payment every month for you. And then another equity build up is when the property appreciates. All of these things add up over time. And all you have done is purchased some property and rented it out.

I am not sure the Sweeps Strategies will work very well during these times of low interest rates. I cannot see the benefits of it when all you could possibly gain is 0.25% or even 0.5% for a month while your money is in the sweep account.

Good luck with your new home and new found freedom! 

what are sweeps strategies?

My sister first got involved in the sweepstakes class, and a year later her car is paid off and she is enroute to wiping out her mortgage in 5 years instead of 20.

My brother jumped on board and will finish paying his 500k mortgage in the next 2-3 years instead of the projected 10-15 last year.

Me, I'm not so into it. I think the banking managers that attend get a cut and give hook ups to members, but you can still learn the system on your own and get the low rates without having to pay for the course, though i highly recommend it if you are not keen on independent studies.

My focus is now on the tiny house revolution taking place around the world, and using Hawaii's unpermitted loophole to build a tiny house that's perfect for someone/couple/small who wants to own a home for less than 50k, assuming you can find cheap land in Hawaii.

Hey Q,

What are the investments that these strategies use for the sweep account? The way I understand how they work would require much better returns than I can see getting right now in this depressed economy. I want to understand what the investment vehicles are. Maybe I should attend a class?

I have a 2/2 home on the Big Island that is sitting on 3 acres. I will be putting a tiny home on the property when I retire and move back over there. I have family that wants to rent the small house from me. The 2/2 home is currently rented and paid off. Also, I will probably add a couple of container buildings on it as well. Also, no permit needed. But there is still cheap land out there if you really want to live far enough away from Kona and Hilo. Or if you want to live off grid. Or both. Let me know if you want to know more. I have been buying and selling on the Big Island for the last 10 years or so. As a matter of fact I just got my real estate license while I was off work having knee surgery and I will be working part time with some clients over here on Oahu and on the BI once the paperwork is completed. I have a real estate broker over there that I have been working with. But now I am hanging my license with him. I believe $50K +/- is doable.

what are sweeps strategies?

I am not an expert so someone correct me if I am wrong. But with business accounts, banks refuse to pay interest on the money deposited in a biz account. Also, there are sometimes high fees on biz accounts. So the idea as I understand it is you take all or most of the funds (Sweep) out of the account every night and put them in an account that earns interest or some other method. Then you deposit money back into the biz account as needed. It is a way to keep your money earning interest. instead of sitting an account doing nothing. You then can use the money earned to make payments and pay down loans. Did I get that right?

Macsak, take the free class.  Behind cutter ford in Aiea.  By fabric mart and such.  They teach you chunking.  Flipping is a little harder to wrap your head around..... But makes sense for cash flow purposes. 

Q and inspector, that's awesome on the tiny houses. One of my tenants wanted to do so as I have enough lot to have 1.  The difficult part was finding good trailers, found a guy on Maui who fabricates new ones.  Can't remember the name. 

Inspector, sounds like you are well on your way! 

Will reply later.  Off to work! 

Macsak, take the free class.  Behind cutter ford in Aiea.  By fabric mart and such.  They teach you chunking.  Flipping is a little harder to wrap your head around..... But makes sense for cash flow purposes. 

name of company or website?

I'm doing sweep for two years now. The program works for me but not for everyone. It's help if you have a good job. My neighbor got PV within two weeks and paid it off within months and within two years just got another property. My brother in law family live pay check by pay check, now the programs works with PV and living verry happy. For me, if you guys know me. Life is very, very, good.

name of company or website?

Sweepstrategies.com

I am not an expert so someone correct me if I am wrong. But with business accounts, banks refuse to pay interest on the money deposited in a biz account. Also, there are sometimes high fees on biz accounts. So the idea as I understand it is you take all or most of the funds (Sweep) out of the account every night and put them in an account that earns interest or some other method. Then you deposit money back into the biz account as needed. It is a way to keep your money earning interest. instead of sitting an account doing nothing. You then can use the money earned to make payments and pay down loans. Did I get that right?

They teach you to use a PLOC as your account.

That is your savings/checking/emergency fund all in one. 

Throw a chunk to mortgage (leave cushion in the balance of course), deposit all paychecks in there when you get them, write mortgage payment pay all bills from there.   Zero balance every six months, rinse and repeat.

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Yeah take the class or learn from someone who has if you don't want to spend the hours learning how to go about obtaining a PLOC or HELOC.

I'm starting to think that those who take the class somehow get easier access to LOCs, but I've talked to people who have had great success without the class as well.

Yeah, I was thinking about the land on the BI and may hit you up for more info in the future 

Q, there is access to some new stuff not out yet.  Haven't signed up yet but will once I catch up on my renovations.

Regarding the tiny houses and land,  if you could secure a water source, living in a tiny house wouldn't be bad at all.   The thing I've noticed is how do you find inexpensive land?  I always wondered why people sell these teardown  homes with the property.   I've realized that it's much easier to get a 30 year with a tear down then it is to buy land.

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Sweepstrategies.com

mahalo

mahalo

No problem. Would be interested in your take as well after you go.