View Full Version : Good Financial Plan?

08-18-2005, 08:33 PM
Ok...I'm sorry for the lack of detail, but here goes. I live in the Washington, DC area and have a decent job (40's), but make more money playing poker on the side than working. I like my job, but I'm not sure how long I want to stay in the area, and what I really want to do ultimately. I've rented for 3 years here and currently pay $1000 a month in rent. Condos in any place I'd want to live (near metro, cool area, etc) are in the 300k range for a one bedroom. While the market is great here, I don't know how much it can keep going up and up...is it worth locking up a ton of money to buy or better to just put it in mutuals or whatever? Having a huge mortgage payment would scare me (though I have a good cash reserve), but I could swing 25k for a down payment. Also, if I'm not sure I'll be here for say, 5 years, is it worth buying?

Other option is to continue to rent here as long as I stay here, but buy a place in Atlantic City as both a vacation home/investment property. I'm there twice a month anyway and spend like 300 on hotels, plus the town is totally reinventing itself (cleaning up the ghetto, shopping, etc). I could also rent it in August for money towards the mortgage. And it would allow me to spend more time in AC which would lead to more poker profit. Thoughts? One bedrooms on the boardwalk can be found for like 150.


08-18-2005, 10:28 PM
If you have $60K to put down, you can get into a 1.5% fixed interest rate for the first 5 years. Your mortgage payments would be less than $1,500 a month if you have good credit. You would also get good tax deductions because you own a property.

greg nice
08-18-2005, 11:42 PM
snowbank, what type of loan is that where you put 20% down and get such a low interest rate for the first 5 years?

08-19-2005, 05:42 AM
It's not that simple in terms of the loan rate. Generally to get a lower loan rate, you need to pay a higher out of pocket fee or points to the lender. So it's sometimes better to get a higher interest rate, and pay lower cash up front.

It depends on how much cash you want to pay up front, vs. how much lower the interest rate is that you get.

If you stay in the house for 30 years, or rent it out for 30 years, then the lower interest rate will tend to pay for itself over a LONG period of time. Because the interest savings long term starts to make up for the huge up front cash layout.

I think Mortgages for Dummies gives a decent explanation of the trade off between interest rate and points. Or do a general websearch for mortgage info.

On yahoo there is a mortgage info section with a reference to a website by some professor who calls himself the mortgage doctor or something like that. His advice seems to be pretty good, with lots of calculators and illustrations.

08-19-2005, 09:32 AM
I can't see how it makes sense to buy in DC now if you're not certain of staying for a long time. No one can say for sure that there's a housing bubble in the works, but it's certainly a possibility. Having a 300k mortgage on a 250k property (or worse) would not be cool.

08-19-2005, 10:32 AM
Jeff - take your down payment and invest in a better education. Making 40's in the DC area is at the low end of the curve you'll need to make more before you feel comfortable buying a house. Also, just came back from AC - that town has a long way to go before it turns the corner.

08-19-2005, 10:46 AM
vacation home/investment property

Landlord is a skill which you will need to develop first. Absentee landlord is the hardest type to be.

AC is not Vegas and it unlikely to become Vegas. It will have to compete with the internet and all the other second and third tier gambling towns, and in the future places like Macau.

I don't think you have the finances to aford the luxury of a vaction home. If you include possible gambling losses I think you will be negative cash flow.

I suggest you work at improving your job/earned income. See if you can get work in a cheaper area.

1)You also need to understand that the large number of bad poker players fueling your returns are not going to last for ever. It is a fad.
2) Your poker winnings could be luck.

08-19-2005, 05:23 PM
I didn't mention this in my first post, but I'm only 25. 40's is somewhat low for the area, but I'm only 3 years out of college and not in a field where six figure jobs are easy to come by. I could see getting a bump in the near future potentially.

About the school thing, I could see your point, but I'd totally have to switch fields. That, and I REALLY don't want to go back...I've carved out a comfortable existence with my job and my poker income, and I don't really want to work that hard...honesty is a good thing.

Also, about the income...if I told you, I make almost 100k, everyone would tell me to buy the house. With poker income AND my job, that is the case (it could be more, but I'd prefer to lowball it when considering items like this). Also, I could come up with a 20k downpayment without loans and still have a good cash reserve.


08-19-2005, 05:30 PM
Interesting thoughts about AC...do you actually think a condo there would lose money? I doubt that would be the case; the city is definitely trending up and could (at the very least) compete with neighboring shore towns (Margate, etc) which have a hot real estate market.

As for the earned income thing, I don't know many people (that aren't in a field like computer programming) earning more than I do at my age (25). I picked a crappy major probably, but I like my job and could ultimately make more money soon. That being said, becoming a pro poker player is always something in the back of my mind, even though it's probably not the best idea.

My poker winnings are not luck. I have paid taxes on significant winning for the past few years now. You could be right the games won't stay as good forever, but I was making money before this explosion (obv. more now).

If you're in my case with a good amount of liquid cash at a young age...what's you plan so you don't work your whole life? I put lots in 401k and invest a good bit (Merryl Lynch guy does legwork). I'd like to buy real estate, etc. Play poker, invest, maybe have other business interests. I'm young, but I'm already tired of working for others, even though I like my job (as far as jobs go).


08-21-2005, 08:53 PM
Learn to play Monopoly before you play Monopoly.