Growing a portfolio

[Tarcizio Goncalves]

Hi everyone,

I was fortunate enough to buy a foreclosure property in 2012 and then selling it 9 months ago and was able to make a decent amount of money. With the profits of the sale, I was able to put down 3.5% on an owner occupied 2-family home in a more affordable market.

Now I have this extra cash and want to make the most out of it while investing in Real Estate. During the podcasts, I hear the guests having some cash and they are capable of increasing their portfolio drastically. How can one like me increase my portfolio? I hear on the podcasts the concept of leveraging cash. I tried to understand this concept but I cannot. Any advice? What does leveraging cash mean?

How can one start to build their portfolio when one already has cash?

Thank you all

Tarcizio

[Brent Coombs]

Originally posted by @Tarcizio Goncalves:

Thanks for the clarification @brent coombs. Here is what I did 

I had an accepted offer on 2 4-fam property (total of 8 units). I eventually backed out of the deal but if I went forward with it, I would have put down 25% on each property and wouldn't have much to buy more properties until I built my savings again. Investors are buying properties at a fast rate and I just don't know if I can do it as fast as them. I know I'm missing something but I don't know what.

But, you didn't back out BECAUSE you "wouldn't have much to buy more properties", right? (That'd be just wrong!)

You had the right idea of using 75% leverage. If you want to accelerate that to 100% AFTERWARDS, you'd need to be paying no more than 70% (all-in) what the property would appraise at once rehabbed. Because THEN, you could Refinance it up to 70% of that appraisal, which would get you ALL your deposit back - to Repeat, Repeat, Repeat...