what you guys think....

[Isiah Ferguson]

Me & my fiancé made the  "mistake" and cash out on a duplex for 95k and 4k in repairs back in November 2016. Our monthly cash flow has been great at 1,020 per month which calculates about maybe 13% ROI yearly after taxes and insurance. Our main focused was cash flow at the time but I think we have the concept of REI wrong a little I'm not sure. The more I educate myself in this game leveraging is starting to make more and more sense for the simple facts of appreciation, cash flow, OPM/banks, & taxes. With leveraging, lower cash flow per door after expenses doesn't quite make sense to me yet when the goal is to acquire enough cash flow too cover your expenses etc. Appreciation isn't always guaranteed and I had the same issues with bank too. No one wanted to lend me money because I didnt have a W2 job at the time because I got injured playing professional sports and I was receiving workers comps but I knew I wanted to build in this business. Leveraging is a little scary but I think if the numbers are correct at purchase and expenses are calculated correctly, and with reserves, you can protect yourself. I also think it ball down too your exit strategy, worry less about cash flow at the moment and build your business. The cash flow and appreciation will come if you buy right from the beginning then you can enjoy cash flow later as you scale up and this is why I'm looking to do a cash out refinance and get my money back. We still figuring things out because having a property free and clear feels so much better than having mortgages I bet but I think we have to look at This as a business that has to be grown. idk I'm still a newbie but thats how what I see now.

Also we're renting for $1,100 a month. what can be the exit strategy for this with our banks issues at the moment  ? any seggestion 

[Chinmay J.]

Oh Wowwww.. @Isiah Ferguson of RAMS.. Really !!!! If I understand your dilemma correctly, you are kind of torn between whether you want to have a property free and clear or you want to have mortgage on it. There are people on this very site who are ardent believers in one strategy vs the other. Both have their benefits, and there are business models where it makes sense.

With bank's money you can do a lot more than what you can with your own money. Even if one has $1MM sitting in bank account, you can only by a $4MM property if one goes to bank. Rarely one finds appreciation and cashflow in one single deal. If you are buying for future appreciation, you cannot use the same matrix as you might use if you are buying for cash flow right now, and its usually the function of neighborhood that you choose.

Just because you can cash out for "x" amount from a given property, doesn't mean you have to. You can always cash out a little less and leave a little bit in the property a for a potential drop in the prices - just to play it safe.