The Goal: Leave my kids with as much real estate as possible!
Member since 2021 · 8 posts · 1 vote
The Goal: Leave my kids with as much real estate as possible!
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Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
5y@Matthew Krueger
I always make this joke with one of my good friends in the business. He owns quite a bit of real estate and his kids have a very blessed life. We are often on the phone when he is pulling up to pick them up from their private school and his Bentley and they are upset because the Wi-Fi is not on for the 10 minute car ride home.
I Love telling him to make sure that he at least gives them a couple free and clear properties in the portfolio that will be budgeted towards their drug and alcohol treatment center when they’re adults!
Clearly I am joking and I want the best for my friends kids, but my point is giving children something for nothing and they have nothing to do all day except counter money that is coming in from cash flow can be a dangerous thing.
It goes back To give a man a fish and feed him for a day or teach A man to fish and feed him for a lifetime.
I had my son by his first house at 13 years old with his own money he had saved and taught him how to take over back taxes and get owner financing for the rest.
He is 19 now and has done multiple properties, he is in the middle of two projects right now I’m top of his own property that he’s living in. He is dealing with the problems that come with Tenant /Buyers and contractors.
I love watching him have to deal with problems and get them solved to keep the deal alive.
My point is giving a hand up is a good idea but giving a hand out can be more devastating than rewarding.
Good luck with everything and if you want to keep on the path of giving away properties, I am up for adoption LOL
14 Replies
- Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes5y
@Matthew Krueger
My first step would be to cash out refinance my 15’s into 30’s
On a 30, your cash on cash should be at least 10% and your rate, even as an investor, for residential should be sub 5, maybe even sub 4. Therefore your highest and best use of your money is to deploy it rather than putting it into your properties for now. You can actually pay off your current properties faster by switching them to 30s, buying more property and then selling the extra properties at the 15 year mark. Your arbitrage is ROI exceeding your cost of debt which accelerates your velocity of money.
That being said, with $60k, you can find some nice multifamily in Aurora/Elgin with 3-4 units around $300k with very good cash flows on a 20-25% down payment. My house hackers are cash flowing even with pmi and only 3.5% down.
- Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes5y
@Matthew Krueger ok don't know anything about your details, risk tolerance etc, but if you wan't to "crush" it you will need more than 60K. Here are some thoughts, not mutually exclusive:
1) sell one (or more)property and exchange into a bigger property with more paydown and more cashflow
2) change to 30 year notes to generate more cash--we have the lowest interest rates we are ever likely to see...sounds like you could be making a lot more cash flow.
3) Maybe with #2 and even #1 get a HELOC and use that as a downpayment for a larger, performing property.
Not ragging on your strategy at all, but its a slow growth one.
- 5yMark AinleyBusiness MemberProperty Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
@Matthew Krueger The sky is the limit and I happy to see your renewed optimism on opportunity. As you have seen here that type of thinking is contagious. There is not wrong answer to your next steps so long as you are comfortable with the path and you stick to your numbers. There are deals out there it is just more challenging to locate. Remember you only need to find one deal at a time.
GC Realty & Development LLC4.61094 Reviews - Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes5y
@Matthew Krueger
I always make this joke with one of my good friends in the business. He owns quite a bit of real estate and his kids have a very blessed life. We are often on the phone when he is pulling up to pick them up from their private school and his Bentley and they are upset because the Wi-Fi is not on for the 10 minute car ride home.
I Love telling him to make sure that he at least gives them a couple free and clear properties in the portfolio that will be budgeted towards their drug and alcohol treatment center when they’re adults!
Clearly I am joking and I want the best for my friends kids, but my point is giving children something for nothing and they have nothing to do all day except counter money that is coming in from cash flow can be a dangerous thing.
It goes back To give a man a fish and feed him for a day or teach A man to fish and feed him for a lifetime.
I had my son by his first house at 13 years old with his own money he had saved and taught him how to take over back taxes and get owner financing for the rest.
He is 19 now and has done multiple properties, he is in the middle of two projects right now I’m top of his own property that he’s living in. He is dealing with the problems that come with Tenant /Buyers and contractors.
I love watching him have to deal with problems and get them solved to keep the deal alive.
My point is giving a hand up is a good idea but giving a hand out can be more devastating than rewarding.
Good luck with everything and if you want to keep on the path of giving away properties, I am up for adoption LOL
- Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes5y
@Matthew Krueger you are in a solid spot, so be careful trying to hit a grand slam right now. Maybe look to do a 1031 exchange into some larger properties that provide more cash flow? I am a big fan of trading up over time, and I think the buy and hold strategy will never work as well as the buy and hold with a trade up component. Reach out to @Lauren Speidel. She handled my 1031 exchange recently and can break down the benefits of the 1031.
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes5y
@Matthew Krueger - Excited to hear the newfound motivation! You definitely received some good advice above. $60k is definitely enough to do something with...if you can grab a house to flip now is a good time because of the low inventory.
Random idea, but can you refinance any your existing rentals to free up even more cash and get a lower interest rate?
Which Chicago suburb are you in?
Quality Builders4.967 Reviews - 5yTony AngelosPro MemberReal Estate Agent · Member since 2019 · 192 posts · 131 votes
@Matthew Krueger As other have pointed out, refinancing into a 30 yr would be a good first course of business. A lot of people think that 15 year notes save them money, but a recent article pointed out that you don't actually save any money until year 22...
While the advantage of a 15 year mortgage is less interest, faster equity build, etc...you are disadvantaged with opportunity cost.
And like others have said, 60k is a good amount of money to get a project under way. Sky is the limit for sure.
- Member since 2021 · 8 posts · 1 vote5y
Thank you, Michael! This is awesome... ON IT!
Originally posted by @Michael J Scanlon:@Matthew Krueger
My first step would be to cash out refinance my 15’s into 30’s
On a 30, your cash on cash should be at least 10% and your rate, even as an investor, for residential should be sub 5, maybe even sub 4. Therefore your highest and best use of your money is to deploy it rather than putting it into your properties for now. You can actually pay off your current properties faster by switching them to 30s, buying more property and then selling the extra properties at the 15 year mark. Your arbitrage is ROI exceeding your cost of debt which accelerates your velocity of money.
That being said, with $60k, you can find some nice multifamily in Aurora/Elgin with 3-4 units around $300k with very good cash flows on a 20-25% down payment. My house hackers are cash flowing even with pmi and only 3.5% down.
- Member since 2021 · 8 posts · 1 vote5y
Thank you so much, Jonathan. I need all the critiquing I can get lol. $$$$$
Originally posted by @Jonathan R McLaughlin:@Matthew Krueger ok don't know anything about your details, risk tolerance etc, but if you wan't to "crush" it you will need more than 60K. Here are some thoughts, not mutually exclusive:
1) sell one (or more)property and exchange into a bigger property with more paydown and more cashflow
2) change to 30 year notes to generate more cash--we have the lowest interest rates we are ever likely to see...sounds like you could be making a lot more cash flow.
3) Maybe with #2 and even #1 get a HELOC and use that as a downpayment for a larger, performing property.
Not ragging on your strategy at all, but its a slow growth one.
- Member since 2021 · 8 posts · 1 vote5y
I truly love this, Mark. Thank you!
Originally posted by @Mark Ainley:@Matthew Krueger The sky is the limit and I happy to see your renewed optimism on opportunity. As you have seen here that type of thinking is contagious. There is not wrong answer to your next steps so long as you are comfortable with the path and you stick to your numbers. There are deals out there it is just more challenging to locate. Remember you only need to find one deal at a time.
- Member since 2021 · 8 posts · 1 vote5y
This is going in the vault, Rob. Seriously, Thank you!
Originally posted by @Rob Gillespie:@Matthew Krueger
I always make this joke with one of my good friends in the business. He owns quite a bit of real estate and his kids have a very blessed life. We are often on the phone when he is pulling up to pick them up from their private school and his Bentley and they are upset because the Wi-Fi is not on for the 10 minute car ride home.
I Love telling him to make sure that he at least gives them a couple free and clear properties in the portfolio that will be budgeted towards their drug and alcohol treatment center when they’re adults!
Clearly I am joking and I want the best for my friends kids, but my point is giving children something for nothing and they have nothing to do all day except counter money that is coming in from cash flow can be a dangerous thing.
It goes back To give a man a fish and feed him for a day or teach A man to fish and feed him for a lifetime.
I had my son by his first house at 13 years old with his own money he had saved and taught him how to take over back taxes and get owner financing for the rest.
He is 19 now and has done multiple properties, he is in the middle of two projects right now I’m top of his own property that he’s living in. He is dealing with the problems that come with Tenant /Buyers and contractors.
I love watching him have to deal with problems and get them solved to keep the deal alive.
My point is giving a hand up is a good idea but giving a hand out can be more devastating than rewarding.
Good luck with everything and if you want to keep on the path of giving away properties, I am up for adoption LOL
- Member since 2021 · 8 posts · 1 vote5y
Southwest suburbs - Naperville/Aurora/Oswego. Thank you so much! Crunching numbers now!
Originally posted by @Jonathan Klemm:@Matthew Krueger - Excited to hear the newfound motivation! You definitely received some good advice above. $60k is definitely enough to do something with...if you can grab a house to flip now is a good time because of the low inventory.
Random idea, but can you refinance any your existing rentals to free up even more cash and get a lower interest rate?
Which Chicago suburb are you in?
- Member since 2021 · 8 posts · 1 vote5y
You are the man, Tony. Mind you, this pre-BP... but I thought it would be cool to go from a 5.1 30yrs to 3.25 15yrs. LOL
I think I can pull of getting out of the 15 yr on one of them though... thank you!!!
Originally posted by @Tony Angelos:@Matthew Krueger As other have pointed out, refinancing into a 30 yr would be a good first course of business. A lot of people think that 15 year notes save them money, but a recent article pointed out that you don't actually save any money until year 22...
While the advantage of a 15 year mortgage is less interest, faster equity build, etc...you are disadvantaged with opportunity cost.
And like others have said, 60k is a good amount of money to get a project under way. Sky is the limit for sure.
- Member since 2020 · 339 posts · 356 votes5y
@Rob Gillespie
Geez that was a great post ,I have a lot of respect for you and what you taught your boy
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