Riskiest financing move that paid off for you?

Question

I’m curious if any of you would share some manner of “risky” financing that you engaged in, from top-of-buying power down payment + conventional financing to short-term or private lending that you really weren’t sure how you were going to pay off, but you played right, worked out, and you and your lenders were happy with the results?

Andrew Freed · Answer

@Jason Shackleton Smart moves, good work! Opportunity costs are real, glad you took full advantage of the equity at your disposal. That's how you multiply wealth.

Brandon Hagen · Answer

@Jason Shackleton

That’s the kind of game I’m curious about. Numbers-per-deal is only a portion of the story. If you had only focused on the first property and the deal it WAS, you wouldn’t have been able to do the deal it MADE. Great work, smooth moves!

Jason Shackleton · Answer

Hey @Brandon Hagen

I have a story. I purchased a property for $300,000 with a solid rate of around 3% at the time. I bought it right, added a legal basement apartment, gut the whole house and caught a hot market. The property doubled in value two years later. I could have stopped there and received about $1200/Mo in true cash flow, Awesome deal.

I didn't lol and Dave Ramsey would shoot me for what I did do. I refinanced the property for $585,000 And essentially doubled my mortgage amount and way over doubled my payment, paid a higher rate at 4% and paid a over $7,000 fee that was due at origination. Also I believe a mortgage breaking fee lol. What a fool most would say but I didn't hesitate for a second. The property was kept at a $100.00/Mo cash flow all said and done. Keep in mind my job was not helpful with financing at the time thus higher rates due to DTI etc.

I took $234,000 out in a refi. It's the ROI on the next deal that matters. If I was losing cash flow on one deal I was going to pick it up at another.

I bought a run down legal 2-unit for $392,000 and put 25% down and $50k into it. I doubled the rents and made it beautiful. When it was done it was valued by my agent at $525,000. I doubled the rents and picked up another $1200.00 in cash flow. This property...both in fact have since appreciated wildly since. This one would be worth around $750,000+ currently.

I sacrificed cash flow at one property to pick it up on another! My wealth and potential for appreciation doubled.

I also have cash left over from that first refi that I have quintupled in other asset classes lol. So long story short it's all about the ROI.