All Forum Posts by: Aaron Bonne

@Morgan Wallace correct, just call around in your local market. The local community banks typically are more flexible on what they can do as they probably hold the loans in house, whereas the big regional/national banks bundle a bunch of loans up and sell them within days.  If you don't fir their narrow criteria, then they won't be that willing to work with you. Not saying it's impossible, just my experience.

I'd call a dozen or so banks in your area, start an excel sheet with criteria of what they offer such as LTV, seasoning or no seasoning, terms, etc. and you'll eventually find the best product for you and be on your path to success!

Good luck, let us know what you find and please feel free to reach out directly if you want

@Jonathan Trimboli As many others have said, it depends on your goals. $3MM is a boatload of money. Personally, I would invest in in numerous apartment, self storage, and MHP syndication deals. That's me though, as I lean towards the more passive route at this point. As @Ronan Donnelly said, be conservative in initial investments with various sponsors then double down on the ones you like in the future.

You should certainly save some cash for rainy days and maybe put some in a conservative index fund as they are liquid whereas most real estate investing is not.

However, to give an example of what $3MM could do for you in syndications, many syndications have an 8% preferred return, meaning $3MM would net you $240,000 a year or $20,000 a month. More than likely that is tax free income early on given cost segregation, bonus/accelerated depreciation, etc. Could you live on that? I certainly could.

You also have the $3MM principal still, hoping your deals perform and that $3MM becomes say $4.5MM in 5 years. Reinvest the $4.5MM and your cash flow increases again. There is certainly risk and finding the right sponsor is critical, but this is the route I would take.

Hi @Morgan Wallace

Sounds like you have a nice opportunity on your hands! I agree with @Hugo Alves but would also add that some lenders might require a "seasoning period" of 6 months or so before they will refinance it. Just something to ask about as you call different lenders in your area to explore their refi options

@David Barnett David, you are 100% correct. I should have specified more. I was trying to say if you plan to quit your job to pursue real estate full time, whether that's investing in rentals, flipping, etc. then maybe no real reason to throw money into a 401K. I'm talking like planning to quit in 12 months or less. IMO I'd rather have that capital easily accessible than tied in a 401K.

If we're just talking retire early, say 40 years old, then yes put money into 401K as soon as you start your job at 22 and let it ride.

I think we're on same page, maybe just didn't clarify my thoughts enough above :)

@David Muscovalley

Sounds like you've assessed the risk and are OK with it. Good call getting your wife on board :)

I would just be hesitant to use a HELOC to fund the down payment of another investment that will have leverage. Not saying it can't work, but it would need to cash flow substantially higher than the interest only payment on your HELOC. At some point, could be years down the road, you need to start paying principal on the HELOC. As long as you have a plan to pay the I/O payment and eventually principle (and your plan is conservative) then it could certainly work

Hi @Mohamed Farih

A couple things here. One, you are 100% correct in that you should have some sort of emergency fund. How large that $ amount is is up to you. You are also correct in that once you have that emergency fund built up, you should invest the rest. Money sitting in the bank account is doing you no good, and most would argue you are losing money to inflation.

As far as what to invest in, I can't answer that without knowing your goals. Personally, I'm all in on real estate with a little money in the market as it's more liquid than real estate. I can get to it in case of an emergency whereas trying to sell a rental house quickly isn't that easy.

What are your financial goals? It sounds like you're asking how to let your current savings grow until you reach enough for maybe a down payment on another rental?

I don't believe it's a scam by any means. In fact, for most people who work 9-5 and likely will for 40+ years, it's probably the wisest thing for them to invest in their 401k as early and often as possible. At a minimum, you should at least contribute up to your company match given it's a 100% return on your investment assuming you're vested.

However, if you're someone who is looking to quit your day job and go into real estate full time as soon as you can, maybe you don't invest in your 401k. Certainly depends on your situation and personal goals.

I believe the argument these books/podcasts/gurus are making is that once the money is in the 401k, it's harder to get out without penalties, etc. The idea is the 401k limits what you can invest in based on what funds/indexes your employer allows you too. For many employees, our options are limited to target date funds. We don't have total control of our money if options are limited as to what we can invest in.

Yes, you can borrow from your 401k and pay yourself back. I've done this to buy real estate and assuming you aren't over leveraging yourself, know what you're doing when purchasing investment property, and are OK with a smaller paycheck for the next 1-5 years as you pay yourself back, then it can be a phenomenal strategy.

What I am doing is investing up to the company match, then saving as much money as I can to passively invest in real estate syndications where returns are far in excess of what my 401K has done over the last 8 years and what stock market has done historically.

Yes, you can and should do both.

I've only used Cozy, but its easy and my tenants preferred way of paying. As others have said, waiting the 5 days or so for the money to hit your account isn't ideal, but you do get an email as soon as the transfer is initiated. My tenants are on ACH and it's automatic for 1st of the month. This is A+ area though, I realize not all tenants may be this "easy."

Cozy also has a good screening process on the front end for background, credit, criminal checks, etc. It allows the applicant to pay for all those vs. me collecting an application fee then paying for it myself. I prefer it this way.

Just my two cents, hope it helps!

Of all the syndication deals I've invested in, the loans are non-recourse. However, there are typically "bad-boy" carve outs that if the GP/guarantor were to act in a fraudulent manner, then the lender could come after them as if it were a full-recourse loan. Example of "bad-boy" behavior could be fraud or intentional misrepresentation by the borrower, gross negligence, criminal acts, etc.

@Katherine Bickel I've used Buildium personally in the past, it's very user friendly but is limited on some of the resources the larger PM software companies offer like Yardi, AppFolio, etc.

I had a 3rd party property management company who used Rent Manager as well. They seemed to like it, but I didn't find it very user friendly and almost antiquated. That's a personal opinion, having never used it to manage properties myself.

I see your in Cincinnati, I am too! Let's connect :)