All Forum Posts by: Adam Beaver

@Zach Grigg hey it sounds like we are in the exact same stage of our REI careers. I am also in the Huntsville area. Me and my wife are currently looking for our first property and our goal is to have 2 by end of year.

I've been diving deep the past 2 months and there is one local real estate group I found. Madison County REIA https://madisoncountyreia.com/

I went to a class Monday on investing in foreclosures. There was a good turnout, probably around 20-30 ppl were there. The info was pretty good to. They also have a boot camp coming up in February for beginners. Anyway, check them out and hopefully we'll connect one day.

4 Votes

Originally posted by @Alicia Marks:

Quote from @Adam Beaver:

I have a newbie question. As far as capital to buy properties, I have 2 options.

1. Take out a HELOC on my home and use that to make purchases.

-My restraint, or fear, of doing this is the fear of making a major mistake and then adding a large amount of debt to my mortgage and being in over my head.

2. Borrow money from a hard money lender.

-Same fear as the HELOC.

I guess the real question here is, which of the 2 would be a wiser move?

I would like to add, another form of hesitation I've been having is fear of a market downturn. Fear that I'd be buying at the top right before a downturn. Of course, that'd be resolved in the actual buy itself. And making sure not to be over leveraged. But again the fear of a major newbie mistake, something I may have missed or didn't run the numbers correctly.

I would assume these are normal healthy hesitations for most new investors, so what helped you guys get past these?

Thanks in advance for any feedback.

Those are both very common concerns. The recommendation is typically to use a HELOC for a short term situation (remodeling costs of a BRRR) or a downpayment. I'm personally not comfortable with using it for a downpayment because it will take a long time to pay back with only rent income to apply. Other people are not as concerned with that.

I have used hard money twice and am looking to do it a third time. I found it very simple and easy to work with. One loan was a corporate, super easy, but the second was a private lender. That was a little more involved since it's their personal money they are investing in you. Make sure you understand that you cover all closing costs. My corporate loan only did an escrow for the repair budget, so my closing costs were very high. The private lender made the repair budget part of the overall loan, so my fees were significantly less. Ask questions before moving forward so there's now surprises right before closing.

I choose HML because it lowers my risk more than a HELOC would. I have never gotten close to foreclosure, but if it happened I'd want the security of a roof over my own head first.

Thank you @Alicia Marks that is exactly why I hesitate to just use a HELOC, the time it takes before you can pay it back. Thank you for your response, much appreciated!

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Thanks

0 Votes

I have a newbie question. As far as capital to buy properties, I have 2 options.

1. Take out a HELOC on my home and use that to make purchases.

-My restraint, or fear, of doing this is the fear of making a major mistake and then adding a large amount of debt to my mortgage and being in over my head.

2. Borrow money from a hard money lender.

-Same fear as the HELOC.

I guess the real question here is, which of the 2 would be a wiser move?

I would assume these are normal healthy hesitations for most new investors, so what helped you guys get past these?

Thanks in advance for any feedback.

0 Votes

All Forum Posts by: Adam Beaver

Adam Beaver has started 0 posts and replied 6 times.

Post: 14 unit estate sell . 3-4 plexes and 1 duplex.

Post: 14 unit estate sell . 3-4 plexes and 1 duplex.

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Post: QOTW: How to help a new investor stuck in “Analysis paralysis?

Post: QOTW: How to help a new investor stuck in “Analysis paralysis?

Post: QOTW: How to help a new investor stuck in “Analysis paralysis?