All Forum Posts by: Andrew Sime

My wife and I also bought a HUD thru the good neighbor program in 2011. I have gone back and forth on the sell or rent decision several times. We have it fixed up quite nicely (not luxury but a little more than I do for my SFHs) and it would sell for at least 3x what we have in it. My thoughts are currently to rent it whenever we decide to move. Several investors with similar ideals to me say that they have regretted almost any time they have sold a piece of (income producing) real estate. Part of me wants to sell and buy 2 income producing properties with the cash(we own outright) and part of me wants to keep it with amazing Cash on Cash return. Considering a HELOC or cash out refi to maybe get the best of both worlds.

I am shocked to see how few members prefer investing with cash only, no leverage. 

My current strategy is to buy a house or 2 each year for the next 7 years all cash. This should position my family to cover all of our expenses. At that time we could do whatever we want for work and I have considered using leverage at that point to build a big real estate business with the cashflow safety net in place. My wife and I both work and we are conservative with money (obviously). All cash I am getting about 14-15% cash on cash return after all expenses. I understand that I could get about 25% COC if I used leverage but with our full-time jobs I would rather sleep well, build slower, and have less doors to manage.

Am I shooting myself in the foot for passing up the extra 10% return for piece of mind and less to manage?

Jameson, Do you mind naming a couple of these books. This is my strategy, cash purchase a rental or 2 every year for the next .... Looking for some additional reinforcement that this strategy is as good as it works out on paper.

Hello all,

I am a new member from Northern Indiana getting into buy and hold investing in pursuit of financial freedom.  I am a 3+ year student of real estate and just finished my first rehab to rent.  I purchased a 2 bed 1 bath foreclosure on August 19th and just signed my first lease with a new tenant last night after rehabbing the property.  Excited to be in the game!

I would like to scale this business as I put systems in place for each step of my process.  A big question I have is whether or not I want to use leverage and grow my portfolio more quickly or continue using cash and ensure a nice cashflow (projecting right around $400 per month from this property which I paid for with cash).  My model for this market right now is to buy it right, between $24k and $33k and put $3-7k into the property to gain some initial additional equity (Property would sell for at least $50k maybe close to $60k, I have $33k in it)  Rents are in the $650-800 range (700 on my current 2 bedroom).  So an all cash purchase + rehab at $35k should generate a net cashflow of $5,270 after all expenses including taxes.  This makes the cash on cash return 15-16%.       OR      If I were to use leverage and put say $10k down on a house that will cost $35k after all repairs with a mortgage payment of approx. $200/month will take my cashflow to around $2,870 per year and a cash on cash return of 29%.

Looks like it is an obvious choice with these numbers to utilize leverage but I am conservative (paid cash for my home and first investment property) and looking for advice and encouragement to get over my gut telling me that debt is bad...

-Any all cash investors out there that can say why it's better to only do cash deals?

-Any other investors using leverage with some advice or encouragement on using leverage?

-Also, will traditional lenders loan only $25k?  One I spoke to during due diligence said the minimum they would loan is $40k meaning the property would have to have a purchase price of $50k (20% down) to use them.

Sorry for being so long-winded, looking forward to continuing to learn and grow in real estate!

AJ