All Forum Posts by: Ali Boone

I would keep things simple- if you like your house, stay in it and tap on the equity to use for investing. Unless you want to move, then you could, but I wouldn't do it to force the use of the equity.

For the cash-out refi, when you say it's not advisable based on what you currently owe and years remaining... how so? When I look at cash-out refi options, I compare the cost of them to the returns of what I plan to invest in with the money. If the returns are higher than the interest rate, it can pencil out well.

With that said though, I would consider the HELOC so you can only pay interest on what you use rather than a set amount as you would with the refinance.

You may already have this info, but I'd first be clear on what you're planning to invest in. That's going to dictate the best way to use the equity for it. Without that, you'd be shooting a dart blind.

It completely depends on where you're buying it- both in the broader market and in what neighborhoods of that broader market. They can range from negative cash flow to super high cash flow on the riskiest MFs. Your profile says NY... is that where you're buying it?

Will you be living in one of the units of the MF? As far as I know VA loans only work for owner-occupied properties. Having the 100% financing will cramp your cash flow as well since the mortgage payment will be higher, but whatever you get is basically infinite returns if no money in!

The midwestern properties, even if the cash flow is low, can still be profitable over time. Rental properties are a long-term investment, and the income starts compounding over time from the different profit centers (cash flow (don't forget about rent raises), appreciation, tax benefits, equity build via mortgage pay down, and hedging against inflation). With that said though, you can increase cash flow by renting out properties by the room. There's a turnkey-ish company out there who does only that. The added benefit to the higher cash flow is the properties are usually a lot nicer and in better areas than your typical turnkey property, so the appreciation factor and value over time can be a lot higher. So yes, all doable! I'm in SoCal and mostly invest out-of-state as well.

BRRRRing always refers to older buildings because of the rehab factor. But if you're wondering if the premise can apply- buy for less than market and force appreciation- to new construction properties, depending on when in the process you buy it, new construction properties can gain value from your contractual price by the time the building is completed. I knew quite a few new construction buyers who went under contract in 2020 and by the time the house was done, they had already gained ~$70k in equity. But it's not exactly the same thing as BRRRRing.

Quote from @Shahin Beyk:

Quote from @Ali Boone:

I have a couple property managers that cover my properties in Atlanta and both of them also sell to investors. I don't know what kinds of properties they're finding for folks these days, but I'm happy to ask.

Griffin, McDonough, and Locust Grove probably won't cash flow. Maybe Dalton will, but you almost may have to find an agent closer to Chattanooga for that as Atlanta agents may not go that far.

 Thank you for your reply. Speaking of PMs in ATL, I am looking to hire a PM. Do you have any recommendations for me? TIA

I do! I work with two in Atlanta that I love. If you want me to intro you to one or both, shoot me an email and let me know the property address. Reason that matters is because they both do different areas and types of properties, so I can see which one might be a fit. If they both might be, I can intro you to both and you can decide who you like best.

Super cool... I lived in Lancaster when I first moved to California! I took a transfer with Lockheed and landed there from Atlanta. Is that where your rental is?

All but one of my properties are out-of-California. As far as what markets are desirable, it really depends on what you're looking for. What's your price range, what kind of property do you want, any other buying criteria, etc. Not a super-helpful answer I know, but the options are pretty vast! Have to narrow it down a bit.

I started my portfolio with all of out town stuff (even some out of country stuff, but that didn't go well). I live in Los Angeles where there's nil for cash flow, which is what prompted me out of town. Yes, it can absolutely be done. There are lots of ways to do it, all varying on the risk spectrum from least risky to most risky. The biggest obstacle will just be finding a good team, and then after that learning proper due diligence, but that's an obstacle for anyone investing local or out-of-state, doesn't matter. The risks are the same as with a local property- rentability, neighborhood quality (vacancy, tenant pool, growing or declining), and then just adding in the risk of those team members. Bad ones will cost you money.

Out-of-state investing is just another REI strategy. All strategies are the same in that you should just take the time, learn what you need to about it (what makes a property in that strategy successful, what are the risks, and what are the risk mitigations). So you can just as easily learn that one as any.

What happens if the correction you're assuming is going to happen doesn't happen and you can't get something better that gives better returns than what your current property is making?

The main driver to help answer your question should be- what's that current property making you? That should drive everything decision-wise.

Except for your quick mention in there of possibly selling to find something better suited to you, well then that's a different scenario that should be looked at different. Your motivation for selling your current property should be known- is it for numbers/returns or lifestyle?- and your decision based off of that.

Do you want value-add MFRs or rent-ready/turnkey?
Do you want 2-4 unit residential MFRs or 5+ commercial MFRs?
What's your price range?

All of those matter in terms of recommendations for areas and properties.

Definitely throw those rules out the window. They likely won't apply at all in Ontario or anywhere in Canada anyway, but they're also incredibly misleading in terms of teaching people what they should be looking for in an investment property.