All Forum Posts by: Andrew Kougl

@Willard Clark

In my opinion, you need to start with your goals and motivations, those are the main reasons you're doing this and will help keep you focused. Then back out those goals to achieve them within the time horizon you're looking for. The more specifics the better. There are many paths in real estate so there is a ton of potential avenues to offer advice but you need to share your endgame first.

@Christian Trieu

Really depends on you, your goals and your risk tolerance. If you haven't invested before, I'd be cautious about entering this market at the moment, especially in California and New York city. The best way for a new investor to start is with a house hack of a duplex. You'll get great financing terms on an owner occupied property and be able to gain experience as a landlord at the same time.

@Will Payne

The HELOC is tied to your property, specifically the equity in your home through a mortgage lien in 2nd position on title. It's not dependent on you living in the property as you can get a HELOC on investment property. It's very common for people to turn their first primary into a rental and you moving won't trigger a due on sale clause because nothing has changed with the title.

Of course it's never a bad idea to consult with your lender who you have the HELOC with. But I don't think it'll be an issue.

@Scott Emsley

@Joseph Back will give you a good idea on rehab since that's one of his strengths, I can't help there, but I can assist by looking at your numbers as a second set of eyes. Cash flow is subjective and you want to make sure you are including PITI, vacancy, repairs, cap ex, utilities, trash, sewer, lawn, snow.

I have a couple duplexes myself in Frankfort and am currently under contract on a triplex in Lexington.

Do you need to buy all the duplexes as a package or can you break it up? In a rural area, and if you are rehabbing these yourself, you might want to methodically go through these and get one done before securing the next. This will allow for some forward momentum while you wait out the seasoning period.

Andrew

God, I love a WL vs Real Estate thread! This one has actually stayed relatively civil, so thanks to all for that.

I am not an agent but I can share my experience as a policy holder. I think we all agree real estate is a superior investment otherwise we wouldn't be on BP. We also all can agree real estate takes money, lots and lots of money. This is where I believe WL comes in, not as an investment, but as a bank, a replacement for your 0.05% interest saving account at the credit union or your (used to be) 2% interest of your online bank. WL is a place to store and build up your capital until you have enough for the next property down payment.

I believe WL is well aligned to be a "foundation" for real estate as the OP mentioned because you need a place for your capital to grow and you need a vehicle to compound your returns over time - real estate isn't a get rich quick scheme. It's true saving for your 1st property will be quicker if you save in cash, in a bank or some secured asset class with no fees. But once you buy that 1st property, you are back to 0, having to start all over again. With WL you're earning the guarantee + dividend of your cash value and borrowing the WL company's money, avoiding disrupting your compounding. WL doesn't make sense as a retirement vehicle in my opinion. It's an alternative to a bank, where you NEED to take out policy loans to buy income producing assets and repeat, it's not a one and done but a multiplier effect that's going to make it excel.

For those curious about numbers since it hasn't really been mentioned here. I have a policy premium of $1644 a year and I've had the policy for 5 years. I am at the point now where my dividends COVER the cost of insurance so it's essentially free insurance for the rest of my life. I think you should get a policy that makes sense for you, with manageable payments and a 5+ year time horizon. My goal is not to have enough to BUY a house out right, but rather afford a down payment then pay back the loan and repeat, all while my cash value grows undisturbed. I just need the cash value to be high enough to afford a down payment and that's it. It's not a money pit I am paying premiums into for the rest of my life.

Andrew

I agree on not adding in the additional calculations and maybe even not including what your personal goals are with your investing.

Obviously it needs a lot of work with that rehab budget. I'd further customize the response highlighting some of those repair areas as having added risk once you get behind walls, etc.

All retail buyers will want inspections and I'd explain to the seller that properties like this can tend to sit with greater days on market and if a quick sale is appealing, you can guarantee it. Good luck!

I've served as the lender a couple of times now to rehabbers I connected with here on BP. And just wanted to call out that your percentages are backward, in the sense that the more someone invests, the lower the interest rate. No one would want to work with a lender if it goes up and up the higher the amount loaned.

25% interest rate is what I charged on a small loan, 15k loan, as it's only $3,750 in interest costs. The juice has to be worth the squeeze and with lower loan amounts, the interest rate should be higher.

@Eric Martin

Really great job. How did you find the property?

@Christopher Leet

I have a recommendation on a lender I've used and I'm out of state like you. PM me

@Mark Reiland

Thanks Mark, I'll send you a request and message. Looking forward to connecting and seeing how we can benefit each other.