All Forum Posts by: Andrew Montgomery

Really helpful stuff, a few things in there I’m going to start researching. Also debating HELOC (more involved but better rate) vs Asset backed LOC (easier but not as attractive rate). Thanks again, really appreciate the reply!

Quote from @Greg Kasmer:

@Andrew Montgomery - If you're goal is get to 10 properties in 3 years you'll need to figure out how to "recycle" your money that you invest in real estate, mainly by either BRRRRing single families or doing something similar with multifamily. I would suggest you consider the following ideas:

- Can you put a HELOC on your primary house and pull out some cash ($100-300k) in funds to invest in BRRRR properties?

- Would you be willing to sell a portion of your stocks to pull out some funds, OR, can you get a line of credit against your stock portfolio?

Overall, I think you'll need a way to pull out a few hundred thousand via what I mentioned above or another mechanism. Then, I would consider your strategy for investing, which might be:

- Do 2-3 single family BRRRS each year for the next few years.

- Invest in 1-2 smaller mulitfamilies (2-10 units) and drive up the value so you can pull out your cash and find another similar mulitfamily property.

- Co-GP or partner on a larger syndication or JV purchase of a large multifamily. That typically is a longer (3-5+ years).

Whatever strategy you use you'll want to make sure you can make investments, drive up the value of the property and then refinance to pull out all/most of your initial cash. Difficult, but possible to do.

Let me know if you want to discuss. Trying to do something similar myself!

Good Luck!

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I think you pretty much nailed it. We know we need to cut back if we want extra to invest so my plan this weekend is taking a hard look at where we can do that. I also max out 401k for max and ESPP for 10% discount and while it’s hard to pas up the free money (at least with the match), I know we could use that money for RE now. Really appreciate the reply and advice.

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Thanks that’s very helpful, I’m just starting to look at alternatives to simply selling stock since I now see how negatively impactful that would be to my long net worth so I’ll be exploring the options you mentioned, thanks again!

Quote from @John Bowens:

Certainly, a lot that can be discussed, thank you for the post. I will just comment briefly on your retirement account you mentioned. I assume you have already heard, but you can self-direct your retirement funds into real estate. Note, if your 401k is all with the same employer you have always had, and you are still working there, you likely can't move it. However, if you have 401k money from a previous employer, you can do a rollover to a self-directed IRA and begin deploying that capital into real estate investments. That can potentially be rentals, real estate syndications, private lending, or other alternative investments.

You can also look at converting funds from pre-tax, to Roth IRA accounts, thus paying taxes on the seed so you don't have to pay taxes on gains/growth. This is known as a Roth Conversion, which does trigger tax as you are moving from pre-tax, to post tax Roth.

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I just turned 50, I've worked a great W2 for 26 years in tech sales/mgmt and managed to save $3M across 401k ($2M) and Stocks ($1M). I want out of the W2 world but the golden handcuffs (and 3 teenagers) keep me tethered. My wife and I bought our first STR in April (Smokies) and it's going well but we realize we want to start focusing on single or multi-family. I've spoken with my financial advisor and ran the numbers where spending 5 more years in my W2 sets us up for the future but it's taking all my attention and I can't focus on real estate, plus I'm miserable. So, I'm now considering working 1 more year and during that time, ramping up into several multi-families and eventually owning 10 doors over the next 3 years. I know we won't come close to covering our living expenses of around $130k per year initially but I need to make a change. I want to avoid dipping into my retirement because I've run the numbers and even just pulling out $500k for down payments absolutely kills the compound interest and makes a material impact on future net worth.

So if you were in my position, how would you use creative financing to build up to 10 properties in the next 3 years and not sell stock or touch retirement?

2 Votes

Quote from @Ray Hage:

Quote from @Andrew Montgomery:

Hello! I live in a suburb of Indy with my wife and 3 teenage kids. We just jumped in the game in April when we bought our first STR in Sevierville, TN. Went big (5BR) and spent more than we wanted but so far so good (on track to be close to breakeven after 1 year). But after doing a lot of reading/research, thinking we want to focus more on LT for the next few deals.

I turn 50 in a month. I've worked in technology sales/mgmt for 28 years and have done well, but probably need to work 5 more years to ensure a comfortable retirement and legacy for the kids. The problem: The thought of working 5 more years in a high stress, anxiety producing W2 is almost unbearable. My wife and I are committed to real estate as our post-retirement gig. I know this is an intro forum but if anyone feels so inclined, would love some different perspectives, what would you do if you were in my position.

The lure of a good salary, benefits and insurance are hard to walk away from. But I'm so busy with my job that I have almost no time to focus on our real estate business (not to mention the constant stress and anxiety of delivering a number year after year). Perfect world, I'd quit today and focus on real estate. I'd rather not touch my 401k but do have $1.2M in stock I could liquidate. Would you throw caution to the wind and jump in with both feet, using half of your savings to build up a real estate portfolio? Or push through working another 4-5 years to make sure you were "safe"? I'm not very well versed on creative financing yet so maybe a better option that doesn't require me parting with my cash? Looking forward to connecting with like-minded folks in this new world!

I certainly wouldn't quit my job and liquidate all the stocks. I don't think it's a wise decision due to the amount of risk. I was able to focus on my W-2 (at that time) and build the RE portfolio on the side. I started acquiring LTRs in my 30s and it was cheaper back then. I think the safe decision would be to focus on your W-2 and do your best with your limited time to get an investment property. Who knows? You might not like it that much so it's not wise to quit and liquidate your stock portfolio for this.

I am an investor first but I also am a realtor and private money lender. It's not quick money and there unexpected expenses that pop up from time to time. It takes a while to build a consistent and sufficient income to replace your W2. If it goes poorly in RE, what would you do? You have to consider worst case scenario of not doing well in RE right away. I like you goal but I think it would be best to build up as best as you can while maintaining a full time position.

Thanks Ray, good advice and I know that's the wise approach. I probably need to look for a less demanding W2 so I can enjoy the next ~5 years and have a little more time to devote to RE to determine if it's right for us, while still making a good income in case it's not. Appreciate the input!

1 Vote

Indianapolis, Indiana

Quote from @Nicholas L.:

@Andrew Montgomery

welcome. i would not presume to give you career advice, since i don't know you very well. but what i can tell you is this. long term rentals are a fantastic long term investment. unfortunately, they're not great at generating immediate, W2-replacing cash flow, even if you paid all cash, which is also something i would not recommend.

if you want to dip your toe in the water and buy one - great. but would i liquidate all my assets and buy a bunch of random LTRs and try to max out 'cash flow'? no i would not.

check out episode 2 of David Greene's new podcast. he talks about the different between generating income via real estate, and generating cash flow via rentals.

https://david-greene-team.mykajabi.com/podcasts/the-david-gr...

Thanks for the response and feedback. Will definitely listen to that Podcast, I'm devouring them lately but this one sounds like it will be right up my alley. Thanks!

0 Votes

Indianapolis, Indiana

1 Vote

Indianapolis, Indiana

All Forum Posts by: Andrew Montgomery

Andrew Montgomery has started 2 posts and replied 7 times.

Post: What creative financing method would you use in my situation?

Post: What creative financing method would you use in my situation?

Post: What creative financing method would you use in my situation?

Post: What creative financing method would you use in my situation?

Post: Intro - Looking to get out of W2 and build a meaningful legacy for my family

Post: Intro - Looking to get out of W2 and build a meaningful legacy for my family

Post: Intro - Looking to get out of W2 and build a meaningful legacy for my family