All Forum Posts by: Anthony King

@David Kim I always mess with them. They will ask how much I'm looking to get, and I'll say "you called me buddy, I'm not looking for anything". They will try to get you to name a price. Wait for them to give you a number then when it's 50% below what you can get on the market laugh at them and say, "good luck, pal, I'm not your guy".

@Danielle Elms You need to look at this like you have $120,000 invested so what type of return are you getting on that investment?

Return On Equity = Annual Cash Flow/Equity

1,200/120,000 = .01 or 1%

Can you invest that $120,000 elsewhere and make a better return than 1%? I hope so.

For those suggesting a cash out refinance, if he is only making $100 cash flow with the current mortgage then a 7% rate on $160,000 would most definitely put him into negative cash flow on this one.

Sell this one in a hurry and invest that money in something else.

I'd have to say noon is the best time.

@Jason Harty awesome location. I hope to move to Lake Norman soon. Care to share some numbers? Price? ARV? Expected revenue?

Quote from @Travis Elliott:

Quote from @Anthony King:

Yes! In addition to selling the properties that have significant equity. Research Return on Equity. If you have $300,000 in equity and you make a couple grand a year in cash flow you'd be better off selling and using that equity elsewhere to get a better return. Using HELOC's to make cash offers or toward down payments are another great way to scale faster, but make sure you have a plan to pay down the HELOC.

I have a house that rents for 950.00 and has a retail value of 175,000. This house is paid off. I am not sure how it would benefit me to sell and buy something else. 
I could buy a place that rents for 1800 and costs 350,000 but then i would have a loan and that would offset the additional income.
So what am i  missing?

Assuming the 50% rule, at $950/month your cash flow is $5,700/year. With $175,000 in equity your Return on Equity is 3.25%. Can you do better than 3.25%? I'd hope so.

Leverage is your friend. If you sold and walked away with $150,000 (after costs) you could buy three more single family homes worth $200k by putting $50k down (25%) each renting for $1,200/month. If you're getting $975 on a $175k house, I'd bet you can get $1200 on a $200k house. Now you have 3 assets worth a total of $600k, all providing cash flow, tax deductions, loan paydown, and appreciating. If those 3 homes appreciated at 1/3rd of the pace as your current house you'd break even on appreciation. If your cash on cash can beat 3.25% that you're getting on your current ROE, you're better off there as well. Plus 3x the tax deductions, and 3 mortgages being paid off by your tenants. 

Owning something free and clear and getting the added cash flow by not having a mortgage feels good, but if you want to scale fast like you said, use more leverage, always put as little down as possible even if the interest rate is higher. Keep as much money as you can to use toward more deals. Learn about ROE and the power of leverage. 

This is a simple example, but more realistically I would sell that $175k single family and 1031 into a multifamily, but the concept remains the same.

Yes! In addition to selling the properties that have significant equity. Research Return on Equity. If you have $300,000 in equity and you make a couple grand a year in cash flow you'd be better off selling and using that equity elsewhere to get a better return. Using HELOC's to make cash offers or toward down payments are another great way to scale faster, but make sure you have a plan to pay down the HELOC.

Quote from @Travis Elliott:

Quote from @Anthony King:

@Stephen Jones don't just let the equity sit there. HELOC, Cash out refi, or sell when your ROE gets smaller than the ROI you can get elsewhere. Don't fall in the love with the properties and the fact that you have 'x' amount of doors. It's a numbers game. Continuously review your portfolio and look for areas you can increase your returns. A lot of times that means selling up into new opportunities. Through a 1031 of course.

So are you suggesting to get a HELOC to buy other properties vs letting the equity sit dormant?

@Kevin Cespedes I just opened a $200k HELOC on an investment property and it took about 3 weeks to close. Prime rate adjusted Jan 1st and Jul 1st. Current rate is 5.5%. I plan to use it toward down payments or cash offers. I think it's a great way to scale, but be careful you don't become overleveraged and have a plan to pay it back in a reasonable amount of time. Not something you want to keep paying on for years.

@Rafael Carvajal Jr after living in the property for 1 year I would buy another duplex and house hack again using another VA loan. Do that every year for the next 5 years and you'll have 10 cash flowing units. Then start doing cash out refi's on the one with the most equity every year and reinvest it into more properties. You can also open a HELOC at some point and use that toward more down payments. Along the way keep educating yourself and building your network. Eventually you'll find a partner or two if you put in the work. You'll also establish a rental history that shows lenders you're a serious investor and someone they want to do business with.

@Stephen Jones don't just let the equity sit there. HELOC, Cash out refi, or sell when your ROE gets smaller than the ROI you can get elsewhere. Don't fall in the love with the properties and the fact that you have 'x' amount of doors. It's a numbers game. Continuously review your portfolio and look for areas you can increase your returns. A lot of times that means selling up into new opportunities. Through a 1031 of course.

@Daniel Pugh dealcheck app