All Forum Posts by: Brian Ellis

Quote from @Jay Hinrichs:

Quote from @Brian Ellis:

@Jay Hinrichs so I wonder why he is thrown around here as being a bad influencer? 

You know when my life changed completely? As soon as I paid off my debt. It opened up many doors for me, and the first door it opened was the ability to buy a house. That house alone has brought my net worth from 15k to 500k in 5 years. But I never would have been in a position to buy it in the first place if I didn’t follow the “baby steps” he talks about. 

 not sure who is haters are .. I like him.. my daughter and son follow him religiously.  both of them own homes and rentals and have Zero debt and 800 plus ficos with no help from Dad..  

I also see this in people that I met early in my RE sales carrer ( clients of mine) and my wealthy ones would always talk about having zero debt.. Remember when I brokered the highest priced SFR in my little town ( 425k) and my client paid cash I could not imagine who had that kind of cash.. he was retired at 45 and owned 3 goodyear tire shops and was in the NO debt camp.. another partner of mine owned garbage companies and recycle facilities NO debt. his balance sheet was all assets everything paid for Millions in high end real estate Napa Valley Lake Tahoe hunting ranchs in N. CA Grnated he had corporate debt ( his garbage trucks and all the bins) that was in the multi millions of course.

But I get it we all have to start somewhere and leverage is very important part of growing a real estate portfolio but from my vantage point there is also nothing wrong with owning real estate free and clear.  I know I am in the vast minority on this site as it relates to leverage but I am also older than many. 

 I would only hope I could get to a place of being completely debt free. I understand the importance of using leverage. In fact it’s the only way I’ve been able to grow. 

But I don’t think Dave Ramsey is saying not to use calculated risks, or leverage in real estate. He is saying don’t buy a house you can’t afford. And don’t leverage what you can’t afford. 

I had just seen a post on IG from a BP member and it rubbed me the wrong way. I would just hate for people to expect leverage to solve all their problems, when the main problem of being financially irresponsible isn’t being addressed first. 

@Jay Hinrichs so I wonder why he is thrown around here as being a bad influencer? 

You know when my life changed completely? As soon as I paid off my debt. It opened up many doors for me, and the first door it opened was the ability to buy a house. That house alone has brought my net worth from 15k to 500k in 5 years. But I never would have been in a position to buy it in the first place if I didn’t follow the “baby steps” he talks about. 

Quote from @Jay Hinrichs:

more people followed him the better off the whole country would be.  Not everyone wants to be a real estate landlord. Its just here at BP were this is the main theme of this site. there are plenty of ways to get ahead without owning rentals as well. 

I agree. He’s targeted as some bad dude. His book personally put me on a path of success. I just use real estate as another source of building wealth. 

Quote from @Brian Ellis:

Quote from @Neil Goradia:

Not sure about Dave Ramsey specifically, but many people feel that financial advice gurus like him, Suzy Orman, etc just cater to those that are content to work a 9-5 and don't consider investing in other things like real estate as a way out of the rat race. I have found I can pick up a few things here or there but largely feel they miss the mark. Advising people to try and hit some magic retirement number is my biggest pet peeve. They should be teaching concepts of creating passive income instead in my opinion but that info isn't for the masses.

I agree when it pertains to real estate. But I don't think he's catering to the real estate investor, which is surprising to me when I hear his name so much around here. He's not saying "don't invest in real estate". In fact he considers mortgage debt being completely ok as long as it's affordable. There are many avenues to create wealth, and I don't think 401k, Roth IRA and savings is a bad idea for the long haul. But he is also teaching fundamentals in regards to being responsible with money.

You see so many people just tossing around equity lines of credit and high interest rate loans. We’ve been in such an inflated market since 2017, it’s easy for everyone to say Daves advice is stupid when we’ve been handed a bull market for as long as we have. 

 Also with historically low interest rates. I guess my point is, that the fundamentals he is teaching is actually extremely beneficial to the real estate investor. 

Quote from @Neil Goradia:

Not sure about Dave Ramsey specifically, but many people feel that financial advice gurus like him, Suzy Orman, etc just cater to those that are content to work a 9-5 and don't consider investing in other things like real estate as a way out of the rat race. I have found I can pick up a few things here or there but largely feel they miss the mark. Advising people to try and hit some magic retirement number is my biggest pet peeve. They should be teaching concepts of creating passive income instead in my opinion but that info isn't for the masses.

I agree when it pertains to real estate. But I don't think he's catering to the real estate investor, which is surprising to me when I hear his name so much around here. He's not saying "don't invest in real estate". In fact he considers mortgage debt being completely ok as long as it's affordable. There are many avenues to create wealth, and I don't think 401k, Roth IRA and savings is a bad idea for the long haul. But he is also teaching fundamentals in regards to being responsible with money.

You see so many people just tossing around equity lines of credit and high interest rate loans. We’ve been in such an inflated market since 2017, it’s easy for everyone to say Daves advice is stupid when we’ve been handed a bull market for as long as we have. 

Over the years of being involved in REI, I have seen so many people bashing Dave Ramsey.

I don’t understand why it is impossible for people to see some value in what he’s teaching. I don’t even think he’s targeting a Biggerpockets type of audience. I think it is bad misinformation to the newbie looking to get his/her first deal, when you say Dave Ramsey doesn’t know what he’s talking about. You need to have your finances in order First.

If you’re investing in real estate already, chances are Dave Ramseys total money makeover is irrelevant. And at some point you have already implemented some of what he’s teaching.

I only bring this up because it was one of the first books I read. I was making minimum wage at the time, bringing home $300 a week, smoking two packs of cigarettes a day, drinking 3 coffees a day, spending money on scratch tickets and blowing money on card games. I had been clean for about 3 months and just barely able to pay my weekly rent at a sober house. 

I read that book and it STARTED to change my life financially. Maybe it did change it completely. But I started paying off my debt, I started saving what I could, and eventually I was able to purchase my first home. I quit cigarettes, I quit gambling, I started making coffee at home, and eventually I became responsible with money. Fast forward a few years and I was able to buy my first house. THEN I implemented what is taught in Rich Dad Poor Dad. Somewhere along the way I understood what kiwosaki was teaching, and I have since been able to scale to 4 properties over the course of 5 years since getting that first property. I’ve used debt (from equity) to scale. But im financially responsible now, I still implement what Dave teaches. Having reserves in place, and not carrying credit card debt. I still carry those same quality’s I first learned. 

My point is I don’t think it is bad practice to understand the basics, especially if you are first starting out. So don’t completely disregard what is being taught in total money makeover. Not everyone is privileged with a high paying W2 job.

Just my 2 cents on the subject.

Just paid over asking price for a condo that will return me 12-13% COC. The appreciation might not be there, but it beats having inflation drain my savings account.

The deals are there, even in MLS listings (hard to find, but do pop up).

Patience, conviction, and discipline will get you something that makes sense. 

Quote from @Bill F.:

@Brian Ellis

In general no, I wouldn't buy an asset I wanted to hold long term with a short term debt product. Goes against the basics idea of asset-liability matching. Add in the floating rate which adds a layer of risk. 

If you use the HELOC like a bridge loan for a year or two to acquire the asset, fix it up, get solid tenants in there and build up a payment history before you get traditional financing, that would be about the only way I'd do it.

Is conventional never an option on this asset or just not right now?

Just not right now, since my w2 income isn’t there at the moment. I would only plan on using it for short term (2-3 years max, then refinance or sell). DSCR loan program isnt an option with this condo, because it is in the suburban area. 

My business would need to bring in enough income before I could refinance. Also, I am going for my real estate license to see if I can pursue real estate full time, and get away from swinging a hammer completely. 

Quote from @Scott E.:

I would use that HELOC only as a backup plan to a conventional 30 year fixed loan on this deal.

The reason is because it will be much easier to get a purchase loan on an investment property compared to a cash out refinance loan down the road in the event you want to tap into that equity (and your interest rate will be better with a purchase loan as well)

Added bonus, if you use a purchase loan now, you can use those HELOC funds for something else.

That’s the thing… it’s a backup plan. And unfortunately I may not be able to get conventional financing on this.

I’m debating walking from the deal or using the HELOC to finance.

If I were to walk, I could potentially find a much bigger deal down the road using all that capital. But then again, I may run into the same issue as not qualifying to a loan. 

I could always use the HELOC if needed, and just sell the place when I’m in a position to qualify for conventional? 

Have a condo deal closing in a couple weeks.

165k purchase price
25% down

$350 HOA

$27 insurance 

Rent after repairs $1750

Cash flow: $490

COC: 13


Now my question is, would you consider using an equity line of 110k, combined with cash to purchase? There is a situation where financing might fall through. The equity line payment would be pretty similar to the conventional loan, and I’m looking at a similar cashflow, but obviously my COC return is less, probably around 8-9%, AND the biggest downside is all my capital is being utilized so I can’t scale for a while.