All Forum Posts by: Bradley R Stillabower

oops... duplicated post.  Can't find a "delete".

I'm just a few weeks into the 6-12 months I'm giving myself to get educated on REI before I have access to capital and start making decisions and (potentially) taking action.

Generally, I plan to 

- spend most of my time being very diligent and involved in front-end analysis of deals, while 

- being minimally-involved (passive) in the back-end property management.  

So I'm mostly being drawn to multi-family properties, buy-and-hold, starting with small residential properties for the first 3-5 years (starting with a house-hack for my daughter, and potentially another for my recently-widowed MIL), and after a few more small residential properties then maybe scale slightly to a couple small apartment properties.  In total, an initial acquisition phase for 5-8 years, followed by up to 10 years of debt paydown, then free-and-clear retirement cash-flow before finally passing it all down to the kids and/or (future) grandkids to enjoy/deploy/sustain/grow the equity to good use.

My question is:  what is best method(s) (for me) to start with (in sequence or in parallel) for the first few properties/deals:

A.  passively invest in a syndication deal(s)

B.  purchase from a complete turnkey provider

C.  a turnkey purchase but self-manage for a period of time

D.  a hands-on "manual" purchase:  find an agent/broker/lender team and do the deal hunting/analysis directly with them

Keeping in mind I'll be working a full-time W2 job in the meantime, at least for the next 4-7 years before retirement at age ~60-63.

Thank you, appreciate any insights

Brad

I'm just a few weeks into the 6-12 months I'm giving myself to get educated on REI before I have access to capital and start making decisions and (potentially) taking action.

Generally, I plan to 

- spend most of my time being very diligent and involved in front-end analysis of deals, while 

- being minimally-involved (passive) in the back-end property management.  

So I'm mostly being drawn to multi-family properties, buy-and-hold, starting with small residential properties for the first 3-5 years (starting with a house-hack for my daughter, and potentially another for my recently-widowed MIL), and after a few more small residential properties then maybe scale slightly to a couple small apartment properties.  In total, an initial acquisition phase for 5-8 years, followed by up to 10 years of debt paydown, then free-and-clear retirement cash-flow before finally passing it all down to the kids and/or (future) grandkids to enjoy/deploy/sustain/grow the equity to good use.

My question is:  what is best method(s) (for me) to start with (in sequence or in parallel) for the first few properties/deals:

A.  passively invest in a syndication deal(s)

B.  purchase from a complete turnkey provider

C.  a turnkey purchase but self-manage for a period of time

D.  a hands-on "manual" purchase:  find an agent/broker/lender team and do the deal hunting/analysis directly with them

Keeping in mind I'll be working a full-time W2 job in the meantime, at least for the next 4-7 years before retirement at age ~60-63.

Thank you, appreciate any insights

Brad

Curious what the property was listed at, in comparison to your valuation?

Thx for sharing.

Thank you. I've watched dozens of U-tubers on this topic, and this was the single best (and most balanced) explanation of these products. The HELOC analogy is very helpful.

Those up-front fees/commissions, and the sensitivity of the product to finding a good agent to "design" a policy right, are big turn-offs for me.  It takes so long to "break even" on the product before it makes sense to use it for leverage.  It's definitely designed to be a long-term strategy to minimize risk, which doesn't compete with systematic stock market investing for someone who can tolerate that episodic volatility/risk and is confident of long-term return of 8+ percent.  It's real utility seems to simply be an alternative to bond investing.  And certainly not a short-term strategy to capitalize for RE investing, to get back to the OP's question.

 When I am "leveraging" my cash value (by borrowing from it) don't I also pay interest ("to myself") that subtracts from the yield that cash value is earning?  

I've been trying for a while to find any financial advisor who recommends these policies (particularly to middle class investors) who is not also an insurance agent who earns commissions selling these policies.  That's not to say they don't truly believe in them, but that naturally creates a bias.

 It "will" make sense to launder his capital through a life insurance product before borrowing it back to invest in real estate?  That seems counter-intuitive to me.  Can you explain why?  (or was that a typo?)

Thank you

That much equity in your current home implies that you probably have a low interest rate on that mortgage, so the advantage of a HELOC is you get to keep that mortgage instead of refinancing into a higher rate mortgage. But you'll still end up with a higher rate mortgage on your new home in addition to the HELOC, so now three loans, and if you hold the HELOC for too long that interest rate will be going up also. If you have the time to wait, saving the cash for the down payment on the next home is the best option, or for someone who is close to retirement (as I'm preparing for in a couple years), tapping into a small portion of 401k/IRA resources to fund a move in order to become mortgage-free sooner.

 It "will" make sense to launder his capital through a life insurance product before borrowing it back to invest in real estate?  That seems counter-intuitive to me.  Can you explain why?  (or was that a typo?)

Thank you

 I don't do Whole Life, but my understanding is that it takes quite a while for the cash value to build up enough to borrow from it, unless you just have the cash to drop a lump sum on a policy to pull right back out as a loan.   In which case I would just use that cash to start investing in real estate directly while buying term insurance for the death benefit.

Personally, I'm not a big fan of any of the Permanent Life products, and find them gimmicky.  The only people I've found recommending them are also selling them.   They may serve a purpose for high net worth individuals using them for estate planning for inheritance, but the middle class average joe is probably better off with a term life policy while systematically investing in a good index mutual fund.

Just my 2 cents from an average Joe.