All Forum Posts by: Brian Babbage

I've been using Obie for a couple years now - I switched from State Farm. Definitely saved a lot of money. I have a 100 unit portfolio based in Louisville and Lexington KY mixed between SFH, and 4-8 unit apts.

Biggest help for me was their ability to insure closer to the purchase price instead of replacement cost. the team is great and I’ve been happy with the claims process. 

@Scotty Gifford @Tom Makinen

If there is no tax on contributions for the 401k early withdraw then this becomes much more compelling, as my gains have not been very significant (Less than 2k) and same with employer match (1.8k). I have close to 22k in the account and have started to invest in cheap duplexes (ranging from 50-70k, so this amount would allow to put down 20% on a couple of these. 

I guess dicussing my goals here might help as well. I see RE similar to my SDIRA & 401k. I am looking to grow my portfolio to ~100 units and pay them off streadily. I do not see myself needing the cash flow that these kick out as my current salary is pleanty for me to live off. To that end I will be reinvesting excess cashflows to either scale the portfoilio or pat down mortages (whichever gives me the best return at any given moment). 

@Anthony Wick Personally I would much rather have 30-50 units fully paid off by the time I am at retirement age with constant and steady  cashflow being spit out than be beholden to the swings in the market. I will continue to take the meager match my employer gives (25% match of 6% of salarty), but I don't see the harm in cashing out the 22k from the old Roth 401k and then start over with my new employer and deploy that 22k into cash flow producing assets. 

@John Moorhouse - Stay in school for all the reasons above. Do the following to set yourself up for success. 

1. Earn your first Downpayment: Find a part time job / side hustle and save, save more, and then keep saving (words of wisdom from my uncle) 

2. Master the basics: Learn as much about RE as you possibly can. Not just they RDPD hype stuff, as fun as it is to read. Get to know the fundamentals of investing so well that you can talk to any one. I suggest to start here. This will immeiately boost your confidence and let you hang with the big boys when they're talking NOI, EBITA Triple Net, etc...: https://www.thriftbooks.com/w/what-every-real-estate-investor-needs-to-know-about-cash-flow-and-36-other-key-financial-measures_frank-gallinelli/256054/?mkwid=sFM5qtcnV%7cdc&pcrid=70112878392&pkw=&pmt=&plc=&pgrid=21323665512&ptaid=pla-292616666786&gclid=Cj0KCQjwxYLoBRCxARIsAEf16-vQGXb3c227ViF_YOS8iYlKQJLF1blMh9rSc4JQ2JgLXKxOdBxxOFgaAhTUEALw_wcB#isbn=0071422579&idiq=3815551

3. Tell everyone you know: Tell all of your classmates that you are interested in RE and get them interested. I did this when I was 16 with investing in the market. Found an 18 year old, drew up a contract and started an investment club. I'll bet that at least one of your classmates parents are in the RE field in some form or fashion. Find them and soak in the advice. Then ask for helping putting together your first deal. They might even stake you or sell you somethign they own (think seller financing) 

4. Get a great model for RE. A great model does not have to be complex. You can find simple ones on the internet, or you can build your own (added benefit of learning excel - use linda/udemy and create a life skill). This will help you show folks your potential investments in an easily digestible way. Mine shows a graph of all expenses, and graph of all income and 6 key metrics at the top. Serves as a great one pager when talking to investors. Notice that you'll have to master 2 before you do this!

5. Find an agent: in the area who also invests and get coffee with them. If you have mastered the things above and can intellegently explain to an agent what you want they will help you (it's their job, and they make money when you buy!) 

6. Get in the game: Use the four things above to find a deal, any deal, no matter how small. For me 1-4 set me up for success, but 5 was the way that I learned the most and launched into RE. 

I wish you the best of luck and love your zeal. I wish I'd have started when I was your age. If you buy soon, you could have someone paying off your mortgage for 7 years by the time you're my age!

@Cory Benhardt

All the tips above are great and you should follow those (I certainly did). 

Adding to them build relationships with banker (this could allow you to put down less than 20%, I did 15% on my first deal) 

or 

House hack and get an FHA. Putting down 3.5% is very manageable for properties in smaller markets. Move in, fix up, move out, and repeat.

@Eric Fitzgerald 

Would agree with two of the major themes posted thus far.

1. Spend what you are spending right now in college for as long as you possibly can. 

• I graduated 3 years ago, and lived with 4 roommates to cut costs and save money despite having a pretty solid paying W2 job
• Don't let income creep happen and stay off the consumerism treadmill - you don't need that new iPhone.

2. Do budgets by hand for as long as you can (but also use mint/whichever tool you prefer) 

• I find it satisfying to do this on Sundays. Grab a bottle of wine (2 buck chuck that you split with your roommates) and write it out. Easiest way to find some cost savings. 
• Pro Tip - Do this with your roommates and turn it into a competition. 

Overarching very simple piece of advise. Read Rich Dad, Poor Dad and understand what an asset is compared to a liability. Once you do, build assets, reduce liabilities. 

Looking for recommendations for an accountant. 

Ideally looking for someone who can prep tax returns and advise on possible tax savings. Hoping that this person will also personally invest in RE. 

I have multiple LLC's in the angel investing space, RE space, and e-commerce space, so looking for someone who is familiar with taxes effecting each of these.

Thank you in advance for any suggestions!

@Twana Rasoul I don't think you are crazy at all, but would agree with the folks who have suggested a healthy mix of cash flow and appreciation in the portfolio. 

I am most likely moving out to SD in the next year for my W2 job. I am looking to house hack a 2-4 plex, but will be keeping my cash-flowing investments in place in KY and Vegas. In my eyes, I would rather buy and hope for the appreciation (or at least bank on the principal paydown) than rent (therefore burning 12-20k on the year). I also love SD, so even if I do lose a bit of money, I'll still be living by the beach, surfing and biking!

Also, since my investing timeline is very long, I am fine taking some risk on appreciation at this point. My W2 income more than covers my expenses, so I don't need to rely on that cashflow. 

Wondering what folks think about cashing out a Roth 401k to put that money to work in RE. 

I currently have a fully vested Roth 401k through my employer that has a sizable chunk of cash (definitely 2 down payments in my market). I stopped contributing a few months ago to start funneling more cash toward purchasing properties. I am now thinking about leaving my Job to take another higher paying W2 opportunity. I am considering taking the 10% penalty for early withdrawal from a Roth 401k so that I can unlock that money and put it to work in RE. My reasoning here is two-fold 

1. I am more bullish on RE long term than the Market (and even more bullish on RE vs Market short term). 
2. The consistency of the cash flows coming from rentals could expedite my being able to leave my 9-5 faster, therefore focusing more time on RE, therefore building a portfolio that provides something closer to financial freedom faster. 

For additional context I have an SDIRA already that I invest through, and I know I could potentially roll the 401k into that and possibly avoid the penalty, but I am hoping to have this cash in my personal accounts so that once the money is invested I can be closer to quitting my 9-5 and focusing on RE full time. 

@Mike Mullins haven't made a career from them (Yet!), but I am working on it and have plenty of other revenue streams to live off of for now (W2, ecommerce, equities). I think a lot of folks on here are influenced by the Rich Dad Poor Dad philosophy. Once you understand assets, build as many of them as you can as quickly as possible. That's my plan!

@Cameron Riley

Few reasons. 

1. I am orginally from KY so I know the market reasonably well and met a great broker there who is also an investor. He really teed it up for me, and bought one of the houses selling in the same portfolio. 

2. I am interested in campus housing right now as it seems to be fairly resession proof. The price per room (i have a 5 bed 2 bath) is already fairly low, so there isn't a ton of downward pressure if the economy tanks. I spoke with people who were holding campus inventory in 07 and 08 to get an idea of how bad it was, and they said almost nothing changed. Plus hopefully kids will still be going to college (at least for the next decade or two). 

3. I just graduated a couple years ago, so I still know some folks who can help source tenants and do a lot of the leg work on the turn. 

There is certainly some stress involved. Had a plumbing issue a couple months ago and probably overpaid to have it fixed, but if you financials and cash flow are strong you can weather a couple smaller rookie mistakes - and get to learn along the way!