All Forum Posts by: Brian Garrett

Thanks Jeff - I appreciate the additional insight.  

Thanks - all good points and I really appreciate your input on this Joel.  It's super-helpful.

Brian

You definitely make a compelling case for that area... 

Are you able to lend in all 50 states?

I realize this may be slightly off-topic, so if it's too far off let me know.

Here's the scenario. I have a friend through one of the recreational activities that we both participate in with an adult son who owns an electrical contracting business in Wyoming.  At a very high level I checked the business out and they do look legit.  Their business has a contract with Sam's Club to do a fairly substantial amount of work and their business is looking for a loan up to $100k so they can complete the contract.  We currently have the cash available as we've been searching for our next deal, so it is available.

Their initial offer of return was for 5%, so I moved on as I didn't want to tie up that much capital for 12 months (the duration of the loan) for only 5%.  I have since explained to them that we do far better with property investing.  They have now offered a 10% return over 12 months for the $100k.  I'd like to get at least 12% - but I don't know if I'm being greedy or just realistic.

Knowing the character of the dad I don't sense a great deal of risk (and yes, anyone and any deal will present risk), and given the contract is with a large retail establishment I don't have any indication that it would be a bad deal.  My relationship with the father is a casual friendship. We don't hang out or anything like that, but he does participate in our community of interests.

Ultimately - has anyone done any deals like this, and if you did, how did you structure it?  

Any other thoughts are welcome and thanks for your input.

Wow - that's a seriously impressive number and history.  Just starting our journey here - hope to find our way to your numbers eventually.  :D

Sue,

Here is what we did.  My wife and I have been living below our means, paying a little extra each month on our mortgage and saving a ton.  The idea was we can't eat our mortgage should things go south.  We wound up earlier this year hitting the go/no-go point where we had enough cash to eradicate our mortgage with the savings we had.  In between the pay off the mortgage plan and actually arriving at the cash to pay it off, I discovered the real-estate investing process.  So earlier this year we shifted gears in a massive way.  Rather than paying off the house, we refinanced and took the equity out (banks will only loan up to 80% value now, but it still was a chunk).

Now - the reason we refinanced rather than doing a HELOC was because in refinancing we went from a 15 year mortgage at 3.75% to a 30 year mortgage at 4%. Sure the increase in interest rate was in there - but with the 80% cash out and going from a 15 to a 30 year mortgage we actually lowered our monthly payments.  

Had we done a HELOC, we'd have the mortgage AND the HELOC to consider every month, vs. just a single payment of exactly the same amount.

That's phase one of the plan which is now complete (the cash arrived in our bank account today).  We've been casually observing properties that we can invest in for a few months.  Now it's time to get serious for phase two - the purchase of our first property.

Best of luck on your end!  :D

Brian

Are you looking for properties in Hawaii or elsewhere?

@Carol Otis - I wouldn't sweat it too much about being a baby about the cold.  I live in the Denver metro area and come late October to about mid-May I'm a big grump because it's cold, dark and dreary.. Oddly enough - that's why I'm here.  Build up a bunch of passive income and move to Costa Rica!  (I hear it never gets cold there).