All Forum Posts by: Craig Moore

u could at markets outside the northeast or west coast. The Midwest and parts of the south. Atlanta shot up in price so I started investing in the Midwest 

20k is enough for 3.5% down on a property worth almost 600k.

Craig Moore I think you hit the nail on the head. I'd get an FHA loan on a 2,3, or 4 unit. Live in one of those units while renting the others. Then you still have plenty of money to play with. For example, you only need to put down 3500 on a 100k duplex. After closing costs you'll have about 15k left to do your marketing thing or buy something else smaller. FHA on a multifamily is the ultimate life hack.

I like your idea, basically a real estate equity snowball. Maybe instead of asking the forum who earns $10k, ask the forum who has successfully used this particular plan of investing. I would follow that thread for sure.

Understand that growing requires leverage. The difference between the cost of leverage and the value of cash is different. Each eat into and reduce the cash flow you receive from a property. When a property is leveraged your cost is the prevailing interest rate which now is extremely low. When you have equity sitting dead in the property the cost is what ever the opportunity value is of that cash. If you can invest it for 10% return then that is how much of your cash flow is actually attributed to the equity you have sitting in a property.

If you purchase a $100,000 property with 10% down then $90,000 is costing you (@ say 4.5% interest) $337.50/ month and the $10,000 with a opportunity value of 10% is costing an additional $83.33/month for a total cost deducted from your cash flow of $420.83. You deduct that from your monthly rental income before any other expenses.

Now look at a $100000 property owned outright. $100,000 with a opportunity value of 10% is costing $833.33/ month off the top of your rental income. 

The cost of owning outright is almost twice the cost of leverage and is the reason why paying more cash for a property than the minimum down payment required is a costly proposition when this business is so dependant on numbers.

The greater the equity lying dead in a property the lower the cash flow generated by the property. Proponents of cash buying conveniently ignore the value of cash to artificially inflate their profits but the reality is that paying down a property does not increase cash flow it reduces cash flow if you are realistic about the value of money.

@Craig Moore Hey man, in the same boat as you to a tee. 23 in NE area looking for 1st property to invest in, "house-hack". Actually, I have the same goal by 30th birthday as well lol

I got analysis paralysis early on because I kept worrying about downstream issues like this when in truth payoff strategies, number of doors, etc. doesn't make a difference if you don't take the plunge into the game.  My (unqualified) advice is to lock down the 1st deal and then be in a place to chart your course how you want.

Also, give the 10x Rule audiobook a listen to.. $10k/mo will seem like small change

Ping me anytime if you want to bounce ideas, talk about markets or real estate.

Best of luck!

 Leveraging is good, as long as the numbers really work. This business is all about getting good properties at low-low prices, and huge cashflows. If your into buy & hold rentals. Commercial loans are where it's at, so get to know some local bankers. Hard money lenders are always good to keep in your rolodex, as well as building a reputation for success so you can get investors if needed. It's a business, there is a standard of how everyone operates, you need to figure what type of debt services will help or hurt your business growth. Owning 15 units is nothing like owning 30, just like owning 60 is nothing like owning 100 units. Each step of the way you will meet new problems. If you are good at resolving those issues by or before they arrive, you will grow quickly.