All Forum Posts by: Dan F.

Does anyone have experience investing in either of these areas? I'd love to chat with you.

The challenge here is mixing the investment mentality with needing a place to live. From an investment standpoint, the buy could go either way if you're betting on appreciation. No one knows whether appreciation will continue to rise, stay flat, or crash, but you'll need to live with the negative cash flow from day one. If you're buying for retirement in a few years and there's a strong geographic preference to stay such that it's worth the opportunity cost of negative cashflow, then it's worth it but for personal reasons and not business reasons.

@Dan H. - Makes sense. I'm just starting out in building my portfolio so using your example, I'd rather get the 406k back to put toward the next house. It'll take me a lot less time to generate that 34k + loan difference vs using traditional financing from the start (390k purchase with 20% down would lock up 78k vs the 34k post appraisal). Not sure if this is the right way to look at it if my goal is to pull out equity and move onto the next deal with some speed...

@Jonathan West - Great post, Jonathan. I vaguely recall that some cash reserve is required for lenders (some % of unpaid principal needed to get the next loan) though I can't recall the exact details.

 You bring up a good point that in real downturns like '07-'09, a lot of things collapsed including the closing of lines of credit. I could see a perfect storm situation if only a few variables turn south. Any investments we make, we've got to be able to still sleep at night. There's also some wisdom there about where we are in our careers. You may be more in a place of capital protection, especially given how most of the market is likely closer to the top than the bottom. Since I'm starting out, I'm may be more inclined to take on a greater degree of risk.

@Ian Ippolito - Yes I'm just starting to learn about syndication/crowdfunding which is how I stumbled upon this term in the first place. Still learning about doing deals this way vs "one house at a time" for someone just starting out

@Mike Dymski- It's becoming more obvious to me that there is always some value-to-money trade off in every way of REI (and life?). As a beginning investor with an enjoyable W-2 job, I'm still figuring out exactly how to value my own time when it comes to the passive vs active investing spectrum.

@Jay Hinrichs- well said!

@Todd Dexheimer- Makes sense that the value of being "accredited" comes from the money rather than the designation

@Saul L.- Excellent point; I'm mixing up the term "accredited" with "verified/certified"

@Account Closed - Great post. I resonate with the confusion around getting "verified" though this sounds like this verification process is investment specific. I'll need to learn more about the differences between Rule 506(c) vs 506(b).

Thanks all. This is very helpful information all around. 

@Dan H. thanks for the advice. It's tempting to use the heloc since interests rates are still low and I could close fast as if it were a cash buy. I considered using it to buy a prop, do rehab work, and then refinancing with a bank to pull my money out (assuming it appreciates). It's of course risky business but fun all the same with the right deal. Sounds like it may be wiser/safer to build up the war chest for now...

@Abigail Hollar Thanks for the quick reply!

I'm wondering the same question - if not going the LLC route, are there any standard partner contracts examples available to ensure that both parties are protected in case the deal goes south?

Hey Nur,

Welcome to BP!

Different folks have different preferences about the importance of proximity. Actually, @David Greene just wrote a phenomenal book about long distance real estate investing if you're interested.

Initial ways to find properties include checking some common websites such as zillow, redfin, trulia for homes.

When first starting out, make sure to read through all the wonderful biggerpockets forums. There's a wealth of free information here!

Hey Brandon,

It depends on many factors including the interest rate (and type) of the debt and how much cash reserve you have. In general, I'd recommend making sure that you've secured one income stream (typically your W-2 job starting out) and building up some cash for emergencies before investing.

Hey Williaam,

It's great to hear that you're getting started so young! I had no idea what financial stability or independence even meant at the age of 20. Agree that paying off those credit cards is a good first start and definitely invest in your own education. There's always more to learn!