All Forum Posts by: David Banker

I made the mistake of bringing up the idea of real estate investing with strictly unbridled optimism. My wife has a bit more of a conservative and scarcity-based mindset with money in general. I do intend to share the full picture of potential risks and benefits in a more intentional manner, to get her on board and as I learn more. So even though I am new to this and in the learning phase, I recognize the error in my ways but I am looking for advice and the best approach to getting someone comfortable. Someone that spends zero time thinking about finances and the only exposure to real estate is The handful of people in our family and friend group that unintentionally happened into owning a condo or two, and are completely jaded by experience interacting with tenants and maintenance. I approached the notion of financial independence and/or early semi retirement, by sharing some inspirational podcasts and videos… does anyone have any recommendations for something similar with real estate? That tackles the conceptual/mindset part, but I’d also like some advice and tactically how to talk about the numbers and risks. 

@Andrew Syrios just to make sure I understand, The cushion you're talking about is the fact that the property can drop all the way down to 75% of my original ARV, before I am upside down on my refinance debt?

What I meant by covid related was an increased rate of tenant's unable to pay rent. You're right in that it's not covid specific or even BRRRR specific, but instead just how much leverage i'm comfortable with.

The BRRRR factor in my thought process is that leveraged more quickly. i.e. with option 1) buying more turn-key properties without forcing appreciation and refinancing (BRRRR)...it may take me many times longer to acquire the same value/# of properties, vs using option 2) the BRRRR method. BUT option 1 my debt to equity ratio will be lower, or bringing it all the way back to my question, less risky in theory. A way to mitigate this risk is some level of cash reserves (not sure best practice here) or number of doors/more cashflow to cover vacancy and inability of tenants to pay rent. Other strategies for this are welcomed.

At the end of the day the ultimate risk if I can't cover the mortgage is some form of bankruptcy and bank takes the property? is there any legal structure can that protect me in this worst case scenario?

Nothing earth shattering here, but I love the BRRRR strategy.  makes sense to me. I am also ruthless with mitigating risk so I am just curious how investors think about risk and leverage in current environment.  I Imagine much of the vacancy risk is helped by a great property manager who finds quality tenants? Are there additional liquidity strategies outside of having a more substantial cash reserve?