All Forum Posts by: David Wagner

 Once he has the properties paid off, the leverage is gone.  The appreciation will help his overall return but his return will not benefit from leverage as it has been.  His return will, over the long term, be smaller than it has been.  

Is that 200% return including value adds?   If it is just appreciation then you have chosen a great market.  With value adds, that is still very good for the last 3 years.  

As indicated, I used the S&P just as a reference that was well known and passive.  There are better (and worse).  My best passive investment we purchased for $300k and the first year received royalty of almost $300k.  Of course, the value also went up.  Many years later, our royalty checks are down to $30k/year.  But 100% passive except needing to file state income tax in an additional state.  That is almost as passive as possible as we have used the same tax man through the whole time so he has the process down.  

Real estate is easy to use leverage. Not using leverage, especially in high appreciation areas, reduces long term return. Real estate also is not as passive as other investment options. Owning an SFR that returns a couple hundred a month is really just a job and not great paying one especially when taking into account any risk.

@David Wagner don't hurry up to use your equity position to purchase a deal that yields you a 10% return. In this high market, only discounted deals & very high yield deals (18% cash on cash is my minimum) are a good call. 

Do you have 50k in equity total or 50k that a lender is willing to leverage for you? Of course, a lender won't give you a HELOC or refi out every dollar of your total equity.

Go wholesale some deals :) Stack your chedda and make a move when you've got enough liquidity not to worry about leveraging your home against your rental property unnecessarily.

David- PM me if interested in the broker's info, I am in escrow with a broker on a multifamily (owner occupied) property, 5% down with no PMI. Nobody else could do it for me, I was given his info by my agent/friend who recently closed with him.

@David Wagner

1st property 3.5% down ($6700) FHA(my name alone)

One year later we moved into 2nd house keeping the first as a rental

2nd property 3.5% down ($7200) in my wife’s name

One year later we moved into the 3rd keeping the first two as rentals

3rd property 5% down rehab loan (my name)

Purchased for $167, put $115 into it, lived in it for 6mo and refinanced at $372k appraisal

With less than $20k of our own capital we now have almost a $1mm in real estate in a market that is hard to break into Portland Oregon

Buying homes as primaries and moving every year was the only way we could make it happen

@David Wagner first property 10% down conventional loan. Made some sweat equity by renovating most of property myself. Appraised property to remove PMI, found out I had way more equity then planned (almost crash car when lender told me amount). Purchased second property with private money all cash, cash out chunk of equity from first property to renovated second. Planning to mortgage second property later this year to pay back private loan.

My second was a BRRR. Bought it for 32k, put about 55k into it and it appraised for 129k. Since you're sitting on some equity, maybe this strategy might work for you. Try to find a private or hard money lender to help purchase and rehab it. It's gotten significantly more challenging in this market to find deals where you can cash out 100% and pay off your investor, but it might be an option depending on your market. Now, having equity and actually having access to that equity are two separate things. Good luck.