All Forum Posts by: David Zheng

@Account Closed you'd love the aftermarket exhaust on this thing. The other lambo owners call me "the mustang of the bulls" because of how aggressive it sounds

@Joe Splitrock

here you go cause you always manage to bring my spirits up!

if your problem is capital and not your DTI. there's really two ways to go about this.

1. simply save. qualifying for a  200k place means you have probably 9-11k saved up for a place including closing costs. so just increase that by 50% and whoop theres a 300k place for you. with some strong saving, you could probably do that in 6-12 months.

2. use gift money from friends and family. you can take these gifts for personal residences.

@Caleb Heimsoth I bought the car in cash and at a huge discount from a distraught seller. I analyze all my big "fun" purchases as much as my business ones. my mindset is always...can I sell this for the same or more later regardless. the cash to buy the lambo wasn't refi money, however more of my personal spend money was taken to fulfill the purchase than to other personal areas like vacations, eating out, etc.

and my daily is a workhorse civic too ;)

most of my rentals were bought using cashout refis from previous purchases so I understand if worse comes to worse and I sell at a 20-25% discount, I would basically be netting 0 in terms of buying/selling. however I would have gained all the cashflow over the couple years. again, this would be a worst case scenario.

My goal with the 7 year loans was to be aggressive in the first 1-3 years and just buy more if I Could. and as I got closer to maturity, really start hoarding cash for anything that might come up.

So to answer a lot of comments or questions

I don't really care when a downturn is happening or when it will happen. It's going to happen. I'm just seeing if I have my bases covered.

@Ray Harrell My  net rental income comes in at 4x my regular W2 job, so I'm not too worried.

@Jay Hinrichs but it my rentals are in a highly populated area. strong businesses, universities, hospitals, etc for the past 200 years. how worried should I be that I can't find renters?

@Caleb Heimsoth I'm about 75% leveraged across all my properties right now because I've been taking money out and buying more properties at 75% ltv. and yes I bought a lambo. but that doesn't mean I shouldn't be worried in case of a downturn. unless you assume people with any kind of extracurricular material item isn't allowed to worry about their finances. but tell me why I need 35% equity in my properties if 1. I have long term conventional loans 2. commercial loans that i'm only into year 1 or 2 with a balloon at the end of 7 years. terms where banks cannot call my loan due or a re-appraisal as long as I'm making mortgage payments.

@Account Closed with the balloons I have I think the max they can raise it is 3% a year, I figured in general, I would be able to take a 6% rise in rates. and in two yeas, I'd hope the govt would stop raising it that crazy, cause it would hurt other people more than me.

So theres a ton of talk about being over leveraged, a downturn or correction is coming, etc etc.

Well, I'm pretty leveraged. It was the only way to succeed without a 350k/year 9-5. brrr over and over.

So correct me if I'm wrong but what does anyone have to be scared of if the following conditions apply in a meltdown

1. youre locked into a 30 year conventional or 7 year commercial loan and the banks cannot re-appraise or call in full your loan as long as mortgages are being paid  per the closing docs

2. your rents can take 25-35% cut and still break even on all mortages, taxes, and insurance

3. you live in a populated and buzzing area where demand has always been heavy and unless a bomb dropped on it (yay insurance) you shouldn't have trouble finding renters

4. downturn --> people lose jobs and homes or try to downsize and  turn to renting  (good thing).

5. have solid tenants that have older co-signers (parents, guardians)

Am I missing something that the banks can still do to me even if I'm paying my debts on time?

in the underwriting state for the cashout refi. Hopefully good news within a couple weeks!


#stillalive

yeah I'm completely confused by your numbers as well. your debt obligation should be the first thing you calculate as a cost when figuring NOI. thought with those rents, you should still be pretty above water

If you've really been reading and researching especially on this site, you wouldn't have come up with such a blanket question. the fact that you didn't ask how to wholesale, how to house hack with an FHA, etc while blatantly just saying "I don't have enough for a downpayment" ....shows youre just trying to ask for someone to hold your hand and give you the golden egg on how to make it big.

and I'm only being an A hole about this because I'm close to your age and most of my friends always ask how to do real estate with 0 self-motivation and research. if you really want to make it in this industry, research  and read Everything. then ask SPECIFIC questions

I too think when it comes to business and money, you'll need to treat it separately from emotions/relationships.

Kinda related but I think most people on BP would agree that you should ALWAYS have a lease in replace for whoever you rent to, be it a rando, friend, or family. Its not always saying you don't trust them. Its literally just insurance against bad things happen IF they do. and as people have mentioned...with a 50% divorce rate, you bet I'm not risking things I've spent years and years of my life building just to have it stolen from me.