All Forum Posts by: Brian Garrett

@Michael Evans Interesting points and valid ones at that. There are very clear advantages to leveraging that's for sure. For me personally, with my limited knowledge since I'm still new to REI, it seems to make more sense to use cash for flips since it's a quicker turnaround on my money and I don't incur the extra holding costs associated with a loan. The buy and hold cash flow generating deals are the ones I thought leverage would make the most sense for. You seem to feel the exact opposite. Am I overlooking something or not considering something?

So you paid cash for the house and the rehab and now are planning to cash out refinance and pull $160k back out?  Then you'll still have $10k into the property at that point since you paid $150k and put $20k into the rehab that's a total of $170k?  Can you not pull $170k out so you recoup all of your initial investment and you're strictly cash flowing from there?  Also you didn't mention your holding costs up until the time you got it rented.  So even though you have $170k into it and it's worth $225k it's not truly a $55k gain since there are still other costs besides just purchase price and rehab that aren't included.  Unless I misread or misinterpreted?

@Dean I. Congrats on a successful first flip and thanks for the detailed analysis it really helps us new guys out that are still in the learning phase. One thing you said was that you had to get the financing in your personal name and not under an LLC. Was this just because it was a conventional loan? To my understanding if you did a commercial loan you can do it through the LLC without your personal credit being involved or even mattering. I also have read that commercial loans seem to close quicker and are an easier process overall. Curious if you explored using a commercial loan at all through an LLC (to my knowledge the LLC doesn't have to have previous credit history) or if you simply went the conventional route? Thanks!

@Josh C. Understood.  Thank you for the feedback.

Where do you place them?

@Ritch Bonisa I'm just asking so I know how to protect myself from a GC overcharging me for a job and just dragging it out and wasting time.  Obviously in flip situations you want the fastest turnaround possible and the least hold time without sacrificing the quality of the job.  I guess you just have to trust that the GC you hired is honest and your project is actually a priority to them.

@Kenneth Garrett Great information about the commercial loan through the LLC. Does the LLC have to already have previous credit history and a proven track record or can it be completely new?

Are you talking about a physical mailing list or an email list?

This was a very informative post. Learned a lot of different perspectives and pros and cons of both sides. I've been going through this debate in my head since I have saved up a pretty decent amount of cash from previous business endeavors and I'm just now beginning REI. Now it's starting to sound like the only time buying cash makes any real sense at least for me personally is for flips since it's a quick turnaround on my money but anything that I'm buying for cash flow purposes should be financed since I can spread the money among multiple properties that way I'm ultimately generating a higher ROI and making the banks money "free" to me and I'm still making profit on that money as well through both the cash flows and properties appreciation. Then once the properties appreciate a certain amount I can cash out refi on them and pull the "free to me" money out of them to roll over into new properties. Does this make sense? If so then wouldn't I only have to put up my own cash once and I could just keep leveraging it over and over again for my cash flow buy and hold deals by just following that same strategy while I'm also getting to keep my cash for more flip deals?

@Lance Lvovsky Thank you Lance.  Do you ever do any deals in Palm Beach County?  That's where I'll be primarily looking.  Feel free to connect via PM if you prefer.