All Forum Posts by: Garrett M.

@yuriy Thanks for the post! What do you draw from the data? Market looks tight... Good time to sell?

Great Game and a Great Team!! EAGLES!!

Jason Laso I have copied your questions and replied. 1. What do you think about an interest-only loan though? Do you think it is beneficial for the lendee to try to pay off some of the principal as the property cash flows or is it better to just keep reinvesting that cash flow towards another property? The answer to this depends on your goals. If you want to acquire properties quickly and you don’t have the money under your mattress, then you use leverage. You have to decide how much leverage you are comfortable holding. If your goal is having increased equity in your properties or even paying them down completely, then your path will be a longer one but you may feel safer about the journey. So it really depends upon what you are trying to achieve through real estate investing. I do think that having at least 20% equity in the property is a good practice. Ultimately you want to be comfortable that you can withstand a prolonged vacancy, a large capital expense or even a recessionary drop in your property’s value. Can you keep making the payments if things get weird? There are smarter people than me who are more strategic about evaluating total interest cost of an investment. Because I am still in the early phase, I am less concerned with optimization and more concerned with getting the cash flow snowball rolling. I will get technical later once I have more options and momentum. 2. I guess my concern would be that while the money is cheap for now it probably won't be forever, and I'd like to have my bases covered in the event I had to refi at a higher rate/with a mortgage in 3-5 years (hypothetically). I wanted to mention here that I wouldn’t worry too much about interest rates in the future. If you can use a conventional refinance and lock in 5% for 30 years then you are sitting pretty. Even if rates climb a bit the rest of the market factors shift in accord with rates. Higher interest may lead to less competition for properties, and so you can buy things cheaper. I wouldn’t overthink it personally. But most importantly... in having a willing private lender you are sitting on a golden goose. I like what Chad Carson has to say about private lending. I’m paraphrasing: My first duty to my investors is to make sure that they get rich and I know if I can help them get what they want then I can get what I want. If you can give your private lender a higher rate of return, treat them well, communicate often and clearly and execute on everything you say you are going to do, you will probably find that you have no shortage of money to secure your deals. A happy private lender is a treasure. Lastly, are you rehabbing these properties at all? If so and you are pursuing the BRRRR strategy, that changes the time frame in which you are borrowing from your lender. 6 months to 1 year. If you are just buying in service properties, what term do you anticipate borrowing from your lender?

Jason Laso In business it is said that “you don’t partner what you can hire” Giving away ownership is much less desirable than making a reasonable interest payment. A good potential partner must bring something powerful and uncommon: a skill set, or network, an incredible work ethic... Unless your lender wants it, I cannot see the benefit to your business of partnering in this case.

I recommend Walt Humphries Insurance group in Philadelphia.

Ben Francis Yes! You can use a Heloc for BRRRR deals. Some people don’t feel comfortable doing it because they could loose their home if things go pear shaped on your deal. I personally think it’s a genius way to use leverage to grow a real estate portfolio. I continue to use my own Heloc on my BRRRRs. Make sure you have financial back up plans and that you are protected against losing your home if things don’t go as planned with your deal. Be brutal in your analysis, conservative in your projections and have multiple exit strategies in place.

Yay!! Thanks Mindy Jensen

Hi John Davis ! If you are interested in multi-family look into Michael Blank’s apartment investing podcast. It’s geared toward helping those doing(or considering) their first multi deal. He is very thorough and the info is good. If you deploy all your available 250k in cash and meet the 1% return mark, you’ll already be at 2500 per month. But you should use leverage if you want growth. If you go the conventional financing route and put 20% down, 250k could buy you 1.25 million bucks worth of property. This will be faster than using the BRRRR strategy which is largely a method of recycling cash. I use it because I don’t have a lot of cash, but someone in your position might not need to.

Bobert M. The terms for those loans are short as you mentioned, but they are usually amortized over 25-30 years.

Bobert M. The way I see it you have two good options: What Peter K. Was saying is feasible for you to get cash out of your first property and use it for your next purchase. He wrote” To cash out of your current rental, you are going to have to find a bank which lends to an investor like you.  The issue I see for that is you don't have a proven record making money on rental properties.  Typically two years of tax returns showing the profitability of your investment is required.  There are certainly lenders which will lend to someone in your situation, but you will probably need to call around for a local or regional bank in your area for one with an appetite for that type of loan.” So find a local small bank, credit union, etc that is a portfolio lender. They will do a refinance with an LLC. Yes, you may pay an extra point for your interest rate and you will need to refinance the property in 5 years or whenever your balloon is due. There are closing costs to consider and other general market risks to think about too. Option 2: Use hard money or crowdfunding(another form of hard money) to BRRRR the next deal. You will most likely need to Rehab the property to create that 25-30% equity appreciation needed to recapture your initial investment. Hope this contributes something. Best-