All Forum Posts by: Tom Cyr

Anthony, I've used some of David's online resources in the past. His website is extensive. Did you interview Bryan Dunklin in Dallas for your LLC? I'm considering setting one up this year and he is on my list to visit with. He's a former SMU professor and plugged into the REI community here.

You would need to focus on high yield to make the most out of your unleveraged funds in true investing.  Almost all of the industry calls Wholesaling or Fix/Flip investing but it's not investing at all.  It is only using your time to find a discounted asset and selling it (or the option/contract) for a spread.  The asset could be personal property just as easy, except that real estate is illiquid and causes some sellers to panic.  Nevertheless, wholesaling is a fast way to raise capital to "invest."

Real estate income will tend to average in the 10% area long term if you have a well managed B or C class asset.  My guess though is that you are looking for higher ROR than that.  You can mix wholesaling and investing for increasing portfolio growth.  Meanwhile, keep your eyes open and keep networking to step up the yield ladder.  You can do it without borrowing or lending, but it will be harder.  I never borrowed in my investing/flipping career, but I did gain some pretty nice returns owner-financing.  

Keep your eyes open for opportunities and you will be amazed at the deals you can find.  You competition has tunnel vision.

Welcome Hiron. Sounds like you've had a great start in your REI career. Welcome to BP.

Kathleen, welcome to Texas and Bigger Pockets.

Gina, you started quite a thread.  At this point it's ten pages long!  

If you are married to real estate as the only vehicle you would consider, then you HAVE to get FNMA financing as that is practically free money and a whole lot lower interest than historical averages.  It will partially make up for overpaying for assets in this fully valued part of the RE cycle.  As long as rents stay high, you could achieve your cash flow targets.  But the down side risk is if the rents soften, your leveraged portfolio is subject to catastrophe.  Ask Dave Ramsey about that.

The other trick investors use is to go down market in class.  Class D in Detroit will get you a high multiple, if you can keep it rented and maintained.  That's not a easy row to hoe.  Lots of risk there.  You will need to find the right market like several members said, with a balance of multiple and risk.

Patrick, whatever you do, don't rush in and pay close to retail for your asset just to get started.  You'll wash out and get a bad impression for investing - period.  Network with other investors and see if any will share in general what is working for them.  In many cases, they won't be able to share details because they found a unique niche and there is no competition.  But just talking with people and attending webinars is going to get you exposed to the industry and that's what you need right now.  Be patient.

Good luck with your freedom Mike.  The best part of the market now is the dirt cheap interest rates.  Make it work for you.  

Let me know if there is anything I can do for you and your partner.

Jason, it's a great question and one that my coach strongly advocates.  Since he's several million ahead of me, I'm taking his advice seriously.  So far I have spent about 8 months conducting due diligence on it.  You are right that the concept has its detractors.  

As a life-long advocate of pure life insurance, I found it amazing that permanent life insurance could actually have a valid purpose.  This looks like it is it.  It is called by several names, including Infinite Banking, Private Vault, Bank on Yourself.  

Basically it is a life insurance product that has a relatively low death benefit and a high level of cash value.  Maintaining a constant corridor between the death benefit and cash value prevents the product from becoming an Modified Endowment Contract which loses its tax advantage.  

You can get some information online and in books about the concept.    R Nelson Nash wrote what experts consider to be the primer, "Becoming Your Own Banker" which is 4.5 stars on Amazon.  One reason it's controversial is that it is a practical implementation of Austrian Economics which is diametrically opposed to the Keynesian Economics taught in most western universities.  

The use for it in REI is that you can use it for borrowing from when you have a short or medium term investment. You can borrow against it with guaranteed loans and low interest rate and the money is still represented in the policy as growing full strength. It's kind of like being two places at once. When you are in between investments, your funds are in a vehicle that is growing, not sitting dead in a bank or money market.

More benefits are that the funds are not part of the fractional reserve banking system (leveraged 10:1) subject to a bank run nor is it a part of the private retirement account system that the feds have their eye on as the only publicly available source of funds to keep the US debt afloat.  

I have found two basis schools within the infinite banking world which I have yet to get to the bottom of.  One school uses Whole Life product and the other uses an Indexed Universal Life product.  The illustrations I have studied lead me to believe that the WL version is a predictable steady 5%-ish range and the IUL claims 8%-ish based on upside tied to the stock market.  I am searching for a historical performance chart for a policy older than 10 yrs that exposes the fees to the insurance company.  It makes me uneasy to put six figures of savings into the policy without having a good picture of what the fees will be twenty years later.

I would probably network with the members you heard about this from at your REIA. If they are actually using it, they may be the more advanced investors.

The banks are marking them up because the public is buying them. Most of the REI community is not diversified so they can't jump to another vehicle when the market shifts. Overpaying for assets and then losing money is how natural selection reduces the size of the pool of real estate investors at the top of the market cycle.

Survey question for folks here planning for massive success in investing:

What do you plan to do to give back to the community with your wealth?  (Not the BP community, the greater community, the common good, outside of your church and family)

Now is the time to think about it, because it could be a large part of your motivation for success, although we can and should already be involved in some way with our time and talent while we are waiting for our treasure to build up.  Enjoy the process!