All Forum Posts by: Jack B.

So you're saying I can sell a mortgaged property but I must buy mortgaged properties with the proceeds? Yet for #3 you say I can mix and match? 

So can I:

1) Sell a paid off rental property and 10-31 exchange it for two mortgaged properties so long as their aggregate value does not exceed 200% of the relinquished property?

2) Sell a mortgaged rental property and 10-31 exchange it for one or more paid off properties so long as the aggregate value does not exceed 200% of the relinquished property?

3) Sell a mortgaged rental property and 10-31 exchange it for a mix of paid off and mortgaged properties so long as the aggregate value does not exceed 200% of the relinquished property?

 Negative, no portfolio lender yet. Open to recommendations or I can ask my conventional broker... :-)

Yeah, the right deal is a good point. It's been ridiculously difficult finding cash flowing properties the last few years in the Seattle area. I have found a few deals here and there, but may have to go back to buying foreclosures and short sales.

Perhaps I need to just flip the houses with the lowest possible transaction costs. I would avoid a lot of capex as well this way. I figure if I use the MLS4Owners instead of hiring a listing agent, and negotiate that the sellers pay the buyers agent commission (why should I have to pay for their hand holding needs?) it is after all a sellers market here with very low inventory.

I have use for the money in that I'd like to expand my rental portfolio. I already own four houses though only three have mortgages, so I should qualify for relatively easy financing with my one more house at least with the same lender. I will say my last house that I just rented out won't show on my tax return for a year though it is cash flow positive even if they only count 70% of the rental income. Maybe I need to talk to my broker and see whether my DTI ratio will support another house right now. I may only qualify for a smaller house in Tacoma for 175K rather than a 400K+ in Seattle.

I have on average about 130K in equity sitting in each of my properties, some a little more. Many of them are only 2-3 years old to me (as in I've only had them a few years) and much of the equity is from appreciation. I'm looking at a 70% LTV to cash out refinance and reinvest the proceeds but is it worth it yet?

What I'd get in terms of cash would be:

Property 1: 20K (held 1.5 years so far).

Property 2: 91K (held 6 years so far, paid cash so it's paid off).

Property 3: 48K (held 3.5 years so far).

Property 4: 50K (just bought, would add closets to some rooms and cash out refi 80% LTV.

I have 100K in the bank to invest and save about 70K a year. My method to date has been buying a house about every 1.5 years. It is a bit slow, I'll admit, but seeing returns in real estate I'm thinking of accelerating returns by using the cash out refi to buy more property. If I cash out now I'll have about 300K to invest. 

OR would a HELOC be better in the short term? Would I still need to keep 80% LTV? Or do they loan on all of the equity? Perhaps I'd be better off letting it season for another year...and just use cash on hand now to buy one more house then a couple more next year.

 You state that buy and hold rental investors also lost their shirt? Can you name any that had cash flow positive properties and lost their shirt, as in let them get foreclosed on losing everything?

The person I bought my last house from is a REI. She owns millions in real estate, and all cash flow positive, she didn't lose her shirt.

Point, is, as I noted in my OP, cash flow positive properties don't put you in a bad spot even in a down turn. Big difference between a buy and hold investor that is losing money every month and the property is losing value and all of a sudden they lose their job vs. the REI that has tons of cash flow and doesn't need to sell, the properties maintain themselves with renters. Of course, they must have reserves, but this again ties into the lesson. Don't buy things you can't afford.

Bump for the weekend crew.

http://www.businessinsider.com/josh-altman-learned...

The Altman brothers bought properties they couldn't afford but were making big money on, rolling the proceeds into bigger and bigger properties...until the market tanked in 2007 and they got stuck with a house they couldn't sell and couldn't afford.

Super glad that although I invest in an equity market, I bought properties I could afford with 20% down and are all very much cash flow positive.

I'm considering getting in on the cash flow property boat, tapping some of my equity market capital gains from property in the Seattle area I rent out. I can buy 10 paid off properties in Aberdeen and cash flow 72K a year after expenses. Not going to replace my salary, not by a long shot, but if I keep working and adding to that over time, it will eventually surpass it. I'll still keep working for a few years just to qualify for loans on equity properties in the Seattle area, but I'm really starting to think as great as the equity strategy is, it relies on market timing, and cash flow properties that you own free and clear and can replace your six figure salary are the way to go as part of a portfolio of index funds, bond funds, REIT's, and equity properties.

Plus, at the end of the day, on a paid off 300K house in King County I would net $1,100 profit a month after all expenses. I can buy a couple houses in the Aberdeen area for just over 100K and cash flow the same, so why not buy 6 and turn it into $3,300 cash flow? After all, it's my job I want to retire from, not my business, so why not buy and keep buying cash flow properties and keep reinvesting the income until it's-say-250K a year cash flow? Then you never really retire you just manage your portfolio and keep adding to it watching your income grow.

I think at that point I'd buy a Lamborghini like @Mark Ferguson ha-ha