All Forum Posts by: Jay C.

For people who want to hedge against risk, I wouldn't do it by putting more equity into the property. In my view, it's better to hedge with some amount of cash savings + other investments like securities to help balance some of the risk. Now, of course, securities can and will lose value at the same time real estate markets crash (see 2008-2009) so having some cash reserves is another hedge. For me though I like the idea of having money in taxable accounts earning 10%+ vs having that same capital tied up in properties saving me 3-5% essentially. Markets fluctuate so those investments will go up and down but I still think its a better way to mitigate some of the risk than paying off properties with great loans attached to them.

I was thinking I would be going the conventional loan route since they are easy enough to get, have low interest and are amortized for 30 years. I just finished the BRRRR book which I like and might eventually adopt but I would rather get some experience first before I go that route. I also have some concerns that lenders aren't doing as much cash-out refinances atm (someone can correct me if that's not the case). I don't want to have all my capital tied up in one deal.

In terms of your strategy, I am interested to know how you are leveraging 5 year loans?

As much as I like the idea of paid-off properties I think as long as banks are giving out low-interest loans for 30 years you want to leverage that as much as possible and not pay them down.

@Tracy C. which Lender are you using?

I have been trying to get all the Dave Ramsey stuff out of my system. Dave's stuff is good for getting out of and avoiding high-interest consumer debt. It should not keep ppl from taking calculating risks on relatively low-interest mortgages for investment properties.

Speaking of which what is a good rate (knowing they are higher for houses that aren't primary residency)? I was poking around the other day and saw that I could get 5% for an investment property, not sure if I could get lower.

For me Joe I will hedge some of that risk by having some cash and also money invested in taxable brokerage accounts. I like having some liquid investments I could draw from if necessary without having to park a lot of cash.

Are cash-out-refinances hard to get right now? I imagine a HELOC is a little easier to get atm but I don't know, I am curious what people's experiences are with that.

Getting a HELOC to help finance down payments would be interesting. Use a HELOC to pay for a down-payment then pay back the HELOC with cash-flow, then repeat. Is that a common method for financing new houses?

I doubt you could get 20 properties with only 10% down. Seems like you are going to be putting in at least 20% to get a loan and the total properties you can buy are subject to your debt to income ratio.

This is a good thought, Brandon. The conservative me says that this would be the approach I'd want to take but then it seems what experienced investors say is that you take advantage of low-interest loans to build up your portfolio. The cash flow number you mentioned of 150-200 sounds too low for a $1500/mo property unless the mortgage, taxes, and insurance are super high. 

At any rate, I am going to be jumping in the next few years and I will probably use cash flow for one property to help pay for the down payment for the next (as opposed to trying to pay them off entirely). Even doing that can take a while if you are only cash flowing a few thousand dollars a year so I will probably be adding additional savings to accelerate that process.

Thanks y'all this is good info!