All Forum Posts by: Kurt Gardner

@Joe Splitrock - personally, I have no problem with 30 year mortgages on my investment properties right now...because interest rates are so low, I feel like I'm stealing money...plus it makes cash flow much easier month to month. 

I saw posted in here one time, that rich people get rich because they find ways to have other people pay off their debts.  It's worth it for me to keep my income generating properties at the highest possible margin to keep my debts covered by my tenants.  The ONLY reason I might consider a different strategy for paying off/building equity in my rentals is for the use of that equity as a tax-free vehicle for more investments.  THAT is the greatest "scheme" I've learned in this business, and I love, love, love how that works.  Even then, we've been blessed to buy at such a good cost to value ratio, our leverage is strong and our positions in each property is comfortable against potential market fluctuations, so I just plod merrily along scooping up a deal here and there when it presents itself. 

On my personal property, I did refi to a 15 because it saved me nearly $135k. That was 6 years ago, and it will be done in another 7 years because I pay an extra $125 each month to push that principle down. 

I'm not looking to become a bazillionaire, I just want to have an honest business and provide a comfortable (secure) living for my family.  I was also told one time, "don't learn the tricks of the trade, learn the trade."

it's not rocket surgery...it's just numbers. 

Blessings!

@Chris Conroy - contractors typically have a fairly good grasp of what is "popular" in the market if they're worth what you pay them.  It's their job to be functional and form conscious.

Make the kitchen nice with fresh countertops and cabinets, have clean bathrooms, paint and re-floor the place if you can build that into your budget. 

Don't pay somebody who makes their money telling you things you can get from looking at other listings online and can figure out for yourself.  Take that money and upgrade the appliances or better yet, save it and use it to buy the next equity earning/cash flow property!

I think we're all agreeing to some extent, it's a matter of how significant the savings are.  With interest rates as low as they are right now, the difference is fairly small (depending on what you consider small).

I believe instead of keeping a lower monthly payment on a 30 year, and strapping on an additional payment of a HELOC, you might as well be just as happy with a refi at a 15 year loan and making an additional $50-100 per month payment on top of that. Compounded with the interest savings on a 15 versus a 30 and the additional $600-1,200 per year in principle reduction, you'd probably come out about the same with much less attention to the detail (set it to autopay and then just go about your business).

meh, there are lots of schemes to utilize your money and frankly, I'd trade the HELOC for investing in other positive cash flow properties and use them to pay off the principle. That way you're not only reducing your daily balance on your principle, but you're also building equity in another investment at the same time.

then, of course, there's the life insurance option...

lol.

@Chad Tate - great comments here for you, and I'd tend to agree with most.

I have taken the DR course and believe it is a great foundation to understanding how to manage "out of control" debt. The thing with REI is it is supposed to be a "controlled" debt. It's about managing numbers, following a schedule of debt repayment (with a positive cash flow), and staying within a budget (as DR suggests).

You'll never be debt (better DEBIT) free.  you'll always have bills to pay, it's the term or length of time it will take you to pay them off that is of concern.

you can ascribe to the DR philosophy and do REI with mortgages and credit cards so long as you manage the numbers properly. for example...I use a Menard's card because I get 2% off all my purchases there...I also have a Home Depot card because they give me 5% of purchases. Right now, my discover card is paying me 5% cash back on all purchases at home improvement stores, and that total will double after August. So, instead of spending cash and paying the "in store" price, I buy on one of their credit cards (save 2-5%), then pay with my discover credit card (saving another 10%). It's not a ton of money, and that's the point. you'll win this game because you pay attention to the little amounts you can save, not the huge amounts that it costs to do business.

take the best of both strategies and create what works best for you. 

Blessings.

same way you start up any business with $0.  you either get some money or you don't start the business.

it will take you some money to start...not a fortune, but you'll need some.  My wife and I started with the purchase of a $25k 3BR home that took about $8k in rehab.  We put down around $7k, mortgaged the rest and paid contractors and materials in cash...so, it took us around $15k...

that property is worth $55k and brings in $650 a month in rent. 

because we only owed around $18k on it, we were able to leverage it after a year to purchase our second property with some of the equity.  We didn't spend a dime out of our pocket on that one.

you can pay cash, get a mortgage, or get investors.  either way, you're going to need some money to begin.

work on it.  save up and be patient. run the numbers and account for unforeseen issues.  be bold when the opportunity arises and keep learning all along the way.  do not get discouraged and keep in touch with the people in here for honest support and help.  this is a very good community with some very learned, helpful and sometimes sharp commentary to guide you.

Blessings.

I've never taken it as rude, and I can see how it could be so.  I just tell the truth.  I have 7 doors.

I think in some ways, they aren't being nosey about your business (i.e. how much you make) as they are checking to see how much you might KNOW because they're curious about how it is done.  Of all the "professions" and entrepreneurial enterprises, I'd guess more people inquire about real estate investment than anything else.

By asking how many properties you own, they are sizing you up, and in my experience the follow up question is, "how do you do it? I've always been interested in that."  I freely share my experiences and love to offer my help to somebody who is just as lost as I was 4 years ago when I started.

The vague answers are good, and probably an easy way to deflect and make a point it's a personal question.  That's just not my first inclination when somebody asks me. 

have not entered the world of electronic payments at all...I am too cheap to deal with any fees for taking my money.

I accept at my residence cash, money orders and personal checks until they bounce.  they will pay a returned check fee AND a late fee, then only have the option of money order or cash going forward.  I have not had this happen yet (7 doors).  Mailed payments must be postmarked before the 1st of the month otherwise they are considered late and get the late fee.

Once we get a little larger, I will either look into a management company (if I'm going to pay a fee, I want to get more than just a transaction) or consider electronic methods. 

Personally, I still get a thrill seeing those envelopes that give me money in the mailbox instead of the ones that always want it from me!

hmmm, not sure I'd try to manage that many accounts...and I only have 7 doors!

we have three...my wife's, mine, and my business.

we keep a detailed excel sheet to track debits and credits for each property with line-item entries.  this is all the "tracking" I need to feel comfortable with the detail.  I created a few basic formulas to calculate certain values and ratios, but for the most part, it's really about how many decimal places you have in the account and keeping up with each dollar as it goes in and out.  with one account and one spreadsheet, that's very easy.

don't make it complicated just because you can. 

first one is always exciting.  the advice on numbers is THE most critical element you have to know...why is it only $130k for 10 units ($13k a door is pretty insane 1BR/2BR?).  you must be patient to find the right deal then you must be aggressive when you decide it looks good.

there could be issues, which is why nobody has jumped on it already, but calculate where the numbers make sense and then reconsider?  is it worth $130k?  maybe not...is it worth $70k, maybe so? 

I tell my wife all the time, it's just money and we're still young enough to figure out some way to start over if we have to...

hint, if you'll provide some of the numbers here, you'll get more than platitudes and encouragement...take advantage of this very helpful community.  we all want to see each other succeed.

hardly any new comment to make except to the amen from all above...it is a personal decision, and the numbers will tell you what you should do...do not let emotions cloud your judgment either way. (e.g. do not feel compelled to invest just because you see the excitement on these boards about how people are using THEIR money, and do not be afraid to take a calculated (minimal) risk with your own just because you want to avoid any risk.

set limits (expectations), make a plan, work your plan and carry on.

*personally, I'd do it.