All Forum Posts by: Lance Robinson

I have actually purchased 4 properties from them before and am in escrow on a few more with them now. I have had a great experience working with them so far. Let me know if you have any other questions!

Lance

4 Votes

Originally posted by @Nicholas B.:

Regarding small scale rental properties or I believe "buy and hold" is the term used around here (sorry, I'm new to all this).

I notice that a lot of investors mortgage properties for 10, 20, even 30 years - whatever it takes to produce a (sometimes barely) positive cash flow. It seems that a lot of them end up in a "one day, I'll be rich" scenario of waiting out the mortgage before they really have solid usable income from the rent checks. Maybe they put a couple bucks in their pocket, but in the mean time, they're paying thousands in interest and often run into difficult DTI problems when they go to finance something in their name.

Do people who have the disposable income ever intentionally enter a negative cash flow deal in order to get to the "I keep the rent $" phase sooner and save the interest? Or more importantly, why not?

I'll add an example in case I'm not really clear:
Let's assume an initial loan amount of $60,000, $3000 / year of taxes and insurance, and a rental income of $1200 / month analyzed over ten years. Assuming that repairs and maintenance will be paid out of pocket. Total income would be $144,000 minus the out of pocket expenses. Please bare with me for simplifying all of this to get to the point.

If I take a 5 year HEL at 4.115%, P&I = $1108 + $250(T&I) = $1358 x 60 months is $81,480. Then another 5 years of tax & ins totaling $15,000. Total investment is 96,480, leaving an income of 47,520. For the first 5 years, I'll have to float $158 / month totaling $9,480, but the next 5 years, I'll have $950 of additional income totaling $57,000.
If I take a 10 year HEL at 5.365%, P&I = $647 + $250 = $897 x 120 mo is $107,640 total, leaving an income of $36,360. Each month, I'll have a positive income of $303, totaling the $36k.

Maybe I'm missing something. I guess I just wonder why I read so much about making "positive cash flow" leveraged deals, but nobody ever talks about just getting the thing paid off and then enjoying the income. This is something that I'm actually considering doing in the future, so feel free to save me from myself. Thanks!

Nicholas,

I'm chiming in because I don't think anybody is specifically replying to your specific example and they haven't dumbed it down enough for you so it's just driving you crazy.

It's fairly simple, in a one house example, you can save money by paying it down. The way to look at it is really how and where you can invest your money. Rapidly paying down your property will save you interest. Which could be say 4.5% return on your money. Instead of rapid pay down, you could buy other properties that would produce a higher return on your money at say 20%. I hope this helps to make sense of it all. My advice is to always invest your money where you get the highest ROI. You may get a 5% annual return in your example (didn't run the numbers) but you could invest elsewhere to have much money in that same time frame.

I hope that helps to clarify for you.

Lance

0 Votes

Joseph,

One thing you will learn about this website is that there are ALOT of opinions. I am extremely detail oriented and do a ton of due diligence before making investing decisions.

Anton explained it perfectly so I won't repeat what he said.

I first decided I wanted to invest in turn key properties for many reasons, I then looked and talked to a bunch of different turn key providers to find who I wanted to work with. After my first call with Marco, I knew I wanted to work with Norada. Marco is on top of it and "gets **** done." He will hold your hand every step of the way. He has been so amazing to work with that I've already introduced many of my closest friends and family to him. I talk to him several times a week and he serves as an advisor, a partner, and someone I can trust.

I guarantee you will love working with Norada like so many others have. Feel free to reach out privately if you want more information, but I guarantee you that you will be happy in making the right decision.

-I purchase properties through Norada, apart from that I am in no way affiliated with the company. There are a lot of "questionable" turnkey companies out there so I want to make sure you work with a company that will be the best partner for you, not one that's just trying to sell you or be "gimicky" good luck!

7 Votes

All Forum Posts by: Lance Robinson

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