All Forum Posts by: Matt Ward

@NhiQuann Jones from my limited knowledge, if you have a property that is paid for in all cash, say $50k... and you put in $30k of renovations... and that property appraises for $100k... you own a $100k property outright.  

On the refi, using your 70%, the bank assumes a $30k loan on your property and give you $70k of equity in cash.  Therefore, you have a $30k mortgage on the property now... but you have $70k in cash.... meaning you only have $10k of cash left inside a $100k property that is now (hopefully) giving you positive cash flow.

@Mia Trasolini I'm in the SF Bay Area with similar difficulties when it comes to price of entry.  I've found that you can get good returns in low income areas for a reasonable entry price.  Also, you can find Section 8 tenants who only pay a fraction of the rent out of pocket and thus are able to absorb rent increases more easily.  Also absolves some of the "late rent" component of low income areas.  That said, being mindful of the area is important.  Buying a property on one side of the street can be much riskier that a property on the other side.

Hi Everyone, long time reader-first time poster!

I'm approximately 6 months away from being ready for my first purchase. Here is some general info: I live in a very expensive market, I have a great mentor who's plan I will be following, but my questions come down to which is better for my situation - all cash BRRRR cash out, or finance multiple properties from the beginning.

More info: my target property profile is a 2b/1b apartment for ~$200k which rents for about $2k.  TOTAL operating costs w/o loan is $500/month.  Loan payment will be ~$800/month.  So either if I finance from beginning, or after a cash out, my costs will be $1300, net $700 = $8400 cash flow annually.

My dilemma is whether I should buy all cash and wait for the 6 month seasoning.  

The issue with all cash, in addition to the wait time, is that in order for a $200k property to appreciate enough for me to get all my cash out, it needs to go to $250k. This may take longer than 6 months. Alternatively, at the 6 month mark I could take as much out as possible and fund the difference of the next purchase with a LOC I have on my primary. The positive is that I am competitive for the purchase and may save closing costs by only doing a refi. Also, when I'm in the seasoning period I'm collecting more rental income.

The issue with financing is that I may not be competitive @ 20% down and/or may run into financing issues with either the property or as I accumulate more properties it being more difficult to get the financing on properties 4, 5, 6, etc.

Some other things: My wife and I each have a W2 job, household income is ~$200k per year.  Only debt is a small amount of student loans from a private lender that will be paid off in 2 years.

TIA for your feedback.