All Forum Posts by: Mike Chira

@Jaysen Medhurst I completely agree that MFR will help me hit my goal quicker and much easier as I stated in my previous message.

However I'm just starting and I think in order to get to MFR I need to start with SFR... obviously I wanna get into duplexes and fourplexes asap, but I know there is a lot to be learned and the first couple years I need to built my base... then start scaling

@Jaysen Medhurst ok got it.

Yea, I have a strong reason why and money will serve it...

I’m 31 and my ling term goal is by 50 to get to 50k/month passive. I know I can do it quicker.

If I do houses, I need 170 houses at $300/month cashflow in 19 years, that’s 8/year.

However if I transition to multi family I think I can do it quicker.

I know $50k passive it’s an ambitious goal, but I also have other investments that I will sell at the right time and that will be a huge bust.

Anyways, the whole point of this post was to figure out a road map that I need to follow to get to as many houses as possible in the shortest period of time.

@Jaysen Medhurst so you are saying that the HELOC and Mortgage together will be at 80%? Meaning that in order to have a high HELOC I need to keep the property paid off?

That's good to know that I can use the same HELOC on future deals.

Yea I understand the rules of 1031 and I don’t believe it’s easy. Definitely I still have a lot to learn and I’m absorbing new information every day.

Ok, I didn’t know that cost segregation study is that expensive.

And yes, I meant deferred...

Buying the second property is not dependent on the HELOC or a loan, but I'd rather not invest all my money right from the start.

What would be the route you would approach in this situation?

@Alexander Felice I 100% agree. I know everything can go wrong... from the HELOC to dealing with contractors, and I understand that everything is easier said than done. But I'm not just trying things... I'm motivated to go this route and I will do it. I've been hustling my whole life and I'm in this position through hard work...

But since I'm new to it (I've been in construction for few years, but no real estate), I need a road map... and I wanted to see if my plan is doable and it's the best option. 

So if the HELOCs are almost impossible on rentals, what's a better option? What route would you go? Again, my goal is to get as many rental properties ASAP.

I have great credit score and good income. Never got a loan before. 

I'm in a great market right now... and I also have the advantage of being a cash buyer. 

I'm in the process of buying my first property cash at foreclosure (closing in few days), and my goal is to get as many properties for rent as soon as possible. I read a lot and here is what I understand that would work best... if anyone has a better/quicker way, or if what I'm planing doesn't make sense, please advice me...

1. I purchased my first property for 75k. Rehab cost 15-20k, ARV 155k. Total in 95k cash.

2. If property gets appraised at let's say 150k after rehab, open a HELOC ASAP for about $105k (70%)

3. Rent the property for $1400.

3. Find another property at let's say 60k. 20k in Rehab and ARV 100k. Total in 80k cash.

4. Use the HELOC to buy the 2nd property.

6. Since I have a different stream of income, I can use the profits from my first property and start paying the HELOC.

7. After 6 months, cash out refi on my first property. If appraised at 150k, loan should be $112k

8. Pay the HELOC (80k - 6 months of rent on first property) let's say 74k.

9. Now I have (112k-74k) $38k + 105K HELOC = $143k

10. Meanwhile I get my second property ready for rent (which is paid in cash).

11. Now with the 143k I can buy 2 properties...

12. Put all my profits from the 1st and 2nd property into HELOC

13. In 6 months refi the second property and pay the HELOC. How I have 2 properties that I have mortgage on, and 2 payed in cash...

14. RINSE AND REPEAT.

If everything I said makes sense I got another question.

Can I use the HELOC on my first property to buy the rest? Or after I took a mortgage on it I can't use the HELOC anymore and I need to open another one on each of the properties one by one?

I understand that after I get a loan for each properties they should still cash flow, and if they're no I will sell them after 1 year of rent so I can take advantage of the long therm capital gains. And best way would be to do a 1031. Or if I don't do the 1031 I should do a cost segregation study on the next property to avoid taxes.

I'm in the process of buying my first property cash at foreclosure (closing in few days), and my goal is to get as many properties for rent as soon as possible. I read a lot and here is what I understand that would work best... if anyone has a better/quicker way, or if what I'm planing doesn't make sense, please advice me... 

1. I purchased my first property for 75k. Rehab cost 15-20k, ARV 155k. Total in 95k cash.

2. If property gets appraised at let's say 150k after rehab, open a HELOC ASAP for about $105k (70%)

3. Rent the property for $1400.

3. Find another property at let's say 60k. 20k in Rehab and ARV 100k. Total in 80k cash.

4. Use the HELOC to buy the 2nd property.

6. Since I have a different stream of income, I can use the profits from my first property and start paying the HELOC.

7. After 6 months, cash out refi on my first property. If appraised at 150k, loan should be $112k

8. Pay the HELOC (80k - 6 months of rent on first property) let's say 74k.

9. Now I have (112k-74k) $38k + 105K HELOC = $143k

10. Meanwhile I get my second property ready for rent (which is paid in cash).

11. Now with the 143k I can buy 2 properties... 

12. Put all my profits from the 1st and 2nd property into HELOC

13. In 6 months refi the second property and pay the HELOC. How I have 2 properties that I have mortgage on, and 2 payed in cash...

14. RINSE AND REPEAT.

If everything I said makes sense I got another question. 

Can I use the HELOC on my first property to buy the rest? Or after I took a mortgage on it I can't use the HELOC anymore and I need to open another one on each of the properties one by one?

I understand that after I get a loan for each properties they should still cash flow, and if they're no I will sell them after 1 year of rent so I can take advantage of the long therm capital gains. And best way would be to do a 1031. Or if I don't do the 1031 I should do a cost segregation study on the next property to avoid taxes. 

@David David

It’s so much information in such short time for me and I hope I don’t mix things up... but what I understood from opportunity zone is... if you invested let’s say 100k in anything(stocks, real-estate etc) and now you sell that for 150k, instead of paying taxes on the 50k, you invest those money into an opportunity zone and you can defer the taxes on them.

@Dave Foster

Great info thank you.

I did some research on opportunity zone as well... I see that if you invest in those areas you can defer the taxes on profits.

But I wonder why my CPA told me that I can just reinvest the profits and as long as those money are not seating in my bank I’m good.

I have another income so my plan was to take the profits from flips and put them into rental properties.

@Todd Powell

I'm selling on Amazon. I've been doing it for 5 years now... last year was the best by far. I have a VA that takes care of 95% of the work...It still takes me 3-5 hours/week for the rest... So that makes it not 100% passive, but to me after doing everything my self for over 4 years I feel like I don't have anything to do lol. Cars are my passion, I sell about 5-10/year.. I's just something that I enjoy doing but I wouldn't go all in. Yea, I agree... it's the same system...buy at a discounted price, clean it up a bit and sell it at retail.. except there are more money in houses and you can end up building real wealth...

@Todd Powell That's great...that's exactly what I'm planing... to flip and save money for down payments. I plan on going full speed... I'm 31 and I have another passive income that made me 280k last year, but there is no guarantee that next month I'll make any money with it so I gotta be careful... I also have a cars dealer license and I sell cars part time. At this point I'm the only one providing for my family and I'm trying to be conservative with my investments, but next year my wife will finish school and start working as a dentist and by having that second income I'll be able to invest more and scale much quicker.