All Forum Posts by: Neil Henderson

Listen to @Alexander Felice

I'll back up what he says. While you can certainly use a HELOC long term, it really is best used as short term debt, like a hard money loan. Use it to fund the purchase and/or rehab of a property and then refinance to pull that money out to pay off the short term debt (HELOC).

The HELOC is a great tool in the BRRRR strategy (Buy, Rehab, Rent, Refi, Repeat). To make it work, you need to buy below market value and force the appreciation with a rehab. Not going to really work if you're using the HELOC to fund the downpayment on a turn key rental.

I agree with all the above comments about vetting the sponsor, the shared articles are a great place to start. I've worked with Ashcroft and found them to be great! Would be happy to answer any more questions you have by PM.

It depends. Isn't the way every piece of real estate advice begins.

My personal preference, in the current market, would be to buy more rental properites (assuming the market you are investing in is not over heated and can't cash flow.)

You can absolutely get more than 10 loans as others have stated above. You just need to talk to lots of lenders. Don't just talk to the BofA's, Wells Fargos, Chases, etc. of the world. Go to the local credit unions, the local one and two branch banks. Ask them about delayed financing if you are doing the BRRRR strategy. Nail down what you are planning to do and THEN go talk to a bank about whether they will support your strategy. Don't buy a property and then go looking for a bank to work with.

My wife and I have a guest house at the front of our primary residence that we rent out as a short term rental on AirBnB. Very easy to do and it pays our entire mortgage plus a little more. 

It depends on a LOT of factors. 

I've seen people do it. Generally, shipping containers are used as a way to expand an existing self storage facility with minimal capital outlay (the containers can be leased) and as a way to increase revenue without improving the property that would generate an increase in property taxes. 

I would caution against just finding piece of raw land near a road and throwing up a fence and shipping containers and calling it storage. Triple check the zoning and I wouldn't proceed without paying for a feasibility study.

 @Matt Faircloth talks about this in his book. DISCLAIMER! I am not a securities attorney and I recommend you talk to one before proceeding.

With that said, Matt talks about the concept of making the non-accredited investor no longer a passive investor in your deal, a Joint Venture as mentioned above. Give them a job. Have them help underwrite the deal, have them help screen contractors, etc. This strategies has its limits. If you get beyond having 2 or 3 investors involved I don't think that strategy is viable but I think it's a place to start. 

I would also caution against faking this. Make sure the investor can truly do the job and has a sophisticated enough knowledge of the asset class to genuinely add value to the project beyond just their capital. 

Great question @Brett G. and I think a really important one to start with when first looking at real estate investing. 

What do I want my life to look like once my real estate investing business is up and running? 

The life of a successful house flipper is very different from a successful note investor. 

The life of a successful buy and hold investor in single family homes is different from a successful commercial real estate syndicator specializes in large multifamily. 

Every one of the above strategies has the potential to provide you an amazing life and build enormous wealth. However, they are very different and I think it's really important to begin with the end in mind. 

Most people here are looking to generate passive income. I prefer to call it risidual income. It takes work to generate that risidual/income, but it keeps paying you long after you put in most of the work. Notice I said MOST of the work. Most of these strategies still require some work to keep them functioning correctly. How passive they are depends on a lot of factors; buying right, doing business with reliable people (good tenants, property managers, contractors, etc.), building and perfecting systems that work with minimal input from you.

I've seen buy and hold landlords struggle to maintain two properties "passively". I've seen landlords manage an enormous portfolio of single family homes very passively. I'm in awe of people like @J. Martin who have built portfolios of short term rentals (NOT the most passive investment strategy) that continue to function and put off cash flow even when he's vacation down in Columbia for over a month. In his case, it's about systems, systems, systems. 

I was going to say exactly what @Maxwell Manatt said but he saved me the typing. +1

So, are the HELOCs people are using to BRRRR typically interest only during the draw period or are they amortized over 5-10 years? The banks I've spoken to so far require a payment based on the balance and it seems like they are using very short amortization tables. For example: On a $100,000 HELOC balance, the monthly payment would be $1,250/month, which works out to a yearly interest rate of 15%.