All Forum Posts by: Nick Cuttonaro

@Brandon Schlichter - So nice to see a familiar face on here! I'm new to the game and in contract on my first investment property this week. Not sure if you knew this but many years ago (right after college) I was a mortgage broker and my wife is currently a real estate agent. We're working together to build a rental business together in South Carolina.

I see where the chokeholds lie and I'm probably going to get where you're at sooner than expected. I read all the responses and it seems like if you can get 8% at scale you're in an ideal position.

I think that's feasible from private sources who have loads of cash. There are so many people we know (outside this industry, in another common we share) who would be happy parking money into something more stable. Let's connect on Skype soon, it's been a while! 

I'd connect with a local attorney who specializes in real estate in your area. If you're not working with one currently, this is the perfect time to start a relationship.

For the types of deals you're doing having your own agreements (not boilerplates) is a smart investment. Having a relationship with a local real estate attorney wouldn't hurt either as they're likely to be at some point representing you and defending the agreement which a tenant signed. Having them part of the process from the very beginning would be helpful, that's what I've done.

I had an experience with a bad agent a few years back in Maryland. My wife and I were trying to purchase our first home. I met the agent at a networking group, felt sorry for his situation, and let him represent us to get him out of a "slump". We already had the house picked out, so we let him handle the paperwork and transaction. He was a stranger but I wanted to help the guy out, big mistake.

It was a nightmare from the very start. He was representing his own interests during the process and was a terrible communicator. We missed closings a few times as the Seller wasn't ready to close. After the 3rd missed closing I chose not to sign another addendum to extend the original contract and had enough of being strung along by a crook.

Several times (by email) I requested to terminate the contract with our agent and he said "it couldn't be terminated" and he's entitled to his commission on the deal no matter what. I engaged my law firm because the agent was rogue and I needed help. We learned he was actively involved in other legal cases where he's suing clients / clients suing him, this is how he rolls and his success in the court system was high, not good.

My wife and I walked from the deal, we had enough. A month later we were sued by the agent for the entire commission ($14,200) for a house we never purchased. We fought and fought and would likely win a case against the agent (who was actually a broker!) for breaking fiduciary responsibilities in a counterclaim. However, from a financial perspective what would winning the case really mean other than being right?

Time is money and I didn't want keep fighting so I tried to settle. Long-story short, with the agent's commission + legal + other fees and expenses we lost over $23,000 as first time-home buyers, for a house we never purchased.

Takeaway: Be careful how you approach the situation. I wanted to fire my agent out of the gate and it was leveraged against me because I expressed by email how terrible of a job he was doing and that I could do it better on my own. Talk to your attorney first and play it cool. Good luck!

I'd suggest any book by Grant Cardone. The 10X Rule, Sell or Be Sold, and Be Obsessed or Be Average are all incredible. I'd suggest getting the audio versions first, then reading the hard copies. These (3) books helped me tremendously over the past couple years overcome business challenges and help me realize my true potential. I hope they'll do the same for you! :)

I lived in Maryland for six years (moved to South Carolina last year) so I'm familiar with the area.

You might want to consider reaching out to Jason and Chris at HardMoneyBankers.com as they lend in Maryland.

Easy guys to work with and likely willing to help since you could meet in person with them to discuss. 

@Allen Tyndall - I mentioned life insurance is a touch subject depending on who you ask. I never stated it to be an investment, it's an insurance policy. In most instances whole life policies offer generous commissions for financial advisors. Unless you're working with a fiduciary who advises for a flat fee, agents can make a fantastic living selling whole life insurance to anyone and anyone. 

Renting vs. owning (term vs. whole) is a tough comparison when making the comparison to real estate. They are two entirely different vehicles, apples to oranges.

Whole life insurance is a great shield for the mega rich. I'd get a whole life policy to protect assets from legal risks and lawsuits. I'm 100% in agreement on that.

Either way, this is a great thread and debate because there is no right or wrong answer on the purpose, benefits, and applications of term vs. whole life policies. Everyone has different beliefs, financial dependencies + responsibilities, and long-term goals. Very cool to see everyones responses.

For me today, it's whatever makes me sleep better at night which is a term policy. For when I'm mega rich down the road, definitely a whole life policy.

I put an offer an a rental property today where I'll be putting $20k down. That's how I'd spend the budget. If I didn't invest the money in real estate, I'd spend it on the following:

1) Pay down debts. Anything to improve DTI ratios are helpful and anything put toward high interest rates on balances is instant financial alleviation, whack the debt!

2) Invest in yourself. Education, conference, business relationships, etc. Anything to put you in a stronger position mentally is helpful.

3) Robo-Investing Apps. I've personally used Acorns, Digit, Betterment, Wealthfront, WiseBanyan, and Stash Invest over the past year. I pulled 14% in the past 9 months on $22k spread evenly across those apps to diversify.

4) Travel. See another culture outside the USA or get familiar with another real estate market in a driving distance. The more aware of the world around you, the more successful you will be.

5) Do nothing. Hold it in reserves until you have a winning deal or opportunity in front of you. Nothing wrong with having a stock pile of free cash! :)

6) Invest in other people. To be successful, you need a team. Use money as a tool to buy time and eliminate doing things you don't want to do, or could be done better by someone else. Spending money on team members who assist in your ability to make money is a wise investment. 

Life (death) insurance is a touchy subject depending on who you ask. Family values, financial circumstances, and peace of mind come into play as well as the ability to "borrow against" the value.

From personal experience, I picked up a $1 million term policy at age 28 for $104 per month. It's cheap because I picked it up at a younger age and I'm in good health. The term expires when I'm 58 years old and if I stop making the monthly payments the policy also expires.

I looked into whole life policies as an "investment" last year and they're (significantly) more expensive as far as the monthly payment is concerned. The biggest benefit is accumulation of a balance throughout the lifespan of the policy and it will payout to a beneficiary upon death provided the policy is still active.

Life insurance is a MONEY MAKER for agents so don't be swayed by them unless there's a real need. If I died tomorrow my wife (no children, yet) would be taken care of where all liabilities could be paid off and there'd still be some left over. When we have children, I might supplement with more term depending on pricing. I'm 32 now so it's still reasonably priced. Think of it like a "lease" in that sense.

Ultimate goal for me would be to have millions in free cash and assets where I could cancel the term policies if to chose or pay the monthly premiums because I don't feel the payments coming out. It'd be completely elective at that point because I'm not living with concern or fear about financial responsibilities in the event of my death. 

Term insurance is a good tool for an instance where your death will financially impact those around you. I don't believe in whole life policies as I don't want my future children or grandchildren waiting for me to kick the bucket to claim their windfall. I'm self-made and I want future generations of my family to be the same. Plus, I'd like to enjoy the money before I die and not have to "borrow against it" when it's my money to begin with if I had gone the whole life route.