All Forum Posts by: Ryan B.

@Carlos Lopes I don't think it's completely unacceptable, but it's less than ideal.

Yes you're getting the loan paid down by the tenants and hopefully the property appreciates in that time. You're also getting tax benefits from the property. Cashflow on top of that would be ideal, but I guess technically not required.

Also, over time as rents increase, the property should start to cashflow.

I think it's just not ideal because it's a matter of opportunity cost. Yes you're getting all of those benefits, but you may be getting those benefits plus strong cashflow with a different property.

If you're barely cashflowing then any repairs or vacancy would put you into the negative easily.

@Cody Mitchell, that all makes perfect sense. There is an obvious consensus here and I know what I need to do.

I spoke with a lender earlier today and received quotes at 3 different price points. Time to shop around to different lenders

@Jonathan Klemm, I have a few reasons why I'm not very interested in investing here in Illinois. I'm not sure if my reasons are based more on a feeling or if they're factual honestly.

- Illinois has had a net loss of residents in the recent years. Vegas has had a net positive which has been helped by people fleeing California.

- Illinois property taxes are really high and Nevada's are really low.

- I came to Illinois from Vegas, so as of now I'm more familiar with the areas of Vegas and not so much with Chicagoland.

- The weather here seems to beat up structures worse. The difference between the lowest temps of winter and the highest temps of summer is much greater in Illinois despite how hot Vegas gets. Vegas has about an 80 degree range and Chicago has like 140 degrees.

- Vegas has almost no basements. No foundations to leaks. Most Vegas homes are on slabs.

- Mostly shingle roofs in Illinois and Vegas is clay tile.

- Vegas homes typically have desert landscaping. Very low to no maintenance.

- I've heard (not sure how true it is) that Illinois laws protect tenants heavily and not the landlords so much.

Those are mosy of my reasons. I would be open to the idea if the right deal came my way, but right now I'm not actively seeking anything in Illinois.

@Lawrence Potts I'm not completely risk adverse. I'm comfortable taking calculated risks. That typically leads to over analyzing though.

The immediate Real Estate goal is to build cashflow and replace my W-2 income.

I worked hard to pay the property off. I started making more money from my W-2 and didn't know what to do with it all, so I kept paying it towards the principal each month.

So yes, I'm kind of proud to have paid it off, but I do realize the opportunity cost of leaving the equity in the property.

Thank you!

@Victor So it's not currently hacked. I was recently until they moved out and into a house they purchased. I'm now looking for more creative house hacks. Renting out garage space etc.

@Greg Scott thank you so much for your advice. That does make perfect sense

Hello,

First, a little back story.

I currently have one rental property and I'm looking to expand. The one property that I do have is now owned free and clear. My property is located in Las Vegas and I have a management company hired since I live in the Chicago area. The property value is now 3x what I paid for it. I'm currently saving for a down payment on my second property, but it's taking a while. I'm sure everyone else has noticed that to purchase a sfh that cashflows in this current market environment, approximately 40-50% down would be required. I'm looking to buy another sfh in the Vegas market. My credit score is over 800 and my dti is very low. My only debt is my primary residence.

So here's my question...

Would it be a bad idea to pull equity from my property to purchase one or two more properties? I could pull $200k-$300k out and put $100k-$150k down on each new property, or like $200k on one. It would still leave me cashflowing on my first property and my new one or ones would as well. I'm hesitant because of the interests rates I'm seeing on mortgages and the cash out refi that I would get though. Eventually when rates come down, even if it's years from now, I could refi to a lower rate and have each new property cashflow stronger.

I've always heard that once a property is paid for you just leave it alone. But having that much equity sitting around seems like a waste. Considering the cash out refi payment and new mortgage payments, my actual cashflow would be similar to what I'm receiving now but with the added benefits of principal paydown on multiple properties and the tax benefits each one would bring. Also, I do have enough money set aside to cover repairs on any new property, so the equity pulled out would just be to cover a down payment.

Also, I do have a primary residence with over $200k in equity but I'd rather leave that one alone.

Thank you in advance for any advice. I've been contemplating this for weeks now.