All Forum Posts by: Sam Ghi

@Sam Ghi

Have you considered buying raw land doing a solar farm, cell phone towers, or micro grid. Just a thought. These tasks once set up, don't have to be maintained, moved, or blatantly do anything with them. I'm a land lover, I own 1200 acres and am also becoming a developer.  I like to think outside if the box with raw land. Hope this helps.

@Sam Ghi

Lenders look at your credit score in tiers… above 720, above 780, etc.  the higher the tier you are in, the better your rate will be on your loan.

For real estate, Fannie Mae has these guidelines published:

https://selling-guide.fanniema...

For other banks it is just up to their individual lending standards.  In general, the higher your credit score, the better the rate you will get. 

Randy 

 @Sam Ghi

Unless you know something the rest of us don’t, you will not be borrowing at 5% (at least with today’s rates), regardless of your Fico score.  What asset category would you be securing your loan with? 

Real estate secured loans, for instance are in the 7-8% range.  Yours seems more like a personal loan, which is likely more in the 8-9% range.  12% returns are usually  not “low risk”.  You are then working with a 3% arbitrage margin IF your market swings your way.  It’s a pretty risky strategy in my book.  Then you are talking investing in options, etc.  

My friend, this is where I step aside,  as it’s just not something I’m going to even contemplate.  Speculating in asset classes outside of real estate with borrowed money is not a move I would personally make.  I wish you all the best!  

Randy 

 @Sam Ghi

So I will start out with saying that while I’m technically a “Sophisticated Investor” when it comes to real estate, I am not a passive investment expert beyond that field.   I know a little about a lot beyond real estate.  So to that end, I can’t help you with green energy, carbon credits, etc with any real authority.

My take would be that your Fico score really isn’t a factor in investing.  It’s a factor in lending.  To the extent you borrow money to invest it has some influence… but not on the products you invest in, but rather your ability to borrow to invest in those products.  

Banks typically lend based on secured assets, (owned real estate, precious metals, stock portfolios), etc.  what you do with the money is likely less of their concern as long as they feel their position is secure in getting their loan repaid. If you have securable assets I would think a bank would lend to you with your superior credit.  I personally would be careful trading options with borrowed money… seems like a risky proposition.   We know nothing about your resources, so you will have to make that call.

All the best!

Randy 

@Sam Ghi

Welcome Sam!

To my knowledge most FICO scores only go up to 850... but congrats on your score.  It won't really do TOO much for you in real estate other than make sure you get the best financing rate available and qualify you to buy financed properties in the near term. As soon as you buy a property it will begin to drop due to credit usage, but that's ok... that's what it supposed to do.

Unfortunately in today's rate environment it is difficult at best to find good deals in about 95% of the country.  Ohio seems to be the best state I see that is delivering better results.  

Regardless of your FICO, you will need cash money to be able to invest in holdable real estate.  Typically about 20% down on each purchase you make.  So you can use that figure to determine an objective (ie. I'm looking to be 4 investment properties a year, etc).  Once you know your objective, I would research potential areas you want to invest (ie. Ohio, etc) and then engage an agent in that area to help you find suitable properties. 

There are many investment vehicles in real estate.  Long term rentals, short term rentals, flips, etc.  Flips definitely aren't passive... Long term rentals have the least amount of interaction required, but short term rentals (AirBnB, etc) have higher profit margins - but require a lot more attention (some companies charge 30% for management and the daily turnover service, for instance).

I would suggest you compare your potential rates of return from real estate with other investment vehicles.  In my opinion real estate isn't that attractive compared to the stock market (currently) - or even your money sitting in a high yield savings account earning 5%.  Most quote the long term stock market gain at 7% a year.  2 years ago real estate had the POTENTIAL to deliver 30%+ per year returns.  It's just not the case right now.  Prices have doubled in the past 2 years, along with interest rates.  Whether you are a cash buyer or financing your purchases those two factors have really squashed returns for NEW real estate investors right now. 

Beyond that, if you plan on your properties to be property managed, you will be paying 10% of your gross income to the property manager.  This could easily be ALL your profit in the current environment... or if not all, a significant chunk if you are financing your purchases - which begs the conversation above about other investment routes.  Most real estate investors are sitting idle right now because of the Fed rate hikes and high property prices unless a deal makes sense to do.

I wish you all the best in your endeavors.  Just wanted to throw out a few thoughts for you to ponder.

Randy