All Forum Posts by: Sam Priddy

A long time ago I learned about using home equity to buy another property. One thing that didn't make sense then ( I was a teenager at best) was using one houses equity to buy another house...but that's not the end of it. Technically you own the second house free and clear because there was so much equity, so now you get another loan on that house and buy the third with that $$$.  Now you own the 3rd home free and clear and have a loan on only the first and second home. So, guess what? Now you use the equity in the 3rd home to buy a 4th....so on and so forth.  Of course, you have a lot of payments to make on all of these loans.  But, my question is whether or not this is still a practice that takes place, is it legal, is it frowned upon? Is it a good idea as long as you are buying homes with proven renters in them? Or if you're buying homes and making quick money from them in some form or another? 

That sounds about right .... I have found several people that are in Indiana and I used to live in Louisville KY so I was right there. Now that I've left and I'm interested in a different area that's when I find you guys..lol.  O well I'm sure there are plenty of people out here as well.  

Hello,

I have not yet begun to purchase homes again. I used to own some rentals years ago and I'm now getting back into the game. I would like to find some hard money lenders that work in the knoxville/gatlinburg/pigeon forge area of TN. Also, other vacation areas as well. I'm looking into vacation property as my first return to real estate.

I don't know the Myrtle Beach area that well so I'm not highly capable of speaking on the property value. However, if you are renting out a vacation home of 3 bedrooms then you will probably want to get much more than $150 a night for it.

Also, a hard money loan can be a very tricky endeavor. Unless you already done so I would suggest finding out every piece of information you can from your lender about the entire loan structure. Most seem to only lend for a few years at most, and if you can't pay off the loan at that point it is possible they will simply take over the property itself. I've never seen it done but I have heard of people who have actually lost their property to a hard money lender, not for being late, but for not paying off the loan completely after just a couple years...and the homes were still producing just fine. 

I don't want to scare you away. Hard money can be a great way to get the ball rolling. But if you can't refi or pay off that loan completely then it may also be a great way to loss the property.  BTW if you have already found some hard money lenders would you mind letting us know who they are?

Yes you can be a wholesaler without a license because you have a financial interest in the property...(not sure why an agent/broker does not have a financial interest..lol)  I feel kind of silly now for even asking because I already knew that.  Agents tend to work for brokerages....hence the 'broker' the agents all work for.  I just didn't put 2 and 2 together for some reason even though it's information from way back.  

I have not read either. However, due diligence in a nutshell is probably the most important part of the entire process of real estate investing.  So if you believe there is some information that you have to find before getting in over your head on a project or deal then the real question is, is it worth $200 to find that information? I'm not trying to sell you the book, (but you can tell whoever you bought it from that I convinced you and they owe me 20% ;) )  but the power of knowledge is immeasurable and knowing exactly what due diligence is and what YOUR due diligence is going to be in any given scenario is HIGHLY useful. On the other hand, if you cannot forego $200 for information then are you ready for this deal that you are considering?  I'm not trying to be rude or anything negative but in my experience if I can't even come off a few hundred bucks for information that will last me a lifetime then I was certainly not in a position to buy and sale any type of real estate. So the real question is how much do you value the information and knowledge? Let me ask you this if you have an hourly based job what is your hourly rate? (please don't actually respond with the answer just ask yourself that).  Figure out how much time you have to work for $200. Is spending that amount of time and energy scrolling through blogs and thinking up questions to type into google going to provide the same amount of info that is in this book?  I don't know if it will or not because I don't know the book. But I could imagine there may just be some information in there that will be helpful and much easier to find since you would have a book about it. Also, do you know how much of the information you are going to dig up on your own will actually be helpful? I've always advocated for education even if you don't go to school for it. Buying a book is usually a good way to educate yourself. I actually still have old text books from college and believe it or not I have been known to scheme through them from time to time .... so I'm kind of partial to the idea of buying the book. And again, I know that if $200 is going to break me then I am in no position to invest, but that's just me. 

what does a real estate broker do?  The title sounds like a wholesaler, is that right? Or do you broker loans? 

I have owned a few businesses, all small but still somewhat profitable. I have studied business and owned real estate as well as played the stock market.  I say all this to preference the fact that the numbers on paper can always look beautiful, just depends on how things get 'tweaked'. That's the Cap Rate...the tweaked number. Bottom line, what is going into your pocket at the end of every month/deal/whatever?  Of course, I am not saying to tweak the numbers to make them look good...I am simply illustrating the fact that those numbers on that paper really don't mean anything if they don't actually put money in your pocket. It sounds like you have calculated a Cap Rate that makes since. But I don't recommend relying strongly on the paperwork because too many things can get in the way and change the numbers...even just a day after you close on the property, and at that point all your numbers just went out the window.