All Forum Posts by: Shane Johnson

No problem! I’m still a student but I been reading here on and off for 10 years. Mostly on the first year then off and back on this last year. Here to learn and share. Jk, I’m just here for the votes :D 

@Brad Hassett -I believe he's referring to your debt to equity ratio, which is common in any business that uses debt. In my experience the bank will be looking out for you on this, on most investment products (example, you need 20% down/equity in a property, aka 5/1 debt to equity). If it is your primary home however, you may be able to exceed that, and he is advising you to exercise caution when doing that, in case we incur a significant economic correction. 



Home value: $550,000
Loan amount: $280,000
Equity: $270,000
Current interest rate: 2.75%
Mortgage payment: $1,600
Current rate payments: $2,650

Given that information, what you both do?

I am not understanding the mortgage payment/current rate payments numbers given above but: 

If it were me, I would consider a loan to value of 75-80%, and pull out 132,500 to 160,000. (Id probably be at 150k because its just a nice round number :) ).

If principal and interest on $280k at 2.75 over 30 is $1143, and $150k @ 3.75 over 30 is $695, now your PI on both is $1838. If you can achieve a conservative 8% cash on cash on that 150k, your net is $305($1000-695) a month on that money, plus the depreciation/tax benefits and principal paydown on the new property of course. Your numbers on the existing mortgage may be slightly different, but you get the point. 

None so far. 10 years ago it would have. Now it requires equal time and less cash on cash return than my primary business. I am moving capital over to investments though, setting up for the future however, and the tax benefits far outweigh the cash flow or freedom of time benefits. My other business provides that. In the future however, I will sell that company, and move the capital into REI and gain mostly passive income. At that point I will spend lots of time with my kids and family, and developing my land for fun and practicality. The other added benefit is giving my spouse a new purpose and industry/business to learn with me. She has a high drive to contribute and have purpose so it seems to be helping us with that after she has taken time away from her career to have children.

Congrats Brandon. I am not too surprised! 500 some episodes is a good run. It seems lately he was testing the waters, lots of great guest hosts like Pace Morby etc. Good luck on your next ventures, and enjoy that family. 

@Rick Baggenstoss

Lets not jump to cynical conclusions. I would think that he intended to have the POF letter upon needing it for this deal. I am sure all the ducks weren't in a row so to speak, and he didn't have this ahead of time, because he is just getting started and learning the process.

Also, where did you see that the HML did not care about the property? Did I miss something in the post? I believe the OP said it was listed online. (details, address and pictures I would think)

Wholesaling sounds a helluva lot harder than a second job to me. If I wanted to guarentee income for a short period of time to pay down debt, that is what I would do. Side business, or 2nd job, to increase income. Keep living off current income, all extra income is for debt paydown. 2-3 months down the road and you are in a much better position. Time flies my friend.

My DTI was a little too high (had 1 bad credit hit, and bought a harley), appraisal didnt come in, and I was not able to acheive my Heloc goal. 6 months later, I paid off my credit card, sold my first house, and released some capital and debt in my name, and hit the 1 year seasoning mark, and BOOM. HELOC is locked in.

Buckle down and keep at it. You gotta want it, like your body wants to breathe. Get er done.

Very well put Shannon.

If you only need to type two letters in the URL bar, and your local county tax deed map website pops up... you might be an REI.

If you sign up for a log in on your local tax deed website, just so you can search by Owner Name... you might be an REI

If you spend hours every week looking at tax deed records just to find out who owns a property, where they live, if they were divorced recently, if they live out of state, and what year they bought it to guess their equity position.... you might be an REI.

If your brother and sister in law are driving through town with their 3 year old daughter in the back of the car and they overhear her saying... "and that house is Uncle Shane's... and that one is Uncle Shane's.... and that one...." you might be an REI...

If you drive by a house and think... "oh that house is ugly... I wonder if I can buy it"... you might be an REI

Not a problem, this is a high traffic site. I am guilty of only participating in "recent forum posts" area myself :)

I understand, and that is why I am helping as much as I am able. I am new to all of this and learn more every day myself.

You can read all day about both ends of the spectrum as far as leverage it all out, or pay it all off, etc, etc. In my opinion, as a younger investor, I prefer cash in pocket, and will risk a little more to do so. Especially with interest rates so low. I have this uncontrollable desire to keep liquid cash available, even if it will cost a little bit. If the difference in cash flow, interest rate, and debt pay down was much more significant between your two options, I would consider putting more down. In this case, its not enticing enough. (again, just my opinion :) )

If they have stable employment, no other convictions(especially in last two years), and meet income requirements, I certainly would. I believe in second chances. I have made my mistakes, a few of them very large, so I will have a much different opinion than others. Some people take a circumstance like that, and use it to change, and mean while, some others do not.