All Forum Posts by: Chris Virgilio

@Michael Wentzel

I should have prefaced my post with the fact that I can only borrow against half of the TSP balance, so 15k if I wanted to do that. It's not the greatest deal ever.

The BRRR method sounds nice, and might not be a bad place to start for a small time starter like us.

We may not be in the exact perfect spot to dive in financially, but we need to get in soon as many others have mentioned. Need to get that first deal under or belts.

First, a little background:

My wife and I just moved to Greensboro, NC in January. She just passed her real-estate broker's exam last week and started with Keller Williams this week. We plan on getting involved with real estate investing, but are curious as to whether we are financially ready to start. 

Things have been good since we got here. I'm an air traffic controller at the local airport and have about $30K in my TSP account. We have about $6K in our emergency fund but will have to tap in to that a little bit as the starter fees for my wife's real-estate broker career come due shortly. I want to get involved in my spare time, and am a bit jealous that she is started in the industry before me. So the question is, do we have enough to get started?

@Cal C. I'm still confused. Are you advocating investing only 10-20% down payments because it lets you get in to riskier properties? I'm sort of assuming that your implication is that higher risk leads to higher reward, but intentionally leveraging one's self simply because I can get riskier properties that I wouldn't otherwise dream of owning sounds incredibly counterintuitive. I think my hangup on that line of thinking is that I thought we were trying to mitigate risks.  Obviously debt=risk, but add on top of that a property that isn't fit to buy cash, that seems like more risk then is necessary for a beginner. But maybe I'm naively missing the point.

@Cal C., I'm not sure if that is an argument for or against using leverage to fund REIs?

Originally posted by @Andy Robison:

Please bear in mind that that is way overly optimistic as far as rent-purchase price. It was only intended to show that paying off a mortgage is not the best option in most cases. 
Now you could once you get to 10 houses, pay down a house or two and increase cash flow. Or do a cash out REFI and just recycle that money. Keeping mortgage on the house and purchasing new properties.

 That's a theme I've seen quite a few times on the forums. Certainly makes sense. I am under no illusions that everything is going to go perfectly. If we can keep from losing money on property #1, I think I will feel pretty awesome. It sure is going to be an adventure. Any recommendations for resources to learn the business/financing/tax side of these matters a little/a lot better? (Short of an advanced degree)

@Andy Robison, that's exactly the kind of education I need. I know little to nothing about the ins and outs of business financials. I think I got a decent handle on personal finances, at least as far as not bleeding money goes.

I've begun talking about concepts like that with the wife, and she is coming around, though I don't feel like I have nearly a good enough handle in it yet to even explain it to myself.

Her biggest fear is overextending, and I don't know yet how to reconcile that part. It is pretty obvious that waiting for everything to be paid off in cash before moving on to the next property will take 2 or 3 lifetimes to get anywhere near the sort of return we could get leveraging. I just need to learn and understand the nuts and bolts better to keep ourselves out of trouble. At least, that should hopefully hold us over until I hire someone who does this for a living to handle/educate me.

Originally posted by @Andy Robison:

Hell I'd have a few CC's rolling around just so I can abuse that 0% financing. 
But personally I'm trying to pay off my CC debt personally and leverage properties to make the most amount of money possible. I'd rather have 5 hoses with debt than 1 house with no debt. Scale is important to me.

 I totally get that.  I mean I wouldn't say it was exactly accurate that Dave Ramsey doesn't advocate becoming debt free just to go back in to debt. He does allow for people to take a mortgage on their first home. So we don't own a home. We are hoping for our first home to be a duplex or triplex so that we can pay it off faster and earn some extra income on the deal. I don't know if that really scales well, but it can't be a bad start can it?

These are some pretty fun replies, so far.  I should clarify that I am already a Creditkarma member and have a 750+ credit score. I know, not in bad shape. Now that I've paid of my last auto loan, we have zero open accounts. My history isn't bad at all, and I've financed two cars in the past 5 years. I'm not in any financial trouble by any means.

I certainly see the wisdom in why buy one $100,000 house with cash when you can put five $20,000 down payments on 5 properties?  Leveraging is just a mental and emotional hump that we are going to have to get over. 

So in the meantime I'm really assuming that it's best to open at least one CC account (shudder) so that my credit score doesn't evaporate into nothingness. But then do I do as @Steve Vaughan suggests and ditch it once we are in mortgage land?

Hello everyone, My wife and I are looks to get in to real estate investment within the next year or so. To date we have been Dave Ramsey fans and are totally debt free as of about two weeks ago. Yay! Now we are saving up an emergency fund and should have that finished up by the summer. As I've been learning and researching, reading the forums, attending BP webinars, listening to the podcast, etc, I get the overwhelming impression that investing with an all cash strategy isn't popular, and I have seen the math worked out in several threads. I understand the logic. We are aware of the popularity of leverage in investment, and are trying to decide if we will be able to come to grips with it enough to allow our potential business to utilize it. It's a scary thought for us right now as we are just freshly debt free. As a result, we currently have zero credit cards. My biggest question is this: should we consider getting a credit card in order to keep our existing credit (which is actually quite good) growing in hopes that it will help us find decent loans in the future, or is it something that isn't necessary? I want to get the communities thoughts before pulling the trigger on another debt product. Please be thoughtful in helping us make this decision, as it's not an easy one for us. The reluctance is indescribable.

Originally posted by @Bill Gulley:

HAND OFF! Chris, welcome to BP, weather, WXOF, ILS approach to GREA, you're heading left of course, your gyro is out, this will be a non-gyro appoach to GREA, turn right.... stop turn, on glidepath on course, I got you! 

LOL, good luck on your transfer from an Army ATC guy. :)

 Thanks a lot, Bill!  It's certainly a challenging career, isn't it?  I'm sure there have got to be ways that it prepares one for real estate, right?  Please say yes, haha.