All Forum Posts by: Thomas Lorini

Holy crap the amount of nay sayers in the responses are killing me. The man made a good purchase and is MAKING MONEY! 

Who cares

He did not use actual cash but leveraged from another property, like many others do

Seller did not negotiate and Thomas made a fair offer HE thought was good for HIM and he already has another property in the SAME street- I think he knows that area

Good job Thomas and hope it all works out. Seems like you have a good grip on YOUR investments. The nit pickers will always do it.

Thought BP was a supportive forum not a beat down forum!

Place looks great

Congrats!  What kind of flooring did you use? 

I’m just getting started and trying to dot my I’s. Sorry for the questions.

Are these numbers you use to evaluate a rental comprehensive? Is there an app to utilize?

Thanks for sharing this real life deal ! Always good to see and “analyze” from different peoples perspectives. We all learn something from these type of posts- thank you.

Aaron Mazzrillo your mentor was right mostly; however, I had many wise people tell me that it isn’t smart to use the words never or always as there will always be exceptions. There are many wise people who will tell you it is never a good idea to borrow from a 401k for any reason or any length of time and yet there are very valid reasons for doing exactly that.

I think to be successful you have to be willing to be creative as long as you know where to draw the line. That’s the problem we had leading up to the crash. People got stupid and banks were insanely complicit. I think that if the OP bought the first property right and maintained a sufficient amount of equity to allow debt and cash flow to make sense in most markets it is hard to knock his decision.

For example, if he maintained 20% equity with a balance owed being 60% between market low and high while maintaining positive cash flow after expense adjustments with rent at a 20 year market average then his move was probably pretty smart. If, instead of that, he only maintained 10% equity with a balance owed very near the market high and very little cash flow after expenses with rents also at or near market highs that are well above 20 or 30 year market averages then it is a very risky move.

It all comes back to knowing your market and having the good sense to know when that kind of play is going to put your portfolio at risk.

That was awesome!!! Good on you for doing this!!! Going in full in 2018. You are an inspiration!!!

Great story. Keep it up!

Jay C. I think you have some valid reasons for advising caution; however, the OP is technically correct when he says he put “no money down”. It’s a market term and he used it correctly. I understand it can be confusing for newbies and it took me a minute to wrap my head around it also.

I also think it’s reaching to call refi-to-buy deals casino deals. You really have to look at the break down of each deal and how each deal impacts the other to get true risk vs reward numbers. Unfortunately, a lot of numbers are assumption-based and highly market dependent and this is what gets a lot of people into trouble.

The whole equity vs leverage argument is not one size fits all. It is very dependent on personal goals, risk tolerance, etc and what’s wrong for you isn’t necessarily wrong for others.

The things that I would find helpful for overall analysis would be how much his cash flow on the refinanced property was reduced, how much equity he maintained on that property, how much his total cash flow increased, and how much his net assets increased as a result.

Some other things that would be helpful in a true risk analysis would be knowing the highs and lows of the market. If values from market lows (2009-2013) can be found then you could then look at highs (2004-2007, current) and get a strong idea of how much risk you are going to be carrying. It’s not completely reasonable to expect to only buy at the low prices but you also don’t want to average close to the highs either. At the end of the day though OPM is a fantastic way to grow wealth so long as you are doing the appropriate risk analysis and maintaining control of your emotions.

Hi Thomas - very inspiring, thanks for sharing! Could you go into detail about what repairs you made for the 18K mentioned? Thanks again!