All Forum Posts by: Tony Hill

Thank you all!  This has been really helpful.  This is not my situation (yet), but I am on track to get there in a couple years.  

@Brian Gibbons and @Bill S.   This concept is what my ultimate goal actually is, but I didn't realize/remember that it could be done on a shorter timeline.  I had known that I could get 10% annually by lending to investors, so I figured I would have to work hard to get up to at least $400k-500k before going that route, but this opens up the possibility much sooner.  As far as opportunity cost goes, with all the free time I would have by simply being a private lender, I could probably make up most of the difference while pursuing my passion (photography) and bringing in some income from that - not to mention the nice quality of life boost.

The one big thing I didn't mention is that I definitely do want to become an experienced real estate investor, so, at the moment, I see myself implementing a hybrid of these methods

@Jai Reddy and @Larry Turowski  Your points are right on with what I am thinking when considering doing self-funded deals.  I fully understand that this does not allow me to get sloppy.  I have to really make sure it is a deal and only slim my margins a little.  75% sounds reasonable for sure.  So, I will continue to educate myself, and I will pass each deal through local investors, the collective mind of BP, objective tools like the BP calcs, and the boss.

Cheers!

Thanks for the quick reply!

Concerning being conservative, if it ended up being a bad deal and I lost, say, $5k on the deal, it doesn't matter whether its 100% my money or 3.5%, I still loose $5k. I think being conservative is would be my MO regardless. It shouldn't matter whether or not its my money.

What, in your opinion, could "more conservative" look like if I were to start with $150k?

Thank you again!

I'm currently in the education phase here and had an idea that I think is good, but not sure...

Hypothetical situation: While in the early stages of my investing career, with little track record to approach private lenders with, having $150k to start with, could it be a good idea to find a $120k property, pay cash, spend $20k on rehab, and sell at $170 ARV as quickly as possible?...thus maximizing profit by avoiding having to deal with a lender or pay the costs that go along with financing. This would give me an advantage because I could break the 70% rule (this deal comes in at 82%), allowing me to buy properties that other investors wouldn't touch because they need to account for financing costs.

My initial thought was that this is a bad idea because it ties up a lot of cash and would limit my exit strategies to just one: fix and flip, but I think that's not true, because I could always finance 80% of the appraised value and turn it into a cash flowing property by renting or lease option.

As always, the money is made when you purchase, so I would have to do the due diligence to ensure that the fallback option is truely viable. But, assuming Plan A (fix and flip) works, this seems like a nice way of reducing work and maximizing profits in my side hustle. While growth may not be as explosive as it would by doing as many deals as possible with the money available, this seems like a rather efficient way of going about it. Also, I initially thought that this is not vary scalable beyond a certain point, but I think that is also incorrect. The big players do exactly this all the time, the larger scale simply involves a bigger team.

Thank you for any response/correction!

Cheers

Tony

I'm currently in the education phase here and had an idea that I think is good, but not sure...

Hypothetical situation: While in the early stages of my investing career, with little track record to approach private lenders with, having $150k to start with, could it be a good idea to find a $120k property, pay cash, spend $20k on rehab, and sell at $170 ARV as quickly as possible?...thus maximizing profit by avoiding having to deal with a lender or pay the costs that go along with financing. This would give me an advantage because I could break the 70% rule (this deal comes in at 82%), allowing me to buy properties that other investors wouldn't touch because they need to account for financing costs.

My initial thought was that this is a bad idea because it ties up a lot of cash and would limit my exit strategies to just one: fix and flip, but I think that's not true, because I could always finance 80% of the appraised value and turn it into a cash flowing property by renting or lease option.

As always, the money is made when you purchase, so I would have to do the due diligence to ensure that the fallback option is truely viable. But, assuming Plan A (fix and flip) works, this seems like a nice way of reducing work and maximizing profits. While growth may not be as explosive as it would by doing as many deals as possible with the money available, this seems like a rather efficient way of going about it. Also, I initially thought that this is not vary scalable beyond a certain point, but I think that is also incorrect. The big players do exactly this all the time, the larger scale simply involves a bigger team.

Thank you for any response/correction!

Cheers

Tony