All Forum Posts by: Tyler Garza

@Tyler Garza

Love the vulnerability and strategy. 

With house hacking (mentioned in the thread), the more uncomfortable you're willing to live, the better the numbers will be, the more comfortable you need to live, the worse the numbers will be.

I've house hacked twice in Reno, NV and it's changed my life. But, it was not fun. Most people just aren't willing to make the sacrifice, and that's OK. You don't always have to. Real estate is a long game :)

Food for thought, especially with a family. 

@Shiloh Lundahl It is a complex strategy but if @Tyler Garza does his homework, finds local resources, and follows the laws, it is very attainable. I don't work in OK but in the state I am in, we have people do similar. Never living in a flip but selling their person home or taking out a HELOC to then pick up 1 - 2 rental units. Then after holding for awhile moving those through a 1031 exchange into a larger multi family property.

Tyler, Travis is right, you need to do your homework, but probably wrong in telling you to not pursue the work. If you are in this, get in it. Study it, got to meet ups, and learn your state rules and regs. Most of what you are looking to do is possible. It will take work and research, but it is possible.

You have been given valuable advice from multiple angles here. You are in a decent position and if done right you will be ok over time. My only add is to the replace your wife's income part. I know some will differ here but I will offer my personal opinion like many others have. This fire your boss and replace your income soon is a pipe dream for most. There are very few people who accomplish this and when they do, it's over a sustained period of time. They have made major sacrifices and in most instances they have sunk fortunes into their portfolio to pay down the debt. Stuff sounds real cool and worked out on paper but if it were that simplistic, wouldnt most people just do that? Yea, fire your boss and live off real estate. Go out in society and evaluate how many have done it. You will probably have more of them here than most places so ask them what was involved and how long it took. If you take that focus off the table and understand this is a very complicated business that tends to be really lucrative over the long game, you will be ok. Not saying you feel this but many think its a get rich quick gig. Others repeat what gurus tell them. They will say they can teach you how to fire your boss in 6 months if you pay them for a 20k course. If you can continue to convince people of that multiple times over then  maybe you can fire your boss. However, just get in, see where you fit, and build over a decent pace where down the line you will be doing great. Ya have to learn to mitigate multiple hurdles, in addition to making intelligent and educated moves. 

Good luck! 

Incorporating (e.g., transferring your property into an LLC) doesn't allow you to defer capital gains taxes. The best way to defer taxes when selling is through a 1031 exchange, which lets you reinvest proceeds into another investment property without paying capital gains taxes immediately. However, to qualify, the property must be investment property (not a primary residence), and strict IRS timelines apply. I highly recommend consulting with a CPA or tax professional to ensure you're using the best strategy for your situation.

Good luck!

@Tyler Garza

Hello.  Just to be candid and realistic - we are not in a cash flow environment right now.  You are not going to be able to generate significant income on vanilla, long-term rentals without a significant amount of capital invested.  

Now, there are very high effort / high intensity strategies that can generate more cash flow and/or return capital back to you. If you've got the time for them and the ability to be hands-on, that's great. But they're tough, because there is a ton of competition. For example, BRRRR. Great strategy. Really difficult right now. STR or MTR. Great strategy. Really difficult right now. Everyone wants passive income which has made it harder to come by.

Happy to help more.  Just want to be realistic.

@Tyler Garza

Your strategy—house hacking, leveraging equity, and scaling into multi-family—is solid, but there are ways to optimize it and reduce risk. From my experience working with over 400 investors, avoid transferring your home into an LLC (it can trigger loan issues), be mindful of capital gains taxes when selling, and ensure your debt-to-income ratio allows for your next purchase. Instead of rushing to sell, consider refinancing or using a HELOC to pull equity while keeping it as a rental. If you do sell, a 1031 exchange can help defer taxes.

Good luck!

@Ryan Blake if you buy the property in a special way where you put a rehab credit that increases the sales price up to the appraised value minus rehab, you should be able to get the property refinanced without worrying about a seasoning period.

I agree with  @Shiloh Lundahl. Only tweak, find a lender that offers 100% LTC (loan to cost) or as close to 100% as possible. That will keep your out of pocket lower and your $70k would allow you to buy two properties. When you refinance, move into one of the properties and then rent out the other.

This may create a brief moment where you will need to live somewhere else. This is because Shiloh was right, hard money loans CANNOT be for a primary home, ever. If a lender tells you otherwise, I would really reconsider who you are working with. They would not be offering you a hard money loan (loan based on the hard asset) and instead they are lending to you as a traditional lender with private money. That would be a allowed but they should be doing more due diligence and requiring a lot more documentation than what an asset based lender would require. Know that if you want to do a cash out refinance on a primary home, it will likely need a full 12 months of seasoning (holding time) before you will be allowed to close. Your hard money fees may eat you up during that time. You may just want to do a traditional refi and take out a HELOC after a couple years as you continue to build equity.

Once you have your primary home refinanced, you should be fine. Get your personal home done first. Then do the second property with the other 1/2 of your $70k. You can always get a DSCR loan for the second property which is just an asset based long term loan (based on the rents or expected rents vs dour income and personal ability to pay).

@Tyler Garza I can tell you what would probably be the most helpful thing, but most wives are not on board with it. I shared the concept with all of my friends, and not one of them did it. But this is what you do:

Get yourself on a bunch of wholesale lists and start looking at deals as they come to your email. Get familiar with price points in your market and what looks like a good deal. 

Start networking with other investors to increase your access to real estate deals.

Put your house on the market yourself on Zillow and Facebook marketplace and see if you can sell it yourself as a seller finance deal on what is called a wrap mortgage; especially if you have a low interest. Ask for a 70k payment and give them an interest rate that is 1 point higher than yours. For example, if your rate is 4% then give them a rate of 5%. They will be really happy because they can get into a house with a lower mortgage and you don't have to pay realtor fees. Because you don't use a realtor because most realtors have no idea what to wrap mortgage is. You can make the mortgage Have a balloon payment in 2 1/2 years so that you don't miss out on the IRS tax exemption rule of living in your primary home two of the last five years. Unless you're OK with paying taxes on the property eventually. Then you can just let it write out the whole length of your mortgage. You'll create cash flow every month and then at the end you'll get another bump of $40,000 or more depending on your loan amortization schedule.

With the 70k down payment buy a house from wholesaler with a hard money loan that is well below market value. Work with the hard money lender on the terms of the loan so you can get a 90% loan and the hard money lender will reimburse you for the rehab costs. 

You may need to have a family member or friend be the actual one on the hard money loan because there are stipulations with a lot of Hard Money Lender that they can't lend on a primary residence. If that is the case, then just have somebody else be on the loan with Hard Money Lender And then after you close on the property then add your name on title. You'll likely have to have your name on title for six months before you can refinance the property.

This way, your spouse can pick and choose the type of finishes that your spouse would like and then when you're done finishing the rehab in six months you can get the home refinanced and pay your family member or friend a couple thousand dollars for their willingness to be on the loan.  

When you refinance the property, you can likely get a lot of that $70,000 back If you bought the property well below market value. And possibly even more money back if you did some of the work yourselves.

So now you have a new home that you're living in that has probably 25% equity in it, you have a cash flowing seller financed property with no maintenance because you've sold it on seller financing and they're going to be taken care of the property because it is their property but yet you still benefit from cash flow because you are the bank. And you still have $70,000 to go buy a single-family home or multifamily home, and now that you're on a bunch of wholesale lists where you can source deals well under market value it is easier to find good deals.