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Forums » Real Estate Deal Analysis and Advice » Regarding Real Estate Investing

Regarding Real Estate Investing Subscribe to Regarding Real Estate Investing

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Real Estate Investor · California


Hi, currently I'm working in Thailand and when I get back to CA, this is what I intend to do for my real estate investing. I'm not very sure if this will work or not in real estate investing but I'll give it a shot.

Example: I bought a piece of property with 80% mortgage and 20% down and this property cost 100K with positive cashflow every month.

After 2-3 years, if property appreciates to 120K, I now have 20K free equilty. I will take a home equilty loan of 20K to down another property for cashflow. I now have 2 monthly cashflow coming in every month.

After another 2-3 years, I now have 2 pieces of properties that appreciate, I can again do a home loan equilty from the 2 properties I owned to down for another bigger property with more cashflow.

Is this the way it works?


Real Estate Lender · Philadelphia, Pennsylvania


This is precisely the mentality that has so many homeowner's in trouble today. The biggest assumption in that theory is that homes will always appreciate in value... The real estate market over the last two years proves otherwise.

Although this is a good idea, do not over leverage yourself.


Real Estate Investor · Denver, Colorado


20% appreciation is extremely unlikely, IMHO. If you buy in CA in the next 6-12 months, I would say the value being exactly the same 2-3 years out is the most likely scenario, and having 10% decline in prices is more likely than a 20% increase.

Getting a HELOC on an investment property is impossible right now. You might be able to do a cash out refi, at the cost of $4000 or so and get some of this money back. You're likely to be limited to 70-75% LTV.

Buying with 20% down right now for investment property would be quite good. I think 25% is more likely.

This strategy would have worked fine five years ago. Not so much right now.

Small_flying-phoenixJon Holdman, Flying Phoenix LLC


Real Estate Investor · Milwaukee, Wisconsin


If you want to control more property you can go after property with less than a 25% down payment. If you make a decent wage and dont have a ton of debt you can get several loans. I would try VA REO's first. These can be had for 5% down. You can also look for property from local banks. In my area, there is a bank that will sell you property with 10% down. So if you were originally going to have to put down 25% for one property, you could now buy two local REO's and one VA REO. You will need cash to fix them though. You will also need a reserve incase of a problem or budget overrun (common on REOs).

Also, try to have the seller or bank wrap the closing cost into the loan or pay for them so you have less out of pocket up front.

After you get those three properties, seek out seller financing or do some options. Good luck, stick around on BP and learn a little, and stay away from Gurus and their boot camps.


Real Estate Investor · California


Originally posted by Jon Holdman
20% appreciation is extremely unlikely, IMHO. If you buy in CA in the next 6-12 months, I would say the value being exactly the same 2-3 years out is the most likely scenario, and having 10% decline in prices is more likely than a 20% increase.

Getting a HELOC on an investment property is impossible right now. You might be able to do a cash out refi, at the cost of $4000 or so and get some of this money back. You're likely to be limited to 70-75% LTV.

Buying with 20% down right now for investment property would be quite good. I think 25% is more likely.

This strategy would have worked fine five years ago. Not so much right now.
IMO, which I could be wrong. If situation allows, wouldn't it be better if we down as little as possible preferbly $0 down which will makes the ROI infinite instead of 20 - 25% down?

Please enlighten me. Thanks...


Real Estate Lender · Philadelphia, Pennsylvania


In principle, what you say makes sense. However, in the current economy, you will not find a loan for zero down. You should look into subject to purchases or assumptions if this is what you are looking to do.


Real Estate Investor · California


Originally posted by James Harkness
In principle, what you say makes sense. However, in the current economy, you will not find a loan for zero down. You should look into subject to purchases or assumptions if this is what you are looking to do.
Hi James, thanks for your reply. Just wanna make sure my principle in real estate investing is correct because I'm doing my ground work now :D


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