Being Patient in Acquiring Properties

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Being Patient in Acquiring Properties

Zachary Riola
Member since 2021 · 4 posts · 0 votes

I am a recent new homeowner in Austin, TX. Essentially I closed on an off market property and walked into greater than $50k of upfront equity (probably closer to $75-100k; Austin market is wild).

About 6 months after closing I discovered BiggerPockets and have since become real estate obsessed. I analyze properties every day and am itching to invest in my first rental property but I believe I will be held back by my D to I ratio. Additionally, I feel like I am "cash poor" from buying my first house still. 

I think I am just lacking patience but I am eager to start buying rental properties; I feel like I am sitting on the sideline due to my cash savings being low from my first home purchase. I know there's other ways to "make things happen" in terms of financing via partnerships, OPM, etc. Just looking for some general guidance on what my next steps should be from those that have been there before. 

I have considered refinancing in a year or maybe less to pull some equity out of my house but that kind of scares me since interest rates will be rising and I locked in a very low 2.75% rate on my home loan. 

Any thoughts are welcome. 

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Rick Reeder
Member since 2019 · 124 posts · 95 votes
4y

I agree with @Chris Webb, and I would add that you should find yourself a great lender to work with. They can tell you exactly how much you could borrow right now and what down payment you'd need to have available to move on the next property.  Don't guess or assume - find out! 

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  • Chris Webb
    Investor · Central Virginia · Member since 2020 · 393 posts · 253 votes
    4y

    Hi @Zachary Riola, if you are analyzing deals every day you are doing just fine. Just because you are not actively buying does not mean you are on the sidelines. Nothing can replace knowing what a good deal is. If you know that, the money will come. Keep up the good work. 

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  • Rick Reeder
    Member since 2019 · 124 posts · 95 votes
    4y

    I agree with @Chris Webb, and I would add that you should find yourself a great lender to work with. They can tell you exactly how much you could borrow right now and what down payment you'd need to have available to move on the next property.  Don't guess or assume - find out! 

    1Reply
  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Zachary Riola congrats on the purchase of your first Austin home! As you mentioned, Austin remains one of the hottest markets in the country, and 2022 continues to see strong buyer demand. Let that demand work for you and continue to build home equity. While 2.75% is a super attractive interest rate, rate isn't everything. Ask yourself "can I earn more with an investment than I'm saving in my interest rate?" If you do a cash-out refinance and your interest rate goes up 1%, but you can invest in an asset giving you a much higher return, that's a win. We also had a 2.75% 15-year note on our primary residence but elected to do a cash-out refinance and use the money to purchase a duplex in 2020. Our new loan rate was 3.65% however our duplex has made us a HUGE return in just 18-months AND cash flows well, more than making the cash-out refinance worth it. Happy to talk details if you want to connect.

    [email protected]512-674-5478
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  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    4y

    I think biggerpockets has made the "acquire units" and "zero money down" huge and it's easy to compare ourselves to others and think wow I'm not doing anything. Getting rich isn't something that happens quickly though and you should only partner with people you really trust. Take it day at a time and realize that everyone is at somewhere different in their journey. I'd say for you, continue what you're doing and maybe even consider a cheaper market if you want to buy sooner. I'd be glad to talk to you about this as this is something that I constantly battle with myself saying: "I need to be like person XYZ on podcast XYZ" but in reality everyone has different goals and you should just do what is right for your situation and what your gut is telling you.

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Zachary Riola keep that rate if you can and ask your bank about a HELOC. I'd also talk to a lender before you decide DTI will hold you back. We have a great cashflow based lender here in Austin right now too.

    [email protected]512-888-9122
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  • Danielle Jackson
    Phoenix, AZ · Member since 2021 · 504 posts · 282 votes
    4y

    Congrats on your purchase. As others have stated, refinancing to access your capital is an ideal way to provide purchasing power for your first investment. While you do have an incredible rate, unless the rates have increased to a point where you aren't able to achieve a greater rate of return by investing, then in my opinion its worth the consideration to refi and pull your cash out. Make it work for you! 

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @Zachary Riola I think you can put yourself in a stronger position by spending time learning, saving, analyzing deals, going to REIAs, and talking to lenders.  Underrated assets: cash and patience.

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