Need some advice for Newby "Real estate financial strategy"

Need some advice for Newby "Real estate financial strategy"

Investor · IN KY, UT · Member since 2022 · 10 posts · 5 votes

Hello Fellow Investors and Professionals

Financial consultants, wives, husbands… etc.

Have a question for you! I build our family home with my own two hands took me 3 years to do… but saved me tons of money and got a lot more for my money. Have 252k in a mortgage cost of building the homes (mine and mother-in-law suite) and land the homes are on. home appraises for 596k and the 7 acers of land worth 300k. I don’t have any debt but this house loan. No cc auto loans nothing just living expenses and insurance a month. Making into the 6 figures a year with my “day jobs” wanting to branch out and get my real-estate portfolio growing for my future and retirement. My wife is under the impression “Dave Ramsey way” getting the house paid off in the next few years but my interest is so low it seems a waist to not use a home equity line of credit to buy multiple properties and get them into their own conventional loans and put the money back to our home after the loans are established. I don’t know what direction or the best strategy for progression and growth in the real estate and rental business. Would love some advice or direction with facts or numbers to share with the wife to talk over a plan or strategy for our family. Don’t want to mess up and put our family home in jeopardy but I feel it’s a value to help get farther faster. It will also me out of state investing after ready many bigger pocket books “this is the way”.

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Investor · Miami · Member since 2022 · 48 posts · 48 votes
4y

One of the hardest mind shifts is to go from "consumer" to "investor." I agree with Dave Ramsey in my personal finances. We carry very little to no debt. This is important to allow us to do things that we like to do without worrying about credit card bills etc. As a small business owner (which real estate should be treated as), it is good to use leverage to move at a steady pace. You don't want to be irresponsible with your "good debt", but if you can change your house from a liability to an asset, the loan to yourself can pay off great dividends in passive income. I would recommend that you educate yourself and your wife on the some conservative underwriting and be prepared to move into the market when feasible. With interest rates the way they are, it feels like the competition to get started is pulling back a little and the time to strike will present itself soon. Good luck!

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  • Lender · Southern California · Member since 2022 · 25 posts · 15 votes
    4y

    Great job on your first purchase, sounds like a home run! I think its important to find a middle ground that is comfortable for both you and your wife. Leverage is a great way to accelerate your real estate investments however its important to leverage responsibly. Is your plan to duplicate what you already did with your primary home or to use the funds to buy an existing home that can be used as long term rental? I would start slow, with out of state investments you don't always need a huge amount to purchase a solid rental. Maybe use some equity to buy one, rent it out, get a few months of rent in the bank, share the success with your wife and then see if there is a comfort level to continue.

    Feel free to DM me if you want to discuss in more detail.

  • Investor · IN KY, UT · Member since 2022 · 10 posts · 5 votes
    4y
    Quote from @Richard Advani:

    Great job on your first purchase, sounds like a home run! I think its important to find a middle ground that is comfortable for both you and your wife. Leverage is a great way to accelerate your real estate investments however its important to leverage responsibly. Is your plan to duplicate what you already did with your primary home or to use the funds to buy an existing home that can be used as long term rental? I would start slow, with out of state investments you don't always need a huge amount to purchase a solid rental. Maybe use some equity to buy one, rent it out, get a few months of rent in the bank, share the success with your wife and then see if there is a comfort level to continue.

    Feel free to DM me if you want to discuss in more detail.


     The goal is to buy established homes or rentals that may need some work. I have a large pool of construction / contractor connections a mix of family and friends in Indiana and Kentucky. I want to leverage those connections to help keep things sorted as I work in Southern Utah now. More hands off building, with the possibility of building new duplex to fourplex apartments in the future. Would 30 to 50k in cash from my saving help get the ball rolling maybe dump more fund into saving do the first home or two with that and leverage the house for bigger progress after 6mnths or a year? 

  • Lender · Southern California · Member since 2022 · 25 posts · 15 votes
    4y
    Quote from @Tyler Shoaf:
    Quote from @Richard Advani:

    Great job on your first purchase, sounds like a home run! I think its important to find a middle ground that is comfortable for both you and your wife. Leverage is a great way to accelerate your real estate investments however its important to leverage responsibly. Is your plan to duplicate what you already did with your primary home or to use the funds to buy an existing home that can be used as long term rental? I would start slow, with out of state investments you don't always need a huge amount to purchase a solid rental. Maybe use some equity to buy one, rent it out, get a few months of rent in the bank, share the success with your wife and then see if there is a comfort level to continue.

    Feel free to DM me if you want to discuss in more detail.


     The goal is to buy established homes or rentals that may need some work. I have a large pool of construction / contractor connections a mix of family and friends in Indiana and Kentucky. I want to leverage those connections to help keep things sorted as I work in Southern Utah now. More hands off building, with the possibility of building new duplex to fourplex apartments in the future. Would 30 to 50k in cash from my saving help get the ball rolling maybe dump more fund into saving do the first home or two with that and leverage the house for bigger progress after 6mnths or a year? 

    Investing somewhere local to friends and family is a great idea. Depending on the price range you are looking at 30-50k could be enough for you to put a downpayment on a rental in one of those markets  and a great way to get your feet wet. Once you have a closed deal or two you will likely feel more confident to leverage your primary home to keep the investing going.
  • Lender · Morristown, NJ · Member since 2022 · 153 posts · 71 votes
    4y

    HI @Tyler Shoaf, great job on your first house! 

    It's no secret that real estate investing can be extremely lucrative and rewarding. With that being said it is also super important to do it in a way that you and your family are comfortable with. I do think this is possible. 

    Starting slow is always a good idea as you will learn more and be able to better asses the situation to evaluate if it is something you want to continue with. Might be a good idea to research and watch some podcasts, YouTube videos, etc. with your wife so you guys can learn more about the facts of the matter together. Usually when people start seeing all the benefits they are inclined to at the very least learn more!

  • Investor · Miami · Member since 2022 · 48 posts · 48 votes
    4y

    One of the hardest mind shifts is to go from "consumer" to "investor." I agree with Dave Ramsey in my personal finances. We carry very little to no debt. This is important to allow us to do things that we like to do without worrying about credit card bills etc. As a small business owner (which real estate should be treated as), it is good to use leverage to move at a steady pace. You don't want to be irresponsible with your "good debt", but if you can change your house from a liability to an asset, the loan to yourself can pay off great dividends in passive income. I would recommend that you educate yourself and your wife on the some conservative underwriting and be prepared to move into the market when feasible. With interest rates the way they are, it feels like the competition to get started is pulling back a little and the time to strike will present itself soon. Good luck!

  • Investor · IN KY, UT · Member since 2022 · 10 posts · 5 votes
    4y

    Thank you for all the thoughts and Ideas presented you guys rock!

    @Bryan Escudero @Frank Avallone II @Richard Advani

    I will continue to educate myself and share more educational insights with my wife. Good research or learning YouTube or podcasts I need to start with.

    Also what's the best way to learn more about underwriting as Bryan stated? 

    I feel like the market is starting to work for me better the time iv been waiting for with more opportunities and deals coming to the market lately 

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