New to Real Estate World

Member since 2023 · 14 posts · 7 votes

Hello everyone, I'm brand new to the Real Estate world and I watch a lot of Podcast from BiggerPockets, but I need some advises please. I purchased my house in 2021 and already paid off the house last month. My house currently worth $325,000 and I want to get into Long term Rental Properties. I also paid off all my debt and that means I have no money right now, so I chose Cash Out Refinance and got approved for $200,000 + Property Tax and Insurance the total monthly mortgage is $1700/month. I put the rest of the information into BiggerPockets calculator with Rent = $1500/month I got $1000 Cash Flow in my New Property. That means I still have $700/month to pay for my mortgage. Did I do something wrong or I'm just bad at understanding Real Estate. Can you guys help me with this please? I really appreciate it a lot and thank you everyone.

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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
Not sure on your question.
1. REI is about leverage, you never want to fully pay down.
2. Are you taking a full loan out of $200,000 or just a line of credit as needed?
3. LTR. Why? My underlying question is do you plan to scale, how high, how fast, what are your skill sets and resources? That will lead you to your REI strategy.
4. If LTR what market?
5. If you’re strong in cash I would hold off buying for the next year and look for your market, team and distressed owners.
6. Resources. Do you plan to manage yourself then local. If you plan to have someone else manage, I would pick the area, then work through a great property manager, so you’re building your team. They may help identify properties for you.
Good luck.
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Duy Xuan Do
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Member since 2023 · 14 posts · 7 votes
3y
Hello Henry,
Thank you so much for the information.
I'm taking out full loan on $200,000. The reason I'm doing LTR is because I want to build a long term road for my family while have some cash flow during these years. I'm looking at the area that will generate higher equity for the next couple years because they are planning to build a small mall in my area in the future. Also thank you for the advise on building my team and look for potential area.
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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
I wouldn’t take out the full amount unless you have a place for it now or in the near future.
Again REI is about leverage. I wouldn't put $200,000 down on your next investment. Do a line of credit.

Also how did you get the money? Don't answer. If you got it easy, you are more likely to spend it easily. Don't. Work on your REI strategy. Don't commit all of your funds to the first deal if you have that much cash or equity available. Good luck.
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John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
@Duy Xuan Do
It sounds like you’re in a good area and have a lot of equity to work with. I’ve bought 12 rentals with no out of pocket cash by doing cash out refis. I would buy as many rentals as you can with 20% down. That’s what I’ve been doing. Then after 3-5 years, pull out equity from your rentals to scale up and buy more with that built up equity from appreciation and principal pay down. Use your equity to generate good cash flow and more properties that will appreciate nicely over time. Leverage your way to wealth with this strategy. PM me if you have any questions.
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