So what's holding you back?
Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes
So what's holding you back?
Most Popular Reply
Providence, RI · Member since 2018 · 29 posts · 409 votes
7yHaving just recently bought my first property, I know for myself what was holding me back was the fear that I would overpay, especially in this type of a market. I would get analysis paralysis and basically talk myself out of every property I looked at.
3705 Replies
- Parker, CO · Member since 2019 · 8 posts · 3 votes7y
For me, I guess fear. Not knowing which strategy will work best. Trying to educate myself while I figure out the right/best approach. Plus this market (Denver area) isn't easy to get started in. I have an opportunity with the condo we are currently living in. Lots of equity. Rent from it should provide decent cash flow, if we could find another place to live. Not sure how to proceed on that strategy yet though. So for now, just doing a lot of reading and getting educated. I know at some point I've got to jump in with both feet and just get the ball rolling.
- Rental Property Investor · Savage, MN · Member since 2016 · 202 posts · 61 votes7y
Honestly analysis paralysis is my main anchor. I've since been taking steps by talking with more advanced investors and getting my financing all set up for my next deal!
- Rental Property Investor · Savage, MN · Member since 2016 · 202 posts · 61 votes7y
Hi @Troy Horne, I have that same nagging fear as well. I am currently researching a new market and that is my #1 fear in not finding tenants to fill the property. One thing to add is that city requires owners living further than 30miles from the property to have an agent (property manager) in place on the property so I am in the process of gathering who does the management in that area (if any) and setting up questions to ask them. Often I found when you step back and take it piece by piece day by day it is much more easier to manage. Best of luck!
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Reginald Collier:
@Frank Patalano I appreciate the reply. Thanks for answering the specific questions.
My main focus is to attain the cash flow to retire early. Who better to ask than the cash flow king.
I currently have about 10K in credit card debt i'm trying to clear. I also have a personal line of credit of $15K avail(5K balance) that I have been using to accelerate my debt elimination.(eliminated almost $20K in debt since March)
So i don't won't have the 25% down payment anytime soon unless I do rental properties in the $40-$70K range.
My additional questions to you is, how much Cash Flow can I typically expect from a turnkey vs doing it on my own? I understand that every deal is different.....I'm just looking for typical ballpark numbers. are we talking $100-$400(max monthly turnkey) and maybe an additional $100-$200/month by doing it on my own?
I constantly get bombarded with mail offering $30-$50K personal loan options. Could/Should I use this for down payments? And would the bank use this against my DTI, even though the money is sitting in the bank? I would Pay the loan off right away if the Rental Property lets me pull all/most of the equity back out.(after the down payment) to pay off the loan.
Can you even pull money out of a turnkey property?( I hear they take a portion of the equity sometimes?)
Thx again.
So here is an example.
I Pulled up a turnkey single family in IN. 3 bed 1 bath. $75,000. Monthly rent $800.
$21K down. Expected return $100/month after every thing. Not counting maintaining the LLC. Eww.
Here is another Turnkey.
Single Family in IL. 2/1.5 $105K. 25% down. Expected return $4K per year. Better.
Here is an example of buying from a non-turnkey website. 3F in RI. 2 beds each. Rents $2700 monthly (Currently a little under market). 25% down. Mortgage $1150 per month. Expenses $750/month. Expected return. $600/month. (Figured $100/month vacancy and $100/month for repairs. But No property management.)
Multis are a little different from single family rentals but its the same idea.
Sounds like turnkeys aren't too bad. At the same point numbers can be played with. Plus a single family vacancy can kill ya.
Any loans would count against your DTI.
Perhaps you could wholesale a property or two to get you started.
Or find a partner and share the risk/reward.
- 7yTyler GibsonBusiness MemberReal Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
@Reginald Collier I can't answer about the numbers on turnkey vs. doing it yourself but as to the DTI question yes a personal loan would count against your DTI even if it is in the bank because it is still a loan and you would still have a payment. Also, it would be hard to immediately pull the downpayment back out of the property after purchase unless you were somehow able to force appreciation and even then typically loans require seasoning.
- New Jersey(near Philly) · Member since 2019 · 15 posts · 4 votes7y
Originally posted by @Frank Patalano:
Originally posted by @Reginald Collier:
@Frank Patalano I appreciate the reply. Thanks for answering the specific questions.
My main focus is to attain the cash flow to retire early. Who better to ask than the cash flow king.
I currently have about 10K in credit card debt i'm trying to clear. I also have a personal line of credit of $15K avail(5K balance) that I have been using to accelerate my debt elimination.(eliminated almost $20K in debt since March)
So i don't won't have the 25% down payment anytime soon unless I do rental properties in the $40-$70K range.
My additional questions to you is, how much Cash Flow can I typically expect from a turnkey vs doing it on my own? I understand that every deal is different.....I'm just looking for typical ballpark numbers. are we talking $100-$400(max monthly turnkey) and maybe an additional $100-$200/month by doing it on my own?
I constantly get bombarded with mail offering $30-$50K personal loan options. Could/Should I use this for down payments? And would the bank use this against my DTI, even though the money is sitting in the bank? I would Pay the loan off right away if the Rental Property lets me pull all/most of the equity back out.(after the down payment) to pay off the loan.
Can you even pull money out of a turnkey property?( I hear they take a portion of the equity sometimes?)
Thx again.
So here is an example.
I Pulled up a turnkey single family in IN. 3 bed 1 bath. $75,000. Monthly rent $800.
$21K down. Expected return $100/month after every thing. Not counting maintaining the LLC. Eww.
Here is another Turnkey.
Single Family in IL. 2/1.5 $105K. 25% down. Expected return $4K per year. Better.
Here is an example of buying from a non-turnkey website. 3F in RI. 2 beds each. Rents $2700 monthly (Currently a little under market). 25% down. Mortgage $1150 per month. Expenses $750/month. Expected return. $600/month. (Figured $100/month vacancy and $100/month for repairs. But No property management.)
Multis are a little different from single family rentals but its the same idea.
Sounds like turnkeys aren't too bad. At the same point numbers can be played with. Plus a single family vacancy can kill ya.
Any loans would count against your DTI.
Perhaps you could wholesale a property or two to get you started.
Or find a partner and share the risk/reward.
@Frank Patalano
Thanks again. What website is the RI property on(non-turnkey). I think the main reason i'm focusing on turnkey, is because of the services they provide while I work my FT job. The research, vetting tenants, property management, repairs already done, etc. is attractive to a 1st time Rental investor. Sounds like it might be worth the extra $100/month or so. Sounds like a "quicker" process too. But that may all pivot on whether I could eventually Refinance and pull the money back out to do it again. The whole turnkey thought is just revealing my fear's of doing it alone. Climbing out of poverty to get to this point, makes me want to tip toe into this without a disaster sending me back to square one. So turnkeys seem to add a little more security and peace of mind, knowing that people that know better than me, did all the hard work for me.And what did you mean by "maintaining the LLC"? What costs are involved with that outside of initially setting it up, and tax time issues?
side note: If i pay my debt down, I may be able to qualify for a $30K+ Line of credit from my bank which could be used for down payments until they the holding time is satisfied.
(you are the man for answering everyone's questions like this, btw) It is helping me mentally move forward a lot!
- New Jersey(near Philly) · Member since 2019 · 15 posts · 4 votes7y
Originally posted by @Tyler Gibson:
@Reginald Collier I can't answer about the numbers on turnkey vs. doing it yourself but as to the DTI question yes a personal loan would count against your DTI even if it is in the bank because it is still a loan and you would still have a payment. Also, it would be hard to immediately pull the downpayment back out of the property after purchase unless you were somehow able to force appreciation and even then typically loans require seasoning.
@Tyler Gibson I may have an option for a Line of Credit of $30K plus eventually. So using that wouldn't be a loan and effect the DTI until after the fact. So how long is it typically for "seasoning" before I can pull it out again?
- 7yTyler GibsonBusiness MemberReal Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
@Reginald Collier I suggest talking to a mortgage officer for more specifics but I think it is 6 months to a year. Also, I think the line of credit would impact your DTI but I don't underwrite loans so I am by no means an expert.
- Rental Property Investor · Member since 2019 · 3 posts · 1 vote7y
I think my fear is the "debt" part of figuring everything out. I've been using the BP calculator on multi family and a few single family. I have a 17k HELOC ready. I've been divorced for 5 yrs and it's taken that long to start to get my head well above water. I travel almost an hour for work as I own my own home. I'm starting to look now at houses closer to work to rent my current residence. After reading "Set for Life", I'm just wondering if i have enough spare cash. I just used a lot of the spare cash to pay off my student loan debt. I have a car loan too. Should I wait and accumulate more money? Wait to pay off car debt? Partner? I think paralysis by over analysis. I want to get started just not sure the route.
- New Jersey(near Philly) · Member since 2019 · 15 posts · 4 votes7y
Originally posted by @Tyler Gibson:
@Reginald Collier I suggest talking to a mortgage officer for more specifics but I think it is 6 months to a year. Also, I think the line of credit would impact your DTI but I don't underwrite loans so I am by no means an expert.
Duly noted. Thank you sir Tyler the Creator. lol
- New to Real Estate · Portland, OR · Member since 2018 · 4 posts · 0 votes7y
What's holding us back? I would say is lack of confidence and fear of failure and getting ourselves in trouble with a large amount of debt. Also, we want to get into the multi-family investment strategy but 25% down payment for a duplex as an investment property is out of the ballpark for us. We already own a SFH which we bought for a really good price in 2015 (this was before we even thought about REI) and have a good interest rate locked in so we don't want to sell it.
With that being said we are actually in the process of buying our first investment property which is a duplex. My husband now qualifies for a VA loan so we plan on house hacking with $0 down. We'll be renting our SFH and moving into the duplex were purchasing for a year or two then plan to move on from there.
One side of the duplex has a large 4 car attached garage (880 sq ft). Instead of charging an additional $100-$150 for the unit attached to the garage we plan on converting it into an additional 2bd/2bath unit and collect $1200 for rent instead. Is this a bit ambitious being that we are newbies and this is our first property? We've never worked with contractors before so honestly I'm a bit scared but also really excited at the same time to be doing something. For those who have worked with contractors before and have done the same I would love to hear about your experience.
- Member since 2019 · 24 posts · 12 votes7y
Age is holding me back right now. I am 58 my wife is 56. We are setup for retirement right now and this would risk that. My risk tolerance is greater than my wife's apparently because I was ready to do this. I had her read BRRRR and she says no now but was ok with it before reading it (go figure). She's afraid there is not enough time to get it back if something goes wrong.
- Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votes7y
Originally posted by @Frank Patalano:
@Mark Bommarito low crime is more important than school districts. I am not saying that schools are not important. Just rember that you are not living there. Many people are not having kids and some districts get a bad rap because private schools have filtered out many top performers. My school district is in the lower 3rd in the state but we send all 3 of our kids to public schools and they are all doing well.
Interesting point about crime rate vs school importance. I guess this is especially true today with U.S. birth rate seemingly in decline.
- Member since 2018 · 3 posts · 2 votes7y
I would have to say, not having enough money saved. I think this is fear rearing its head in my circumstance = and rightfully so. I think it would be best to have a nice cash cushion prepared before jumping and making an investment.
I currently own a home, that also makes it a bit more of a challenge, fearing that I may not look like someone a lender could trust or that I may be shamed for ”owning a home and wanting another.”
- New Orleans, LA · Member since 2019 · 5 posts · 0 votes7y
@Frank Patalano I am afraid people won't take me as serious because I am only 20 years old. I am also afraid of making a mistake, even though I know I just have to get out there.
- Rental Property Investor · Santa Cruz, CA · Member since 2019 · 8 posts · 3 votes7y
Hi @Frank Patalano to answer your question I’m currently trying to raise capital to fund my first deal out of state. Also not sure what market I will be buying seeing that my market is out of my reach right now. I currently live in the Santa Cruz Ca.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Alex Pearson:
For me, I guess fear. Not knowing which strategy will work best. Trying to educate myself while I figure out the right/best approach. Plus this market (Denver area) isn't easy to get started in. I have an opportunity with the condo we are currently living in. Lots of equity. Rent from it should provide decent cash flow, if we could find another place to live. Not sure how to proceed on that strategy yet though. So for now, just doing a lot of reading and getting educated. I know at some point I've got to jump in with both feet and just get the ball rolling.
Yes the Denver Market is hot. Have you thought about looking at properties to see if you moving into one makes sense?
depending on your situation I would be looking at an owner occupied multi. You could do a cash out refi and use that money as a down payment for your new property.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Alexander Lang:
Honestly analysis paralysis is my main anchor. I've since been taking steps by talking with more advanced investors and getting my financing all set up for my next deal!
Yes. Partnering will people and seeing them do big things will help you grow.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Reginald Collier:
Originally posted by @Frank Patalano:
Originally posted by @Reginald Collier:
@Frank Patalano I appreciate the reply. Thanks for answering the specific questions.
My main focus is to attain the cash flow to retire early. Who better to ask than the cash flow king.
I currently have about 10K in credit card debt i'm trying to clear. I also have a personal line of credit of $15K avail(5K balance) that I have been using to accelerate my debt elimination.(eliminated almost $20K in debt since March)
So i don't won't have the 25% down payment anytime soon unless I do rental properties in the $40-$70K range.
My additional questions to you is, how much Cash Flow can I typically expect from a turnkey vs doing it on my own? I understand that every deal is different.....I'm just looking for typical ballpark numbers. are we talking $100-$400(max monthly turnkey) and maybe an additional $100-$200/month by doing it on my own?
I constantly get bombarded with mail offering $30-$50K personal loan options. Could/Should I use this for down payments? And would the bank use this against my DTI, even though the money is sitting in the bank? I would Pay the loan off right away if the Rental Property lets me pull all/most of the equity back out.(after the down payment) to pay off the loan.
Can you even pull money out of a turnkey property?( I hear they take a portion of the equity sometimes?)
Thx again.
So here is an example.
I Pulled up a turnkey single family in IN. 3 bed 1 bath. $75,000. Monthly rent $800.
$21K down. Expected return $100/month after every thing. Not counting maintaining the LLC. Eww.
Here is another Turnkey.
Single Family in IL. 2/1.5 $105K. 25% down. Expected return $4K per year. Better.
Here is an example of buying from a non-turnkey website. 3F in RI. 2 beds each. Rents $2700 monthly (Currently a little under market). 25% down. Mortgage $1150 per month. Expenses $750/month. Expected return. $600/month. (Figured $100/month vacancy and $100/month for repairs. But No property management.)
Multis are a little different from single family rentals but its the same idea.
Sounds like turnkeys aren't too bad. At the same point numbers can be played with. Plus a single family vacancy can kill ya.
Any loans would count against your DTI.
Perhaps you could wholesale a property or two to get you started.
Or find a partner and share the risk/reward.
@Frank Patalano
Thanks again. What website is the RI property on(non-turnkey). I think the main reason i'm focusing on turnkey, is because of the services they provide while I work my FT job. The research, vetting tenants, property management, repairs already done, etc. is attractive to a 1st time Rental investor. Sounds like it might be worth the extra $100/month or so. Sounds like a "quicker" process too. But that may all pivot on whether I could eventually Refinance and pull the money back out to do it again. The whole turnkey thought is just revealing my fear's of doing it alone. Climbing out of poverty to get to this point, makes me want to tip toe into this without a disaster sending me back to square one. So turnkeys seem to add a little more security and peace of mind, knowing that people that know better than me, did all the hard work for me.And what did you mean by "maintaining the LLC"? What costs are involved with that outside of initially setting it up, and tax time issues?
side note: If i pay my debt down, I may be able to qualify for a $30K+ Line of credit from my bank which could be used for down payments until they the holding time is satisfied.
(you are the man for answering everyone's questions like this, btw) It is helping me mentally move forward a lot!
I was giving an example of one of my properties if I bought it now slightly below market.
Maintaining the LLC. There are small costs every year to have an LLC. Annual fee from the state. Separate tax return if it is a partnership.
I worked a full time and part time job for years and managed 10-12 units myself for a while. I had a handyman/contractor who did most of the work.If they couldn't contact me the tenants would call them.
At the beginning of the year I switched to full time property management on every to allow me to look at more opportunities.
Turnkey is an okay way to start. Contact them it is free to look and ask questions.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Jason Halka:
I think my fear is the "debt" part of figuring everything out. I've been using the BP calculator on multi family and a few single family. I have a 17k HELOC ready. I've been divorced for 5 yrs and it's taken that long to start to get my head well above water. I travel almost an hour for work as I own my own home. I'm starting to look now at houses closer to work to rent my current residence. After reading "Set for Life", I'm just wondering if i have enough spare cash. I just used a lot of the spare cash to pay off my student loan debt. I have a car loan too. Should I wait and accumulate more money? Wait to pay off car debt? Partner? I think paralysis by over analysis. I want to get started just not sure the route.
If you are going to house hack a multi closer to work I would do it. If you have great credit, you can buy with as little as 3.5% down.
One of my partners had about 70K in student debt. House hacking his first property allowed him to accelerate his debt repayments.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Cam Jimmy:
I just saw how many replies were on this thread, so I figured I'd sit back and eat my popcorn and read everything :)
Lol🤣. Thank you for participating. After reading my answers you will start to see some themes.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Lai Cha:
What's holding us back? I would say is lack of confidence and fear of failure and getting ourselves in trouble with a large amount of debt. Also, we want to get into the multi-family investment strategy but 25% down payment for a duplex as an investment property is out of the ballpark for us. We already own a SFH which we bought for a really good price in 2015 (this was before we even thought about REI) and have a good interest rate locked in so we don't want to sell it.
With that being said we are actually in the process of buying our first investment property which is a duplex. My husband now qualifies for a VA loan so we plan on house hacking with $0 down. We'll be renting our SFH and moving into the duplex were purchasing for a year or two then plan to move on from there.
One side of the duplex has a large 4 car attached garage (880 sq ft). Instead of charging an additional $100-$150 for the unit attached to the garage we plan on converting it into an additional 2bd/2bath unit and collect $1200 for rent instead. Is this a bit ambitious being that we are newbies and this is our first property? We've never worked with contractors before so honestly I'm a bit scared but also really excited at the same time to be doing something. For those who have worked with contractors before and have done the same I would love to hear about your experience.
That's awesome with the VA loan.
Ambitious? Yes. But I like it.
Have you spoke to Zoning yet? Some cities are pro growth others will fight you tooth and nail. I would double check with them before lifting a hammer. Sounds like a great way to increase value.
- Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes7y
Originally posted by @Ed Morrison:
Age is holding me back right now. I am 58 my wife is 56. We are setup for retirement right now and this would risk that. My risk tolerance is greater than my wife's apparently because I was ready to do this. I had her read BRRRR and she says no now but was ok with it before reading it (go figure). She's afraid there is not enough time to get it back if something goes wrong.
Ugh. My wife and I don't see eye to eye on real estate most of the time.
Perhaps you can start small.
Or do some hard money lending.
Or wholesale deals to others.
Or partner to reduce the risk.
I'd be more fearful of the stock market than a house.
- New Jersey(near Philly) · Member since 2019 · 15 posts · 4 votes7y
Originally posted by @Frank Patalano:
Originally posted by @Reginald Collier:
Originally posted by @Frank Patalano:
Originally posted by @Reginald Collier:
@Frank Patalano I appreciate the reply. Thanks for answering the specific questions.
My main focus is to attain the cash flow to retire early. Who better to ask than the cash flow king.
I currently have about 10K in credit card debt i'm trying to clear. I also have a personal line of credit of $15K avail(5K balance) that I have been using to accelerate my debt elimination.(eliminated almost $20K in debt since March)
So i don't won't have the 25% down payment anytime soon unless I do rental properties in the $40-$70K range.
My additional questions to you is, how much Cash Flow can I typically expect from a turnkey vs doing it on my own? I understand that every deal is different.....I'm just looking for typical ballpark numbers. are we talking $100-$400(max monthly turnkey) and maybe an additional $100-$200/month by doing it on my own?
I constantly get bombarded with mail offering $30-$50K personal loan options. Could/Should I use this for down payments? And would the bank use this against my DTI, even though the money is sitting in the bank? I would Pay the loan off right away if the Rental Property lets me pull all/most of the equity back out.(after the down payment) to pay off the loan.
Can you even pull money out of a turnkey property?( I hear they take a portion of the equity sometimes?)
Thx again.
So here is an example.
I Pulled up a turnkey single family in IN. 3 bed 1 bath. $75,000. Monthly rent $800.
$21K down. Expected return $100/month after every thing. Not counting maintaining the LLC. Eww.
Here is another Turnkey.
Single Family in IL. 2/1.5 $105K. 25% down. Expected return $4K per year. Better.
Here is an example of buying from a non-turnkey website. 3F in RI. 2 beds each. Rents $2700 monthly (Currently a little under market). 25% down. Mortgage $1150 per month. Expenses $750/month. Expected return. $600/month. (Figured $100/month vacancy and $100/month for repairs. But No property management.)
Multis are a little different from single family rentals but its the same idea.
Sounds like turnkeys aren't too bad. At the same point numbers can be played with. Plus a single family vacancy can kill ya.
Any loans would count against your DTI.
Perhaps you could wholesale a property or two to get you started.
Or find a partner and share the risk/reward.
@Frank Patalano
Thanks again. What website is the RI property on(non-turnkey). I think the main reason i'm focusing on turnkey, is because of the services they provide while I work my FT job. The research, vetting tenants, property management, repairs already done, etc. is attractive to a 1st time Rental investor. Sounds like it might be worth the extra $100/month or so. Sounds like a "quicker" process too. But that may all pivot on whether I could eventually Refinance and pull the money back out to do it again. The whole turnkey thought is just revealing my fear's of doing it alone. Climbing out of poverty to get to this point, makes me want to tip toe into this without a disaster sending me back to square one. So turnkeys seem to add a little more security and peace of mind, knowing that people that know better than me, did all the hard work for me.And what did you mean by "maintaining the LLC"? What costs are involved with that outside of initially setting it up, and tax time issues?
side note: If i pay my debt down, I may be able to qualify for a $30K+ Line of credit from my bank which could be used for down payments until they the holding time is satisfied.
(you are the man for answering everyone's questions like this, btw) It is helping me mentally move forward a lot!
I was giving an example of one of my properties if I bought it now slightly below market.
Maintaining the LLC. There are small costs every year to have an LLC. Annual fee from the state. Separate tax return if it is a partnership.
I worked a full time and part time job for years and managed 10-12 units myself for a while. I had a handyman/contractor who did most of the work.If they couldn't contact me the tenants would call them.
At the beginning of the year I switched to full time property management on every to allow me to look at more opportunities.
Turnkey is an okay way to start. Contact them it is free to look and ask questions.
I will talk with them and seek out a CPA as well. U da man!
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