Be Careful If You Are Overleveraged
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
District Invest Group545 Reviews
Be Careful If You Are Overleveraged
Most Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesProper capitalization and reserves is the corner stone of real estate investing.
the refi till you die while a good strategy to scale needs to be tempered with fiscal realities if you do hit a bump in the road or like Russ is talking about a brick wall at 100 mph.. this is not about those that will get the Virus this is about those that work in industries that are being shut down.. some will get paid regardless others will get help from various sources but others will have no choice but to either buy food and medicine or pay rent.
Or they may just move in with relatives and leave properties vacant and in C/D areas vacant properties are sometimes worse than having non paying tenants who at least are keeping an eye on the house.
Tough times don't last but tough people do.. be tough be smart and be caring of others IE your tenants.
And for sure having owned hundreds of C/D class rentals myself I know once the word gets out in that tenant base there are going to be lots of them playing games with you.. But hopefully you know the good ones from the characters that are just out to take every advantage they can get as its their way of life
140 Replies
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
Originally posted by @Brian Kueck:
Given the banks can now borrow for 0-0.25% with the additional $1.5 Trillion+ pumped into the economy by the FED, they should be able to shoulder a couple of months of missed payments.
Brian, the FED hasn't pumped $1.5 trillion+ into the economy. It is stepping in to fill the vital role in normal capital market operations of providing short term liquidity (primarily overnight liquidity) that has been vacated by due to the seizing up of credit markets. The headline number is the size of the backstop, not the amount accessed. The amount accessed is massively underbid, coming in at less than 20% of the backstop, and this temporary liquidity is always backed by investment grade credit. It's not new money given to banks.
It's ok to not understand how capital markets work, but if you don't have a real knowledge of the subject please don't spread misinformation.
- 6yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
In Canada, the 6 big banks announced that they have options for mortgage payment deferrals for up to 6 months for people affected by the coronavirus.
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
Originally posted by @William C.:
Can someone smart in the room define "over-leveraged". Is it based on LTV or ROI? Seriously trying to take inventory on my portfolio. We avoided a 100% financed fix and flip on narrowest of narrow margins in time for the crash. But, I have a few rental properties, eaxh leveraged at about 70% LTV pre corona. Each with net cash flow of $14,400/year. A class. I could afford to cut rents 40% until I would be cash flow negative. I haven't been concerned about the affects, but then again we don't know there the bottom is.
Were banks leveraging beyond 70-75% on investment properties?
I was too young foo 2008.
I don't think I'm the smartest voice in this room, but my opinion is that you need to focus on your entire operation more than just your LTV ratios. 100% LTV with 12 months reserves is conservation while 50% LTV with 1 month reserves is a disaster waiting to happen.
All of my properties are leveraged 75-80% LTV. But I have enough non-RE income to cover my lifestyle (no vacations, but I they were all cancelled anyway) and enough cash on hand to cover 1 year+ of mortgage payments and standard maintenance. Even though my properties have a lot of leverage, I feel like my operation as a whole is fairly conservative.
- Rental Property Investor · Batavia, IL · Member since 2018 · 452 posts · 672 votes6y
Originally posted by @Scott Pearson:
It's encouraging to here these long term investors talk about owning property non-leveraged. I'm new to this game of REI and my one property is owned debt free.
Also interesting to note is there are no comments stating how dumb it is to not take the equity out of your real estate. Either those commenters respect the long term investors posting or they are to nervous to even think about how great leverage is?
While I would never dare to say it's "dumb" to leave equity in your real estate, I will say that I purchased a turnkey property a year ago and am in the process of finishing up my refi right now to pull out 16k after increasing the value by 45k through reno upgrades. I started this process before the Covid-19 crisis started up and I'm so thankful I decided to leave 30% equity in the property to take a lower interest rate and leave in more equity. Once this closes (fingers crossed it still goes through), the 16k I am pulling out will allow me to pay the mortgage for nearly 2 years should I have to cover it myself. Having that money on hand will be tremendously helpful to ride this out for a while should I lose my tenant or they have trouble paying. So pulling out equity can have major advantages so long as you retain some or all of it for reserves.
- 6yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Originally posted by @Theresa Harris:
In Canada, the 6 big banks announced that they have options for mortgage payment deferrals for up to 6 months for people affected by the coronavirus.
Theresa:
Better confirm those options with your bank. One of our lenders informed us the offer is only for owner occupants.
- 6yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Originally posted by @Roy N.:
Originally posted by @Theresa Harris:
In Canada, the 6 big banks announced that they have options for mortgage payment deferrals for up to 6 months for people affected by the coronavirus.
Theresa:
Better confirm those options with your bank. One of our lenders informed us the offer is only for owner occupants.
Knock on wood, I don't need to take advantage of it as I have a good amount of savings and only some of my tenants might be affected with regards to their income. Plus for 2 of my 3 with mortgages, I've been doing extra payments so I can use that option to defer if needed. I'd rather let those who need it use the extra assistance being offered. I'm just thanking my lucky stars that I got rid of one problem tenant when I did (6 weeks ago).
- Investor · Raleigh, NC · Member since 2015 · 81 posts · 210 votes6y
Originally posted by @Account Closed:
I was managing 25 units in an apartment building in Santa Clara, CA when the crash happened in 2008. In one month, we had 25% of our tenants move out. They all left on good terms, so no evictions. They had lost their jobs - various industries. They moved in with family, most of them out of state.
Apartment buildings put out huge banners saying "No credit checks" "First month free" "No deposits."
We had to lower rents to get new tenants and only one of my current tenant asked for a rent reduction, which we gave them - we only used month to month agreements.
What ended up working for us, was the building was right next to the university. The owner hated renting to students, but after he told me to lower my criteria and we got a problem tenant we had to kick out - he let me try students. Undergrads are awful in a building with non-undergrads, so we ended up kicking a couple of those out. But, then I discovered law students - they're fantastic tenants.
But, students aren't affected by recessions. In fact, my friend who is in HR for a college district in the SF Bay Area, told me that more people go back to school during a recession. So, if you can buy near a college and focus on students, you're pretty recession-proof.
The owner I worked for owned that building and several others around the Bay Area free and clear with his brothers, but it was still a stressful time. We had to get creative looking for a different tenant pool, and fortunately had that option with the college next door.
My definition of being over-leveraged is not being able to weather a storm like these, because you don't have the reserves. I had a cousin back in the 90's doing the borrow on one property to buy another and so on, and he had a number of properties and when the economy started to tank, all it took was for him to have trouble with one property and they all fell like dominoes, one after the other. He ended up filing bankruptcy.
Except this time college students are being told to go home. I have several apartments near North Carolina State and University of NC - Chapel Hill and my property manager just told all her clients to expect students abandoning units in the coming weeks. She already had several students from overseas fleeing middle of the night because their gov't told them to come back now or risk not being able to for a long, long time (China, etc).
- 6yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Over the years we've accumulated fairly large "mortgage vacations" with various lenders as a result of accelerated payments. They are marketed as attractive options, but will result in you owing more interest at the end of the payment vacation and should be used as an instrument of last resort (and not for a trip to a sunny beach as they often are).
- Investor · Raleigh, NC · Member since 2015 · 81 posts · 210 votes6y
Originally posted by @Joshua Myers:
Originally posted by @Brian Kueck:
Given the banks can now borrow for 0-0.25% with the additional $1.5 Trillion+ pumped into the economy by the FED, they should be able to shoulder a couple of months of missed payments.
Brian, the FED hasn't pumped $1.5 trillion+ into the economy. It is stepping in to fill the vital role in normal capital market operations of providing short term liquidity (primarily overnight liquidity) that has been vacated by due to the seizing up of credit markets. The headline number is the size of the backstop, not the amount accessed. The amount accessed is massively underbid, coming in at less than 20% of the backstop, and this temporary liquidity is always backed by investment grade credit. It's not new money given to banks.
It's ok to not understand how capital markets work, but if you don't have a real knowledge of the subject please don't spread misinformation.
This is 100% correct. This was a $1.5T repo operation (short-termk inter-lending facility between banks etc) and not real spending. I laughed when AOC said on her twitter why can't we give bailouts for student loans when we just "spent" $1.5T, never mind it isn't really spending at all.
However the fiscal stimulus being discussed right now ($1000 to each person, etc), now that one has a real punch in terms of stimulating the economy. They have to go big here, and I mean really, really big.
- 6yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
We have several student rentals as well and have begun fielding calls from students (and parents) who simply think we should release tenants from their leases because schools are closed. I suspect this line of questioning will consume a significant amount of our time over the coming weeks.
- 6yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Originally posted by @Roy N.:
Over the years we've accumulated fairly large "mortgage vacations" with various lenders as a result of accelerated payments. They are marketed as attractive options, but will result in you owing more interest at the end of the payment vacation and should be used as an instrument of last resort (and not for a trip to a sunny beach as they often are).
Thanks. I don't have any plans to use them at this point. If I think money will be tight, I'd just stop doing the extra payments and do the regular ones. I'm fortunate in that I can work from home and still get paid.
- 6yWill GastonPro MemberRental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
Originally posted by @Roy N.:
We have several student rentals as well and have begun fielding calls from students (and parents) who simply think we should release tenants from their leases because schools are closed. I suspect this line of questioning will consume a significant amount of our time over the coming weeks.
Roy, how are you handling these phone calls? I have ~150 students that rent from me as well and am expecting the same as the next rent payment approaches.
- Warsaw, IN · Member since 2017 · 229 posts · 270 votes6y
@Mark F. No you're not nuts at all. When I was active duty I didn't have any appreciation for the job security or the GI (guaranteed income) the military provided my family. You'll be fine-in my opinion, even if you Refi out of a VA loan for your current triplex just to free up a no money down, VA loan for an owner occupied 4 plex.
Truth be told I'm under contract on a SFR and Duplex (same deal) and I think within 6 mos this will all be a memory, with no impact to RE beyond the next 60 days of work restrictions, social distancing, and potential missed rents.
Totally respect all of the long timers around here and agree you need access to reserves and most owners will probably have a small percentage of tenants missing rents due to Corona virus job impacts.
- Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes6y
I am suspending raising rent until the current economic situation has reversed course.
Some folks will leave if you raise rent on them, I do want to add an unknown risk i.e. new renter into my formula.
My S.F.H homes are paid off but one with economic activity strangled it takes no crystal ball to see what is going to happen.
I have a pre payer getting ready to renew I was going to bump up that number up I will now stay at last year’s level.
- 6yMichael K GallagherBusiness MemberReal Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
@Jill F. We did not have a policy put in place for this type of situation, but have already had similar discussions. We only have one property at the moment so it's a little easier to absorb losses and such at that level, but have already decided that if any governmental relief comes down to us as the owners, we would be passing that along to our tenants.
- Rental Property Investor · Northern NJ · Member since 2019 · 673 posts · 677 votes6y
@Nick Barlow Thanks for the reply. I agree with you, certain jobs must aren't impacted and I see covid blowing over in 4 more. If we're still in a downturn that doesnt scare me as much.
In 2010 2011 I was oblivious to the world around me when I had another GI job. Purchased an SFR back then which worked out great. Now I'm a bit more educated and well off financially. Good luck on your purchase! Hopefully I'll have a few more doors by the end of 2020.
- 6yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Originally posted by @Will Gaston:
Originally posted by @Roy N.:
We have several student rentals as well and have begun fielding calls from students (and parents) who simply think we should release tenants from their leases because schools are closed. I suspect this line of questioning will consume a significant amount of our time over the coming weeks.
Roy, how are you handling these phone calls? I have ~150 students that rent from me as well and am expecting the same as the next rent payment approaches.
Will:
How we are responding depends upon the particular situation.
1) For lease terms ending in April or May (which are not renewing) we are politely saying "no" to any early releases.
2) If the anniversary date is May 01 or June 01 and tenants and the leases are renewing (tenants did not serve notice of termination 3+ months in advance) we are telling them we will revisit the situation once we have a better idea on how prolonged the restrictions will be and whether the Universities fall session is in question. The students are typically away for the summer, so if classes are to resume as per normal in September, there is really no difference. If classes will not be resuming in September, we will have to decide at which point we release the tenants.
3) In a few instances where we would like to carryout renovations on a property, we are negotiating early releases or rent relief during the period we will be carrying out the work (while the tenants are away). Ironically, this is a regular practice of ours - come in during the summer while the students are away and perform a renovation - but tenants are typically oblivious to it.
4) When parents call on behalf of their kids, if the parent is a guarantor we will tell them whether or not their child is current with their obligations. If they are not a guarantor we politely tell them we cannot discuss the lease with them as they are not our tenant.
Looking out longer term, thing are a little more fluid.
1) We have several student houses/units turning over this summer - normally we have all of these relet prior to students leaving for the summer, but traffic is understandably way down. We are preparing ourselves for vacancies and/or a late summer rental rush once the situation is better understood.2) We often assist our student tenants to reduce their rent during the summer months by subletting their houses/units. The last few years we have been using AirBnB in addition to conventional listings. We have yet to decide if this is something we will bother doing this summer as we are anticipating demand to be weak.
- Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes6y
Originally posted by @William C.:
Can someone smart in the room define "over-leveraged". Is it based on LTV or ROI? Seriously trying to take inventory on my portfolio. We avoided a 100% financed fix and flip on narrowest of narrow margins in time for the crash. But, I have a few rental properties, eaxh leveraged at about 70% LTV pre corona. Each with net cash flow of $14,400/year. A class. I could afford to cut rents 40% until I would be cash flow negative. I haven't been concerned about the affects, but then again we don't know there the bottom is.
Were banks leveraging beyond 70-75% on investment properties?
I was too young foo 2008.
There is no hard and fast rule, that when you have LTV you are over-leveraged since every investors' situation is different. The idea of Optimal Capital structure from corporate finance, which asks, at what amount of debt are the benefits the highest and the risks the lowest can help us.
The main benefit of debt in this case is the tax shield. Every dollar of interest you pay is tax deductible (I know this doesn't' hold true for all BP folks but stick with me). That means debt can lower your tax rate, while also letting you buy more assets.
The risks of debt are quantified by the probability and severity of financial distress (for our case). That is basically how volatile are your earnings and what will result from the distress (deferred CapEx, interrupted renovations, missed payments, foreclosure)
In the business world you see this at work in different industries. Utility companies have really high debt ratios (what we would call 70% LTV), because since they provide services that everyone needs, they have low earnings volatility. On the other side of the coin, you have pharmaceuticals companies, who often have negative level of net debt (debt - cash) because if their next break through drug may not get approved and their sales will drop.
Applying this idea to RE, since the loans are secured by real property, we can have high LTV ratios, but should be give some thought to what space we are in when thinking about overall leverage and how fast to pay down debt/how much cash to hold. If we own commercial RE with credit tenants (think major McDonald franchisees) in a niche that has limited supply and high demand, we can keep high LTVs and low cash reserves. If we own a bunch of STRs in the same area our income is volatile so we should seek to have high cash and retire debt pretty aggressively.
Each investor has to figure out their own tax shield and risk of financial distress on their own, but it the optimum LTV is tied to the investor's strategy and goals.
- Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes6y
@Russell Brazil
When it comes to leverage I have been trying to lock in low interest permanent 30 year loans.
I was 14 in 2008. But from the research I've done many people had 5/1 arms. This caused problems..
Woukd you say the percentages of people that have long term fixed loans and arms is different from 2008 from 2020?
Best,
- Rental Property Investor · MA · Member since 2020 · 98 posts · 77 votes6y
Thanks for the post, appreciate it Russell
- Mike
- Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes6y
There's a lot of experience and knowledge n this thread. New investors: take heed and soak it in so it can help guide you through the next one.
- Real Estate Agent · Seattle, WA · Member since 2014 · 87 posts · 39 votes6y
Has anyone thought about how inflation will play into this? If the gov't hands out $1 trillion, that money is being printed and injected into the economy. Devaluation of the dollar - Your purchase power will drop. Interest rates on 30 year loans will begin to creep up as banks try to adjust for inflation.
If you refi today with 30 year loan product, devaluation will erode away at the value of your debt (good thing). Best to refi today and maybe even cash out some if you have W2 income to leverage?
Any mortgage industry professionals have insight on the state of future interest rates?
- 6yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Originally posted by @Peter Tverdov:
I've been saying this on here for 2 years. I have started threads on here asking people about reserves and got crickets.
I hope I don't get banned for tagging them but at what point do higher ups like @Josh Dorkin and @Brandon Turner share blame? You can't go one Instagram post, one podcast, one forum on anything Biggerpockets: BRRR! BRRR! BRRRR! Just BRRRR!
I submitted a video to be on their podcast and didn't get picked. Not really sour grapes but part of it (maybe?) was because I didn't brag about BRRRing to 100 doors. I own 10, boring but they cash flow (for right now) and I have reserves.
I see all these clowns on Instagram with houses the size of my car bragging about BRRRR and just take their online class and you can be successful too! These people are going to get absolutely annihilated in a few months. Majorleague bullcrap artists are all over the internet and suckers everywhere just handing them money. Blows my mind.
Biggerpockets created morale hazard promoting BRRRR so hard and I say it as someone who has done it to an extent, has reserves and I am still uneasy about it all. I cannot imagine the people who own a 105k SFH rental in a low income area and their credit card is the reserve.
Peter - You can't go on one instagram post, one podcast, one forum, one blog post without seeing "reserves" "cash flow" "CASH FLOW" "CASH FLOW".
I'm extremely concerned by this post here. I wonder how loud Josh, Brandon, and I can possibly scream about the importance of investing with appropriate numbers, about the importance of reserves. And how frequently. About the importance of analyzing deals. Josh Dorkin founded this platform and has literally been predicting a bubble since 2013! Brandon has championed our calculators and the importance of analyzing deals for the past 8 years that he has been a part of the community.
I'm so passionate about reserves that I have written literally dozens of blog posts on the subject, written it thousands of times on the forums, answered hundreds of PMs about it, and talk about it for an hour every week on the BiggerPockets Money Show Podcast. that show's entire purpose is to help people who are not financially prepared to invest in real estate and help them build a financial foundation capable of supporting responsible long-term investing. You can link to many of my posts talking about responsible long-term investing in the post found here.
Every month (if not every week) for the past five years, a blog post has talked about a possible recession. Nearly every week we've had trending forum discussions. We've released books on how to BRRRR, yes, and we've also more recently (in mid 2019) released books on "Recession Proof Real estate Investing" and my book, which talks about nothing but building a strong financial foundation capable of sustaining investments.
I think that many investors here on BP are prepared, a few may not be. There's only so many times you can scream from the rooftops about good financial habits, and investing from a position of strength. NO ONE has advocated buying property when one has no job, no income, no credit, and bad debt. I have never seen someone advocating buying without reserves.
It is truly sad to see this type of accusation. I have worked tirelessly for several years, continuing the work of Josh Dorkin, to help our community prepare for both long-term wealth creation and precisely for a recession, which always looms on the horizon.
And frankly, I think that most of our users are reasonably well-capitalized, have long-term debt locked in, have adequate reserves, did invest for cash flow, and will be able to weather the storm and thrive. Most of them have listened to hundreds of hours of podcasts, read books, networked, learned from the last recession.
I'll repeat - calling the investors who feel that they are NOT well capitalized and overleveraged! Where are you? Tell me your story.
If there is a sizable minority of BP investors who are overleveraged and in over their skis, not invested for cash flow, and without reserves, then I have failed, and BP has failed. I don't know what more we could have done. But, I bet that's not true, in the slightest. I bet our community is as well prepared as a group as is possible to be. I know I am. I know that the other folks on this thread largely are.
Please, show me the masses who are unprepared, and I'll relent.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes6y
Originally posted by @Scott Trench:
Originally posted by @Peter Tverdov:
I've been saying this on here for 2 years. I have started threads on here asking people about reserves and got crickets.
I hope I don't get banned for tagging them but at what point do higher ups like @Josh Dorkin and @Brandon Turner share blame? You can't go one Instagram post, one podcast, one forum on anything Biggerpockets: BRRR! BRRR! BRRRR! Just BRRRR!
I submitted a video to be on their podcast and didn't get picked. Not really sour grapes but part of it (maybe?) was because I didn't brag about BRRRing to 100 doors. I own 10, boring but they cash flow (for right now) and I have reserves.
I see all these clowns on Instagram with houses the size of my car bragging about BRRRR and just take their online class and you can be successful too! These people are going to get absolutely annihilated in a few months. Majorleague bullcrap artists are all over the internet and suckers everywhere just handing them money. Blows my mind.
Biggerpockets created morale hazard promoting BRRRR so hard and I say it as someone who has done it to an extent, has reserves and I am still uneasy about it all. I cannot imagine the people who own a 105k SFH rental in a low income area and their credit card is the reserve.
Peter - You can't go on one instagram post, one podcast, one forum, one blog post without seeing "reserves" "cash flow" "CASH FLOW" "CASH FLOW".
I'm extremely concerned by this post here. I wonder how loud Josh, Brandon, and I can possibly scream about the importance of investing with appropriate numbers, about the importance of reserves. And how frequently. About the importance of analyzing deals. Josh Dorkin founded this platform and has literally been predicting a bubble since 2013! Brandon has championed our calculators and the importance of analyzing deals for the past 8 years that he has been a part of the community.
I'm so passionate about reserves that I have written literally dozens of blog posts on the subject, written it thousands of times on the forums, answered hundreds of PMs about it, and talk about it for an hour every week on the BiggerPockets Money Show Podcast. that show's entire purpose is to help people who are not financially prepared to invest in real estate and help them build a financial foundation capable of supporting responsible long-term investing. You can link to many of my posts talking about responsible long-term investing in the post found here.
Every month (if not every week) for the past five years, a blog post has talked about a possible recession. Nearly every week we've had trending forum discussions. We've released books on how to BRRRR, yes, and we've also more recently (in mid 2019) released books on "Recession Proof Real estate Investing" and my book, which talks about nothing but building a strong financial foundation capable of sustaining investments.
I think that many investors here on BP are prepared, a few may not be. There's only so many times you can scream from the rooftops about good financial habits, and investing from a position of strength. NO ONE has advocated buying property when one has no job, no income, no credit, and bad debt. I have never seen someone advocating buying without reserves.
It is truly sad to see this type of accusation. I have worked tirelessly for several years, continuing the work of Josh Dorkin, to help our community prepare for both long-term wealth creation and precisely for a recession, which always looms on the horizon.
And frankly, I think that most of our users are reasonably well-capitalized, have long-term debt locked in, have adequate reserves, did invest for cash flow, and will be able to weather the storm and thrive. Most of them have listened to hundreds of hours of podcasts, read books, networked, learned from the last recession.
I'll repeat - calling the investors who feel that they are NOT well capitalized and overleveraged! Where are you? Tell me your story.
If there is a sizable minority of BP investors who are overleveraged and in over their skis, not invested for cash flow, and without reserves, then I have failed, and BP has failed. I don't know what more we could have done. But, I bet that's not true, in the slightest. I bet our community is as well prepared as a group as is possible to be. I know I am. I know that the other folks on this thread largely are.
Please, show me the masses who are unprepared, and I'll relent.
Scott, I definitely applaud you and The @Mindy Jensen for your constant emphasizing, both on the site and on the podcast of the need for reserves and your conservative investing approach. In fact, I think you and Mindy are even more conservative than me and @Jay Hinrichs.
I love leverage, and I think leverage is exactly what makes real estate the great investment that it is. It was either @Joe Splitrock or @JD Martin earlier in the thread though that pointed out the cash out refinances on the BRRRRs is just equity stripping, and that equity stripping is what ups peoples leverage, and by definition, ups their risk.
#1 reason small businesses fail is not being properly capitalized. 90% failure rate. 87% failure rate for real estate agents, and I believe thats due to not being properly capitalized. #1 reason we will see a thinning of investors over the next few months, is not being properly capitalized.
District Invest Group545 Reviews
Join the conversationCreate a free account to reply, vote on answers and follow this thread.