How Has Your View on Financing Changed Over Time?

Question

Did your approach to funding deals change as you gained experience? What shifted?

Jules Aton · Answer

Initially I did 15 year, no-doc loans for properties that were little more than shells. As I got more credit, cash and a solid W2 under my belt I attempted to put as little money down as possible for conventional loans so I could build my portfolio. In 2020 I took out a 15 year primary home mortgage because the rates were so low and plan to hold until I pay it off or croak.  Most recently I paid cash for two properties because I have the money and rates are so high. TBH if rates go low again I will finance but what a pleasure it is to make a cash offer, close quickly and not have to deal with providing any documentation.

David Krulac · Answer

When I first started investing, having no money and a low paying job, my mantra was to borrow as much as I can for as long as I can.  First 11 properties were 100% financed one way or another.  Then when the biggest expense was paying mortgages, I decided to sell some properties and aggressively paid off mortgages, and at one point only had 1 mortgage.  Then low interest rates happened and I decided to load up on more debt, as they were practically giving money away.  I regretted not financing/refinancing everything when interest rates were 2% or 3%, as I don't expect to see those rates again.  This year bought some properties at 4.25%, to 4.75% fixed.