Significant Increase in Posts For Financing...
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
7e investments53 Reviews
Significant Increase in Posts For Financing...
Most Popular Reply
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
2yI think that many investors who have bought property in the last few years are equity rich and cash poor. Now that rates are finally dropping they anticipate there will be buying opportunities and are trying to find cash. I agree that leveraging your primary residence with a HELOC to buy investment properties with tight margins is a great way to lose your house.
43 Replies
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
- 2yGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
I've noticed a number of SF posts and they have been split between 1) I want to tap my existing equity for investing or 2) Need the cash. It seems like most are struggling with how to get cash out while keeping their low primary mortgage.
From my personal experience, we are invested in about 40 MF syndications. Ten of them have had floating rate debt so there has been a lot of discussion about refinancing in those deals. Two of them executed a cash-out refi. One was cash-neutral. Two had a cash-in refi. Three have another year before the loan is due and they are still hoping to refi. Two are being forced to sell at a loss this month.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y"and I think a HELOC doesn't feel like debt the same way as other types of payments."
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
I agree, people need to realize this is just a form of leverage and going at it 100% is ok as long as you have the income to support it. For example if someone has a heloc from 5 years ago at 3% and figure to use that vs. there cash which is liquid and earning them 6% that is ok, but if you are tapping it out at 6% for another property then you are over leveraged and that can get scary.
Banks know the above which is why they have for the most part shutoff lines of credits on investment properties. Of course there are some still doing it but you have to dig hard to find that type of lender.7e investments53 Reviews - Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes2y
I think that many investors who have bought property in the last few years are equity rich and cash poor. Now that rates are finally dropping they anticipate there will be buying opportunities and are trying to find cash. I agree that leveraging your primary residence with a HELOC to buy investment properties with tight margins is a great way to lose your house.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
I'm noticing that also. I'm currently comfortable with the amount of leverage I have. I've received different advice - on one extreme is sell off all your rentals, take the cash and take the capital gains tax hit and invest in stocks/index funds (not from a RE investor, from people I know who are horrified that I have more than one mortgage), which I won't do. Or start paying down my mortgages.
The other side is I can leverage more of that equity on my California properties (cash out refi on or HELOC on primary) to buy more RE or put into other investment that would get a higher return. I'm trying to figure out where on the spectrum I fall with risk and leverage
- 2yKerry BairdPro MemberRental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
@Chris Seveney, I have been interested in HELOCs on investment property for several years, and have a key word search for that specific term. I have nothing to sell, am not doing marketing and not counting threads. That said, I do not notice an uptick in posts about investors wanting HELOCs on investment property.
I also look widely for HELOCs for my own rental portfolio and am not seeing danger signs there, either, defined by me as lenders cutting off lines or no longer extending lines.
I look at big banks and credit unions that BP users say have recently extended a line of credit for rental houses.
On the other hand, I cannot ignore the folks here marketing their DSCR HELOAN products; that number has increased.
The underlying situation (obvious to you and me) is that there were historically low interest rates, followed by inflation and equity creation...and folks who want to tap into the equity without displacing their first mortgage. Lastly, variable HELOCs are harder to obtain than fixed rate DSCR mortgages, due to DTI...which is, in my opinion, a Very Good Thing.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votesWe already saw this, you've been on it as have some others. People have tapped into everything they already have to get some money to spend it frivolously or try to "invest".
Quote from @Chris Seveney:
Has anyone else noticed the increasing number of people on Bigger Pockets requesting financing, especially to tap into the equity of their current portfolio? I’m seeing a significant uptick in this trend, and it's got me thinking—is this a sign of underlying distress in the market?
While equity financing can be a smart move in the right circumstances, the sheer volume of people turning to it lately seems to suggest something deeper might be going on. Are these investors feeling the pinch?
I’m curious to hear what others think.
Now, one of the last few lines is their home equity. We've said it before and we'll say it again-- the chickens will come home to roost. - 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
Nicholas - what advice would you give me to help change this perception that BP has made everyone feel like they’re missing out, even if that means investing in expensive deals?
Is this something I am saying? Dave Meyer? A recent guest? I don’t do this. I buy slowly and consistently, from a position of financial strength.
I am, and BP is, certainly a proponent of real estate investing, but I am also trying to establish us as a place for sober long term thinking. I have published multiple warnings of the market, and have preached about investing from a position of financial strength for 550 BP Money episodes.
Clearly, however, this is not coming through and I am failing if you and others feel this way.What can I do to change this? Should I make changes in the org? To our content? To our hosts? To our books? Should I show up every week and talk about where I think the pain is coming (multifamily, STR, etc)?
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Scott Trench:
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
Nicholas - what advice would you give me to help change this perception that BP has made everyone feel like they’re missing out, even if that means investing in expensive deals?
Is this something I am saying? Dave Meyer? A recent guest? I don’t do this. I buy slowly and consistently, from a position of financial strength.
I am, and BP is, certainly a proponent of real estate investing, but I am also trying to establish us as a place for sober long term thinking. I have published multiple warnings of the market, and have preached about investing from a position of financial strength for 550 BP Money episodes.
Clearly, however, this is not coming through and I am failing if you and others feel this way.What can I do to change this? Should I make changes in the org? To our content? To our hosts? To our books? Should I show up every week and talk about where I think the pain is coming (multifamily, STR, etc)?
The seed was already planted a long time ago, you'll have to delete the history and start anew. I mean material as recently as late 2022 was totally off-base-- the real estate rookie bootcamp, you had porfer Morby on here, the Carl twins that promote STR as recession proof, the list goes on. The changes you've made in the last 3-6 months will have to undo a lot of the previous notions.
It'd be like going against your own wind. Those previous episodes, etc., definitely put people in a state of FOMO but that's really upon the individual and their discipline. I wouldn't say that's all BP, but BP definitely contributed to it.
The changes you've made and are continuing to make won't show up till 2026. That's not to discourage you, but encourage you.
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
agreed, I think you personally are doing a great job. your message of slow and steady is clear in the BP money podcast, it was clear in your conversation with Dave Meyer, etc.
when I say 'BP' i'm using that as shorthand to refer to the entire ecosystem - the forums, 2016 webinar Brandon Turner, the whole thing. so i just worry about new investors who haven't internalized (yet?) that the market has changed, and I'm in the forums trying to help set (reset?) their expectations.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @Scott Trench:
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
Nicholas - what advice would you give me to help change this perception that BP has made everyone feel like they’re missing out, even if that means investing in expensive deals?
Is this something I am saying? Dave Meyer? A recent guest? I don’t do this. I buy slowly and consistently, from a position of financial strength.
I am, and BP is, certainly a proponent of real estate investing, but I am also trying to establish us as a place for sober long term thinking. I have published multiple warnings of the market, and have preached about investing from a position of financial strength for 550 BP Money episodes.
Clearly, however, this is not coming through and I am failing if you and others feel this way.What can I do to change this? Should I make changes in the org? To our content? To our hosts? To our books? Should I show up every week and talk about where I think the pain is coming (multifamily, STR, etc)?
I guess I'm one of the people who don't see it that way. People see and hear what they want to hear. If someone shows up here looking for instant riches, they are going to find it no matter what saner voices say because they are going to ignore any information that rebuts or contradicts the narrative they already have in their head. For example, BP has been pretty consistently anti-guru for all the years I've been here, yet people still come in here to post about this or that guru or how they lost all their money. It's not that they didn't have access to the info that told them to save their money, it's that they ignored it.
I agree that posts tend to trend, depending on the market and other forces, but that doesn't mean it's because of any promotion by BP. For every podcast or blog on Sub to I could show an equal number or greater of "slow and steady". People ignore that for the same reasons they ignore the odds on playing the lottery - they want lots of money and they want it now.
Skyline Properties - Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes2y
I am not one to use a HELOC on my primary to invest . Risking my primary is out of the question . I know those that have done it , and 2 out of 5 have had problems when tenants didnt pay during covid . They both are still playing catch up . One of the five got in and out quick and made some decent money , the last two are doing OK .
Leverage can be a great thing but its a calculated risk , and a lot of people put too much faith on the upside and little consideration for the downside .
- 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Scott Trench
I do not look back so I won’t comment on that.
I try and provide feedback that is typically contrary to popular opinion because most of the people here on BP are newer and do not have the experience that others have - so when I see people telling others to do X or Y which has significant risk because they thinks it’s easy - most do not know the skills of the person on the other side of the post and sometimes it’s better to err on the side of caution or atleast let everyone know and be aware of the risks.
What I would tell anyone buying real estate today is expect to hold it 5 years before considering selling it if you expect to make any money on it.
7e investments53 Reviews - Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes2y
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
- Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes2y
@Chris Seveney I will speak to this as I am one of those people. I am not the typical person you hear from on here who does the BRRR. I sold a business and took that money and bought houses back around 2011 and a few years ago 1031'd those into small multi unit properties with big value add that we have completed and out portfolio value has grown significantly. We are actively looking for good new value add opportunities. I thought I had found one last month but during inspections we found major foundation issues and canceled. During this deal we were working on financing. We don't have a huge cash pile, but we own most of our RE free and clear. Our way to buy the property at the lowest rate was to finance the property that we were buying at only a 50% LTV and do a 50% LTV loan on another property. With such low LTV loans we get a very good rate. We were going to buy the new property with 105% debt this way. After 60 days it was still going to cash flow positive. For us, even with doing something like this it would still leave us with a super low LTV for our portfolio (below 15%). For us this is how we plan to finance those deals that we find that are great deals. I expect more great deals to be coming up and I want to able to have a way to do them. We will not be like many you hear on here that are leveraging everything up at 80% plus. For us we want to stop at around 30% LTV. We like the safety and security and less work of the smaller portfolio with low risk. It makes sleeping at night no problem.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesThe Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010 by Thomas J. Stanley (Author), William D. Danko (Author)
Quote from @Account Closed:
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
It’s people who live a fairly conservative lifestyle and while they own mundane type businesses or work professional type jobs (or high paying blue collar jobs) put aside a good amount of income for investment. They buy homes in upper middle class to lower upper class neighborhoods which represent solid appreciation potential and reasonable upkeep/taxes/insurance expenses. So you have two people living in houses side by side, both with annual incomes of say $250k. One has debts totally $1.8 million including maxed out cc at 19%; with their only asset being a $125,000 401k and $10,000 in “emergency” savings. The “millionaire” living next door owns his $850,000 house free and clear, his only debt is paid off monthly when he pays his cc bill, and his net worth is 6 times his annual income not including his home. - Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2yA great book and one of my top 3 when anyone asks about recommended reading.
Quote from @Don Konipol:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010 by Thomas J. Stanley (Author), William D. Danko (Author)Quote from @Account Closed:
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
It’s people who live a fairly conservative lifestyle and while they own mundane type businesses or work professional type jobs (or high paying blue collar jobs) put aside a good amount of income for investment. They buy homes in upper middle class to lower upper class neighborhoods which represent solid appreciation potential and reasonable upkeep/taxes/insurance expenses. So you have two people living in houses side by side, both with annual incomes of say $250k. One has debts totally $1.8 million including maxed out cc at 19%; with their only asset being a $125,000 401k and $10,000 in “emergency” savings. The “millionaire” living next door owns his $850,000 house free and clear, his only debt is paid off monthly when he pays his cc bill, and his net worth is 6 times his annual income not including his home.Skyline Properties - Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes2ySounds like the whole separate website is needed MNDPockets which is a totally separate paradigm from buy 40 out of state rentals in Cleveland to replace your W2.
Quote from @Don Konipol:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010 by Thomas J. Stanley (Author), William D. Danko (Author)Quote from @Account Closed:
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
It’s people who live a fairly conservative lifestyle and while they own mundane type businesses or work professional type jobs (or high paying blue collar jobs) put aside a good amount of income for investment. They buy homes in upper middle class to lower upper class neighborhoods which represent solid appreciation potential and reasonable upkeep/taxes/insurance expenses. So you have two people living in houses side by side, both with annual incomes of say $250k. One has debts totally $1.8 million including maxed out cc at 19%; with their only asset being a $125,000 401k and $10,000 in “emergency” savings. The “millionaire” living next door owns his $850,000 house free and clear, his only debt is paid off monthly when he pays his cc bill, and his net worth is 6 times his annual income not including his home. - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Account Closed:
Sounds like the whole separate website is needed MNDPockets which is a totally separate paradigm from buy 40 out of state rentals in Cleveland to replace your W2.Quote from @Don Konipol:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010 by Thomas J. Stanley (Author), William D. Danko (Author)Quote from @Account Closed:
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
It’s people who live a fairly conservative lifestyle and while they own mundane type businesses or work professional type jobs (or high paying blue collar jobs) put aside a good amount of income for investment. They buy homes in upper middle class to lower upper class neighborhoods which represent solid appreciation potential and reasonable upkeep/taxes/insurance expenses. So you have two people living in houses side by side, both with annual incomes of say $250k. One has debts totally $1.8 million including maxed out cc at 19%; with their only asset being a $125,000 401k and $10,000 in “emergency” savings. The “millionaire” living next door owns his $850,000 house free and clear, his only debt is paid off monthly when he pays his cc bill, and his net worth is 6 times his annual income not including his home.Do not forget columbus, the greatest investment to ever be made.
In all seriousness, I posted this because people should realize, there is smart leverage and bad leverage. If you are leveraging to pay off other debts etc, that is bad leverage. If you have equity in a property and are having cash flow issues, sell the property as rarely do those issues not go away.
Also seeing a lot of people who are seeking 100% financing because a guru says it can be done. When rates are 3% and prices appreciating, its risky but probably can get a way with it, today with rates 5%+ and appreciation stabilizing back to norms, this is an AWFUL idea for most people.
7e investments53 Reviews - 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Brian Kloft:
@Chris Seveney I will speak to this as I am one of those people. I am not the typical person you hear from on here who does the BRRR. I sold a business and took that money and bought houses back around 2011 and a few years ago 1031'd those into small multi unit properties with big value add that we have completed and out portfolio value has grown significantly. We are actively looking for good new value add opportunities. I thought I had found one last month but during inspections we found major foundation issues and canceled. During this deal we were working on financing. We don't have a huge cash pile, but we own most of our RE free and clear. Our way to buy the property at the lowest rate was to finance the property that we were buying at only a 50% LTV and do a 50% LTV loan on another property. With such low LTV loans we get a very good rate. We were going to buy the new property with 105% debt this way. After 60 days it was still going to cash flow positive. For us, even with doing something like this it would still leave us with a super low LTV for our portfolio (below 15%). For us this is how we plan to finance those deals that we find that are great deals. I expect more great deals to be coming up and I want to able to have a way to do them. We will not be like many you hear on here that are leveraging everything up at 80% plus. For us we want to stop at around 30% LTV. We like the safety and security and less work of the smaller portfolio with low risk. It makes sleeping at night no problem.
your the exception not the rule.. As @Mike Dymski often comments on PRUDENT debt and thats what you have congrats.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Chris Seveney:
Quote from @Account Closed:
Sounds like the whole separate website is needed MNDPockets which is a totally separate paradigm from buy 40 out of state rentals in Cleveland to replace your W2.Quote from @Don Konipol:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy Paperback – November 16, 2010 by Thomas J. Stanley (Author), William D. Danko (Author)Quote from @Account Closed:
Quote from @Scott Trench:
Thank you guys! It is good to hear that the changes are starting to show up to the point where you notice them, and it makes sense that we have to sit on the current trajectory for some time to reinforce to folks what the core values here are.
We are aligning around the concept of “The Millionaire Next Door” as the type of person we speak to and we hope that you call out any content that strays too far from this message.
I think that we are making, and have made, big changes to get back to this core message, but understand that it will take time to get there. Until then, I understand that I will continue to get this feedback. It doesn’t matter if I talked about this for the past 5 years on BP Money, if I let other parts of our content let some of the hype in. It doesn’t matter the ratio of “slow and steady” stories to “home runs” on the real estate podcast. BiggerPockets needs to aspire to perfection in every single piece of content reflecting a “rational optimism” about real estate investing - we believe in it’s power, and fear near-term volatility.
I just hope that some of you, our most prominent forum members, can provide actionable advice as part of that feedback, or just let me know if the frustrations are from things done in 2023, 2022, or before, or are present-day outputs of BP.
I’ll bear the frustration for the former, knowing it is venting/frustration earned from years past, and I’ll consider feedback on the latter as actionable to inform present-day decision-making.
How would you define this millionaire next door. Sounds like someone with a W2 in engineering with a 401k a paid off primary and 1-2 rental houses nearby. Just my guess.
It’s people who live a fairly conservative lifestyle and while they own mundane type businesses or work professional type jobs (or high paying blue collar jobs) put aside a good amount of income for investment. They buy homes in upper middle class to lower upper class neighborhoods which represent solid appreciation potential and reasonable upkeep/taxes/insurance expenses. So you have two people living in houses side by side, both with annual incomes of say $250k. One has debts totally $1.8 million including maxed out cc at 19%; with their only asset being a $125,000 401k and $10,000 in “emergency” savings. The “millionaire” living next door owns his $850,000 house free and clear, his only debt is paid off monthly when he pays his cc bill, and his net worth is 6 times his annual income not including his home.Do not forget columbus, the greatest investment to ever be made.
In all seriousness, I posted this because people should realize, there is smart leverage and bad leverage. If you are leveraging to pay off other debts etc, that is bad leverage. If you have equity in a property and are having cash flow issues, sell the property as rarely do those issues not go away.
Also seeing a lot of people who are seeking 100% financing because a guru says it can be done. When rates are 3% and prices appreciating, its risky but probably can get a way with it, today with rates 5%+ and appreciation stabilizing back to norms, this is an AWFUL idea for most people.
We all have short memories or those that are newer simply dont know and they dont read the fine print of their mortgage docs.. HELOC's can get frozen and called you always run that risk . Not saying it will happen but it happened in Mass during the GFC.. Their is risk and like many who posted to me personally my personal homes are off limits to investment debt. - 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @V.G Jason:
Quote from @Scott Trench:
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
Nicholas - what advice would you give me to help change this perception that BP has made everyone feel like they’re missing out, even if that means investing in expensive deals?
Is this something I am saying? Dave Meyer? A recent guest? I don’t do this. I buy slowly and consistently, from a position of financial strength.
I am, and BP is, certainly a proponent of real estate investing, but I am also trying to establish us as a place for sober long term thinking. I have published multiple warnings of the market, and have preached about investing from a position of financial strength for 550 BP Money episodes.
Clearly, however, this is not coming through and I am failing if you and others feel this way.What can I do to change this? Should I make changes in the org? To our content? To our hosts? To our books? Should I show up every week and talk about where I think the pain is coming (multifamily, STR, etc)?
The seed was already planted a long time ago, you'll have to delete the history and start anew. I mean material as recently as late 2022 was totally off-base-- the real estate rookie bootcamp, you had porfer Morby on here, the Carl twins that promote STR as recession proof, the list goes on. The changes you've made in the last 3-6 months will have to undo a lot of the previous notions.
It'd be like going against your own wind. Those previous episodes, etc., definitely put people in a state of FOMO but that's really upon the individual and their discipline. I wouldn't say that's all BP, but BP definitely contributed to it.
The changes you've made and are continuing to make won't show up till 2026. That's not to discourage you, but encourage you.
ya I was wondering what happened to the Carls they were big contributors had a book presented at BP con etc etc.. do you think this is a reflection on how their market has gone or deals not working as well ?? or just made so much money dont really need to be active on BP anymore ?? - 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Refi til you die! Haha, not quite but I've bought 14 properties from cash out refis. I've scaled up to 29 SFR by recycling equity in my properties to scale up to buy more properties and increase my cash flow without using my own $ to buy. But there's obviously a risk. I'm ok taking a little risk in RE and the stock market. I'd rather put my money to work vs sitting in savings doing nothing for me. And rather put some of my equity to work vs sitting there doing nothing for me as well.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Jay Hinrichs:
Quote from @V.G Jason:
Quote from @Scott Trench:
Quote from @Nicholas L.:
definitely seeing these posts. a lot of folks saying they're going to buy using a HELOC for the down payment and some other type of financing for the rest.
is it distress? maybe - i think it's also probably just a reflection of the increase in home prices. additional equity allows for, for example, that HELOC - and I think a HELOC doesn't feel like debt the same way as other types of payments.
and BP has made everyone feel like they're missing out if they're not buying "deals," no matter how expensive.
Nicholas - what advice would you give me to help change this perception that BP has made everyone feel like they’re missing out, even if that means investing in expensive deals?
Is this something I am saying? Dave Meyer? A recent guest? I don’t do this. I buy slowly and consistently, from a position of financial strength.
I am, and BP is, certainly a proponent of real estate investing, but I am also trying to establish us as a place for sober long term thinking. I have published multiple warnings of the market, and have preached about investing from a position of financial strength for 550 BP Money episodes.
Clearly, however, this is not coming through and I am failing if you and others feel this way.What can I do to change this? Should I make changes in the org? To our content? To our hosts? To our books? Should I show up every week and talk about where I think the pain is coming (multifamily, STR, etc)?
The seed was already planted a long time ago, you'll have to delete the history and start anew. I mean material as recently as late 2022 was totally off-base-- the real estate rookie bootcamp, you had porfer Morby on here, the Carl twins that promote STR as recession proof, the list goes on. The changes you've made in the last 3-6 months will have to undo a lot of the previous notions.
It'd be like going against your own wind. Those previous episodes, etc., definitely put people in a state of FOMO but that's really upon the individual and their discipline. I wouldn't say that's all BP, but BP definitely contributed to it.
The changes you've made and are continuing to make won't show up till 2026. That's not to discourage you, but encourage you.
ya I was wondering what happened to the Carls they were big contributors had a book presented at BP con etc etc.. do you think this is a reflection on how their market has gone or deals not working as well ?? or just made so much money dont really need to be active on BP anymore ??The former, for sure. They caught folks on the run up, but believed it was sustainable probably themselves. It's not. Highs are highs for a reason.
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