Investor in Dallas/Fort Worth/Arlington area

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Investor in Dallas/Fort Worth/Arlington area

Justin Johnson
Member since 2020 · 1 post · 0 votes

Hello. I'm an investor in the DFW (Texas) area.   I've done several deals in the past; I'd like to use BiggerPockets to help me optimize and improve what I'm doing.

I've always done either cash deals or traditional financing for my rehabs and rentals. I've done 5 single-family rehabs and 3 condo rehabs (probably not going to bother with condos anymore). I'm currently holding 0 properties tho.   I'm trying to decide if I want to start using hard money, or continue with cash deals, or do part hard money/part my own money. 

I really HATE the idea of the HML interest rates, but it's possible that's just me being a cheapskate, I don't know. I have enough $ so that HML is not a requirement for my deals; I'm just trying to figure out what the optimal way would be in my situation. My capital is 100% invested in REITS and various stocks, funds, etc. So doing a RE deal with my own $ would mean cashing out of some other things that Id really rather not have to do. Hence my temptation to use HML. Comments appreciated.

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  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    6y

    I've used hard money and am a hard money loan officer so here's what I would do: stop hating rates. I doubt you love paying your painter, or your electrician or your roofer their rates as well, but it's part of the business. Figure out the costs objectively. Figure out your opportunity costs. It may make sense for you to use your own money and do all the work yourself. It may also make more sense for you to use none of your money and do none of the work yourself because perhaps it gives you the opportunity to do four properties instead of one and make more money that way. Just figure out what it means to your profits and decide if that works for you.

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  • Jeff Cichocki
    Lender · All 50 States · Member since 2015 · 401 posts · 250 votes
    6y

    @Justin Johnson, I agree with @Odie Ayaga. The best thing you can do to help yourself figure out whether or not HM is a good route for you is to run the numbers; compare the results. What will it cost you to pull those funds out of your other investments to do this? What will it cost to use HM? If you use HM, and you make money in the deal, when you add that profit with the profit from leaving your other investments in place better or worse?

    HM, PM and banks all have their places in our investments. Typically, the highest yields from investments happen when you leverage someone else's money into the deal. Typically, the highest yield on your time, is to hire someone else to do the work while you do something else.

    Only you can do the math and comparisons for your situation. Anything that people tell you here on BP is just an opinion. Others opinions may or may not be good in your situation. And, every property is a new situation. It may makes sense in one deal to use your own cash and to use someone else's money in a different deal.

    Good luck. I hope this helps.

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