All Forum Posts by: Brian Ewell

@Brian Ewell everyone seems to think there is some law that states you can't get more than 4 loans (or 6 or 8 or whatever the FHA mandate is now). This is simply not true. Yes, there is a limit to how many FHA backed loans you can get, but there is no limit to conventional loans. Yes, you will pay more in interest and you will have to put more money down for conventional loans, but that is the price we pay as investors.

If your lender doesn't do conventional loans on investment properties, then you need to find a new lender.  

As mentioned by others, you can also start looking at blanket loans.  These are considered commercial loans and again you will be paying more interest, but this is the way you will eventually want to go.

You really need to find a lender that can do all of this for you in such a way that you are continually buying a new property with an FHA loan and once that investment is seasoned (6 months to a year depending on your lender and a lot of other factors) you move it to your blanket loan and you are then freed up to buy your next investment with an FHA loan again.

Does this make sense?  

@Brian Ewell One pretty common strategy is filling up those loans in the conventional bucket and then refi into a commercial loan (blanket loan) where you can package 4-8 properties into one loan. Then rinse and repeat. Colony American Capital has a couple programs both on the individual property side and blanket loan program.  

@Brian Ewell Why pay more for the same return?

Because you don't know what you're investing in. You are only hedging your bets against the stock market. You can find similar returns in any market if you take the time to learn the business. People do it in every market. In Real Estate rarely are the deals out on the vine for you to easily pluck. You have to learn your market, farm it, find the opportunity and create a deal. This is what turn-key providers are doing. They've manufactured a deal and then look for outside investors to fund it and then take their cut, I assure you. Not to say that's a bad thing. They are providing a service. But by electing to take their offering you are outsourcing the expertise to a 3rd party. So you fundamentally don't really know what you're investing in. You could invest in a REIT for similar returns. Or ETFs or Vanguard index funds for that matter.

I only say this to caution you, and others who are considering their investments choices (myself included), that investing with a turn-key solution is not really being a real estate investor (in my opinion). You have your money in real estate, agreed, but you are treating it like a stock certificate. So only if asset class diversification is your goal then it may have merit. It's a value and risk judgement based on your situation and goals. Just don't fool yourself into thinking you know real estate because real estate is a location specific business. And it's very difficult to really know a market unless you live and/or spend a lot of time in the area.

And I suspect if you were to be really honest with yourself and really know your goals... you want to create wealth with these investments and "have enough passive rental income to be able to retire in 10 years" (that's from your profile... kind of cheating...). You don't want to just stash your cash somewhere as a small hedge over inflation or against the stock market. I suspect you want to invest in real estate to create wealth and financial freedom. If that's the case, passively investing in turn-key real estate, mutual funds, REITs, or any other actively managed asset class will take many, many years to create wealth. There's no shame in this by the way. Just make sure your actions are in line with your true goals.

If you really want to create wealth and attain financial freedom in a relatively short amount of time with real estate (5-15 years) then spend the time and energy it takes to become a real estate investor that learns the market you are in, master it, and dominate it.

Those are choice words... what do others think?

Best of luck in your investments. My goals happen to be very much in line with yours as it happens and this is as much advice to myself as it is to you. This is why a forum like bp is so valuable.

Cheers!

I vote Detroit... oh sorry wasn't on the list.

So seriously, @Brian Ewell why invest out of state at all? Someone is making money with RE in every market. Unless you're part of a hedge fund or a really big time investor why go outside of the market you live in and know the best, especially if you want to be hands on?

What's the argument for going so far afield if you're just investing for yourself and not as part of a REIT or an institution? I don't know your market at all but based on your profile goals and background I don't see the driver for leaving your market. Sounds like you have a few properties, have learned some lessons, but aren't doing horribly so far. I suggest don't learn another lesson the hard way by branching out beyond your experience level and scope of understanding. Find great deals in your town, get them on good terms, enjoy what cash flow they generate, and wait for them to double with appreciation in the next 10-20 years. That's a solid plan that can work in most any market.

John Schaub has a book on Amazon called "Building Wealth One House at a Time". I think its a very good book for someone in your situation. I've attended a few of his courses. It's really good, common sense advice without the hype or the pitch. And that would be his advice to you.

Best Wishes on your investing and feel free to reach out to me to talk shop.

Paul