All Forum Posts by: Scott E.

Being a good real estate agent is a full time job, and one that carries a lot of responsibility and risk.

Being a good general contractor is a full time job, and one that carries a lot of responsibility and risk.

I don't know of any successful realtor/GC hybrids.

This is a good strategy in concept. But the 2 biggest issues I see are...

1. You're going to have a hard time finding an entry level home that cashflows $1,000 per month or more. Even if you're talking about buying a fourplex, it'll be hard to find a property that cash flows half that right now with where interest rates are at.

2. Even though this strategy feels right today, 10 years is a long time. It's going to take a lot to stay disciplined with putting all of your extra cash every month into this house for that long. And who knows what your mindset will be in 10 years. You might move out of state. You might hit the lottery. You might change your investment objectives. You might have a really bad experience with a tenant and want out of the rental business. You might get divorced. You get my point... it's really hard to plan that far ahead.

Again I want to reiterate that in concept this is a great financial plan. And it very well may work out for you. But if I were in your shoes I'd take this long term plan and break it into shorter term goals (what do you want to achieve in the next 2-3 years?)

If you come to the forums with a specific deal and share your underwriting, you'll get plenty of great feedback.

1. Yes this is definitely something worth doing. Or in other words, using a HELOC to buy an investment property is a great plan. The biggest downside right now is that rates are very high. HELOCs are typically tied to the WSJ prime rate. Which is 8.25% today.

2. Yes if you can pay down the HELOC you then can reuse those funds for the next property. The draw period on HELOC's is typically 10 years. Meaning you can continue this strategy for 10 years before your HELOC is locked and you go into a repayment period.

Market goals for what? Are you looking do flip, build specs, buy long term rentals, do short term rentals?

I think your spreadsheet is cut off because I can't see what markets these are. But my favorite for all of the above investing strategies is South Scottsdale. Been doing deals around here for 12 years. If I had to guess, South Scottsdale is the 3rd column on your sheet?

You say: My minimum ROI goal is $12,000 ($1,000/month).

This is not how you calculate ROI. You need to reframe your thinking which will help you when you are looking at and underwriting these deals. Here is a better way of looking at it:

My minimum ROI goal is to earn 15% on $80,000 cash invested ($12,000 per year, $1,000 per month)

Just aiming for a monthly cash flow of $1,000 doesn't paint the entire picture. Making $1,000 per month with $80,000 of your own cash in the deal would be a fantastic return. But making $1,000 per month with $300,000 of your own cash in the deal would be pretty awful.

Your profile says you're in Orange County, so I'm going to take that into account here. I live in an expensive market as well (Scottsdale). The simple answer to your question would be:

-In a market like Scottsdale or Orange County: No there is not much of an advantage for somebody who has $100k in cash available. You need closer to $250k to really start seeing an advantage. Unless you're willing to buy out of state.

-In a market like Detroit, Cleveland, or St Louis: Yes there is quite an advantage for somebody who has $100k in cash available. Whether you want to buy rentals, do BRRRR's, flip. You have options in these cheaper markets.

Do not try to flip a house that is 2,300 miles away from where you live.

My recommendation is you pat yourself on the back for saving up so much at such a young age. Then spend the next 6-12 months getting educated. Read as many real estate books as you can. Listen to as many biggerpockets podcasts you can. Spend more time here on the forums asking questions. Completely immerse yourself in real estate for the next 6-12 months and don't touch your $20k.

Then after you have a foundation of education, pick a strategy that feels right. If you do want to get into fix n flipping, I recommend you move to within 5-10 minutes of the homes you will be flipping (especially when you're first starting out).

But who knows, maybe after you do some more studying (and let the market pick a direction) you might realize you are interested in a completely different strategy.

You make some good points Dan but I have a few counter points...

-The S&P500 lifetime return is not a comparable. The 7.2% indicated above does not account for principal pay down, appreciation, and tax benefits. All of which likely would boost this investments return past the S&P500's lifetime return.

-Syndicators producing 20% returns over recent years also is not a comparable. A donkey could have produced a 20% return over recent years. It is very unlikely we will see similar returns from syndicators over the next several years.

-You're right on a BRRRR done correctly. But as you know, BRRRR's are much more challenging when DSCR interest rates are 8%. I'd imagine very few BRRRR's are happening nowadays where 100% of invested capital can be returned after the refi.

Now... just to be clear, in my post above I didn't realize that he had about $100k of equity in this deal. That totally changes my last post. I still think that if you are returning 7.2% on a single family home (just cash flow alone), then that's probably worth hanging onto (unless the property is in a C neighborhood or worse). But at a 3.6% return, I say sell it.

I've paid as low as $3,000 and as high as $30,000 for architectural services depending on the size of the project.