All Forum Posts by: Cam Schwartz

Hey Saleem. As @Jacob Sherman mentioned, lenders prefer and typically require to be the sole debt on a project (mortgage). If you're keen on buying real estate with little or no money down, you might consider taking out a HML for 80-90% LTC and syndicating the remaining 10-20% equity among investors in your network. Bigger Pockets is a great hub to network with investors. If you find an attractive deal, you should be able to pool capital and perhaps negotiate some 'sweat equity'!

No problem Mario, just sent over. Let me know if you find helpful!

Hi Baltazar. Lenders are going to charge an origination fee and interest rate for each project. You might also see smaller fees at close for legal, title, appraisal, etc. These fees vary by lender and, so long as they are transparent, you should be able to request and identify before formally applying.

Hey Matt, great suggestions from @Chris Seveney and @Jason Wray.

As recommended, holding the cash flows in a high-yield savings account or other low-risk asset until you've accumulated enough cash to buy another property is one way to reinvest. You might also consider maintaining a certain level of cash reserves to handle maintenance/capex as needed.

The general point the author is emphasizing is that to reap the benefits of compounding you must reallocate your cash flows into the same or other cash flowing investments rather than spending them on discretionary expenses.

Hi Adalys, some good recommendations above. Unfortunately it can be difficult to identify legitimate offerings both on the lending and wholesaling side but if you stick to larger more reputable groups you should be in good shape.

As far as requirements, hard money / private money lenders will typically require you to put at least 10% down on the purchase, often more. Their primary responsibility is vetting the applicant's wherewithal to repay the loan so they prefer borrowers with strong credit and consistent income, in addition to some experience completing similar projects. You may also be asked to fund an interest reserve at the time of closing which mitigates default risk for the lender.

Hopefully you find helpful. Feel free to reach out directly with any other questions!

Hi Sean, some great recommendations above. In addition to learning on Bigger Pockets I would recommend the book Rich Dad Poor Dad if you haven't read already. Very quick and simple read that boils down the importance of investing in cash flowing assets such as real estate. Both helpful and effective when getting started! 

Hi Jan. I recently put together two detailed excel profit/cash flow calculators specifically for BRRRR and fix-and-flip investment projects. Happy to share!

Hi Alana, great question.

This largely depends on your long term goals and liquidity profile. If you are looking to quickly build a portfolio then keeping the $70k for other projects may be optimal, especially if you have plenty of cash to cover potential shortfalls with maintenance. If you're content with holding just this property for now then the cash flow + lower rate option may be best.

Hopefully you find helpful!

Eric, you're absolutely correct. Buying with all cash is an excellent strategy, particularly as it relates to security and maximizing profit/cash flow. For example, a vacant rental property purchased with all cash is far less a burden than another with a monthly mortgage payment.

One advantage that leverage does provide is the return on your investment. Used correctly, you can generate far more profit on each dollar invested than with all cash. See the below example for a fix-and-flip:

Purchase: $100

Rehab: $30

ARV: $170

Before carrying costs and commissions, you would generate $40 in profit on $130 invested with all cash (~31% ROI). That same project, with say 85% LTC on the purchase and 100% of rehab funds (85 + 30 = $115 total loan) would generate a profit of say, $30, after paying lender fees. Your $30 profit on a total investment of $25 ($15 down payment + $10 in lender fees) would represent a 120% ROI. Said differently, with all cash you would generate 30 cents of profit for each dollar invested vs $1.20 in profit for each dollar invested with leverage. The key here is to ensure you complete the project on time and on budget.

Regardless, while leverage presents the potential for a greater ROI, there is inherent risk that should be considered before taking out a loan. If you have the cash to buy in full and aren't in a rush to add doors to your portfolio then cash is the safest bet!

Hi Micah. What type of business loans would you be looking to take out?

If you're simply seeking leverage for additional properties you can tap banks and hard money/private money lenders. Otherwise unsecured and specific types of SBA loans may be suitable.