All Forum Posts by: David Clinton III

The concept is using “leverage” to make more money with less capital. If you buy one property with all your cash, analyze how much income you will make, and then calculate your cash-on-cash return. If you get $1500/month from a $300k investment, you are making 6% return on your money. 

Now do the same analysis and calculation with a loan involved. Maybe you invest $150k, and borrow $150k. Look at your payment etc and calculate your cash on cash return. This will help you see if there is any benefit. It isn’t always a no-brainer. It is always worth running the numbers. 

I’m happy to chat further about your specific situation if you’d like. 

start by networking. Go to as many local meetups as you can, meet people. Anybody you want to learn from, ask if you can buy them lunch or coffee ask lots of questions and listen for ways you can add value to their business.

Also, if the deal is good enough, a local hard money lender would love to be part of the deal. Keep networking and meeting as many local lenders as you can. Getting started, you'll want to be buying lots of coffees and lunches meeting these people.

My advice: do it.

I generally will analyze this situation against other opportunities you can use the same capital for. Consider your costs of sale, and capital gains taxes as well. Can you make more with the net cash from selling than you can from keeping the rentals as-is?  Probably.

I did it. I quit too early and made some huge mistakes afterward. I then found a mentor local to me that helped me dig out of the holes I had dug myself. I went on to do ~150 deals and now I mentor people myself. As with anything, you’ve got to put the work in. If you do, it’ll work. This isn’t an easy way to make money; but it is enjoyable and fulfilling. 

Make sure you are asking for a good sized deposit, and when renovating, use materials that are hard to damage (LVP on the floors, higher sheen with the paint, higher quality faucets, maybe solid doors). It's not about the property, as much as the attributes you can add to it in renovation.

it's a hard balance thinking of selling for short-term capital gains, vs selling later (at a lower price, probably).

If you owe $198k, and sold it for $208k, sounds like you probably didn't have a big capital gain to worry about, though...?

I'm pretty against any negative cash flow... Compare that situation with alternative uses for the same money. If you're going to cash flow negative $500/month, only to build some equity and pay lots of interest.... what else could you put $500 toward every month to accomplish your goals?

As the market has already turned, I'd sell it. Refinancing with current rates will leave your cash flow very low or negative. It's too tight of a deal to be worth the risk, in my opinion.

But your original question is "how to refinance". If you're okay with the negative cash flow, keep calling every lender possible and find out what they need. Your best bet will likely be a local credit union, or small bank, who understands your market better than national outfits ever could.

12% is great. Be sure to vet the operator as well as the deal. I’d rather do a mediocre deal with a stellar operator any day. 

If your Roth is transferred to self-directed, you could still invest in real estate and continue to get the growth tax free. I’d sooner do that than withdraw it.