All Forum Posts by: Denver McClure

@Brian G. It depends on the brokerage you invest with. A good comparison can be found at Interactive Brokers. Usually I see max loan % between 25-50% of your portfolio. I would note that if you hold crypto in your Taxable Account, brokerages usually don't let you borrow against that portion. 

Theoretically, you or an advisor could set up an account that meets your risk profile and goals, but creates dividends and interest that outweigh the interest rate of the loan. For example, if your portfolio generates 4% in yearly income, and your Margin Loan interest rate is 2%, then you achieve a positive margin of 2%. 

Hey @Jack Synesael, if you have a taxable brokerage account, you could utilize a Margin loan to get cash for another investment property. These rates are usually a lot cheaper than a HELOC depending on your brokerage. I've used a Margin loan before to fully fund an Airbnb flip without using any of my own cash.

Hey @Ami Son, glad to see fellow veterans investing in RE! Before going the hard money route, I would consider leveraging your Individual Taxable brokerage accounts first. If you or your boyfriend have taxable investment accounts, you could utilize a Margin loan (sometimes called line of credit) to borrow against your account value. The loan rates are much cheaper than hard money lenders, and are more flexible on paying it back. It's a strategy I've used before on a flip, and one that I build for my clients. Feel free to reach out if you want me to explain it in depth. 

Hey @Priya Gohil, in addition to the other recommendations, I'd look into using a Margin line of credit, sometimes called Margin loan. You can leverage your Individual or Joint Taxable account to borrow cash at a low interest rate, and utilize it for a down payment on another rental property. It's a strategy I've used myself for flipping an Airbnb, and one that I build for my clients. Feel free to reach out if you want me to explain it in detail! 

Hey @Skip Bell, I use HNG CPAs, they have been helping with my real estate taxes for years. They also have a few affiliated companies that help with 1031 exchanges, investment advising, mortgages, insurance, etc. 

Hey @Matthew Fields, I would recommend an Individual Taxable account or Joint Taxable if married. You can invest your cash flow from your rental into that account and allow it to grow even further. Typically you'd want to invest into low cost ETFs, bonds, or REITS that may provide some stability along with interest/dividends. The added benefit of a Taxable account is your ability to use a Margin Loan (sometimes called line of credit) to borrow cash (without selling your ETFs/Bonds/REITS) for more rental properties or renovations. Just make sure you compare the cost of Margin loans between brokerages. This is a strategy I've used myself for flips, and one that I build for clients. 

Hey @Lance Bradshaw, glad to see you're investing in Wichita Falls, I went to college there at MSU! I don't have any bridge loan recommendations, but I would suggest utilizing a Margin Loan if you have an Individual or Joint Taxable account. It's a common strategy I've utilized myself and one that I build for clients. You'll be able to get cash within a very short timeline depending on your brokerage. 

Hey @Brandon Craig! Do you happen to have an Individual or Joint taxable account? If so you can use a Margin Loan against your portfolio value to borrow cash at a low interest rate. I personally use Interactive Brokers for myself and my clients who are looking to acquire rental properties without holding so much cash. If you hold cash, you get crushed by inflation. If you invest your cash into a taxable account, your portfolio should ideally grow and produce dividends/interest. You'll just use a Margin Loan when you want to acquire a new deal or complete renovations.

@Scott Trench Adding to your views on crypto, I'd suggest Web3 and DeFi as reasons to invest in the asset class. Personally, and as an Investment Advisor, I stick to various index funds over individual stocks due to the risk and historical performance between passive indexing and active trading. However, in crypto you could assume that a blockchain that supports Web3, DeFi, and is an industry disruptor would be a viable investment for a small allocation of your portfolio. I'd rather take the volatility and speculation with one crypto over one stock. An example that comes to mind is the Helium blockchain, although there are several more projects that fit that criteria. 

The only category I think your missing is leverage. I believe this is a common category people don't consider when investing. As we know in REI, you can use HELOCs and Cash Out Refi's to access cash (at a cost) to do more deals. Well we can do nearly the exact same thing in our Individual or Joint Taxable accounts. We can continue to invest (ideally dollar cost averaging into Index funds) in those accounts, then utilize a Margin Loan (sometimes called line of credit) to access cash at an even lower rate then HELOCs or hard money lenders can offer. I recently completed an ADU Airbnb renovation just using my Margin Loan at 2% interest, without having to sell any of my ETFs. Good examples of brokerages that offer low cost Margin Loans are Interactive Brokers and M1 Finance. 

You might call this a self-lending strategy. This allows us to build our portfolio, increase our leverage, then utilize that leverage on a rental property for example. It's all about preparing our finances and purchasing power for the next deal!

 All great points @Bob E.! @Stetson T. Stallworth, just want to comment on Bob's 6th recommendation. 

Margin Rates have become very competitive over the last few years. A good comparison can be found here on current rates. I personally use Interactive Brokers myself and for my investment clients who are looking to purchase properties or complete renovations and need access to low cost capital. Happy to help explain this further if needed!