All Forum Posts by: Erik Sherburne

Great feedback everyone! I think it is interesting the variety of answers. I'm trying to stay conservation and I have BRRR'd a couple times but don't want to be completely leveraged.

Curious out there what people use as a general rule for how leveraged they are. How comfortable you are with debt. Do you have 401K loans? Would you cash out a Roth IRA? Do you use HELOCs off your primary?

For me I'm ok with leverage and a little risk but I'm at a point where I need to get creative/leverage myself a little more than my comfort zone or a little bit of both.

As always, the BP community has great feedback and, interestingly, varied feedback which is very thought provoking, thank you. I honestly didn't expect to get this many replies. I recognize that my proposed scenario isn't "real" per se, but I'm at a stage where I want to keep this passive as I have a job I enjoy, a young family, write some music for passive income royalties. I see REI as investment diversification but time is a luxury I don't have. For me, it's not a matter of lazy, I work plenty hard, it's just more that I value using my time on multiple things and not completely focused on REI.

That being said, what I was thinking of is if the CoC was the same then I'm essentially getting higher rents per door on the duplex and thus a greater risk if the rental market declines of losing that return. For generic numbers sake (not based on anything real),

• $1600/month cost for both
• I net $400 per door off of $1200/month rent on the duplex or $800 per month
• $200 per door on the fourplex off $600/month rent still $800 per month

Then if (when) the rental market declines that $1200 is likely to drop further than the $600/month leaving me with better cash flow on the fourplex, right?

Assuming all things are equal (CoC return, etc.) is there any advantage in have four units vs two if the cash flow is the same? I like to consider time spent as so in this scenario I would spend less time on two units that four....any insight? Thanks in advanced, BP!

Good luck @Jason Sylka, this is really cool!

I can't add much to all of the great stuff already said, only that Dave Ramsey (IMO) is meant as understanding behavior and helping us (everyone) to better discipline themselves.   It isn't the most efficient way to build wealth.

Hey all- 

I'm excited to announce I just finished my first cash out refi!  Using it to expand the portfolio!

Thanks to everyone for your tips and support!

-Erik

401K loan?   Is this second property a "can't miss" great deal or something intriguing that you would be able to find other ones?

My recommendation would be not to stretch yourself to thin with your time or your finances.  

I agree I think your criteria is well thought out.  One of the big things I look for (with a full time job and family) is the return I get relative to my time.   I don't have a lot of extra time right now so I'm patient to find properties that won't be a lot of maintenance while still producing good cash flow.   I have four properties now (just refinanced and looking for a fifth and sixth) but as I analyze it is only about a property every other month that "fits" my criteria to even put an offer on.  Admittedly I'm still relatively new but I have analyzed hundreds of deals to get to four.  Be patient, good luck.

(Not a financial advisor) but I echo everything everyone said about getting the company match.   The other nice thing you can do with that to leverage in is to take a loan out against it to buy a property(s).   Obviously the numbers have to make sense because even though you are paying yourself back it is still interest you are paying back.