All Forum Posts by: Matthew G.

@Hai Loc Thanks. The cap and term exceeding 100 sounds like good advice.

It seems like a majority on this forum prefer multi-family rentals. From speaking with many previous landlords at meetups, they eventually hated managing it or paying steep prices for property managers. Some became private lenders and others preferred triple net commercial leases. What are your thoughts on multi-family vs triple net leases for cashflow?

The equity in your home is the current appraised value minus the outstanding principal on your mortgage. If your home is worth $100,000 and you have a mortgage for $60,000, you have $40,000 in equity. Lenders won't usually give you a HELOC for 100% of the value of your property though. They might only give you 80% of the appraised home value, so to calculate your HELOC you would take $80,000 (80% of appraised value) minus $60,000 which give you a $20,000 HELOC.

@Raquel Sayago If you don't have a prior relationship with a hard money lender, you may not be able to get no money down. You should be able to get by with little down if you have a good deal though, they just want you to have some skin in the game. Typically HMLs will fund up to ~75% LTV with an annual interest rate of 8-10% and charge 2-4 points along with fees. They are much faster to get and can usually close within 7 days unlike traditional loans.

HMLs are typically good if you want to rehab a property or only need the cash for a short amount of time. You only need to make interest payments until your loan term is up which is usually 12 months. As long as you include the interest when you are calculating your deal and don't underestimate the amount of time it takes to rehab a property, then a HML can be a good option.

If you plan on buying a rental, then HMLs wouldn't be a good option since the loan term is too short. If you are planning on rehabbing the property first then renting it out, a HML could be a good option as long as you refi to a traditional loan once you rent it out.

@Dimitri Gregorio I think you should consider how much time you want to give yourself to hit your goals. You say you want to build long term wealth and not short term cash. If that's the case you can slowly acquire rental properties, but that could take decades of saving and buying. If you had a shorter time frame for your goals, then you can make quick cash through wholesaling or fix and flips and then put those profits to work for you in long term rentals. My recommendation is not to settle on one investment strategy, but to adjust it based on your timeline and goals.

@Raj G. I think you have to define what "better position" really means to you. If all it means is that you want the most money you can make in 10 years, then private lending may not be enough for you. If a "better position" means having more time with family, be able to travel more, buy expensive things, then that will give you a better idea of how much time you want to put into your investing.

@Anders Jax  You want to add value that would make an investor always want to go through you. Think about it this way, sellers on Amazon can easily make a sale on Amazon then direct those customers to their own website afterward. Amazon, however, offers buyers more protection by going through their platform along with fast shipping. What can you do to add value that will make your investors want to always deal with you?

If you performed the due diligence for your investors and they can trust it, then that is what you can bring the table. If all you are trying to do is introduce people with money to the person with the deals and try to take a cut for that introduction, your business won't last long once you run out of investors in your network. Most investments would be toward an LLC, so even if you wrote a contract that says that you take a fee for any investment an individual makes with you, the contract would only be valid with that LLC. Once they have a new project under a new LLC, that contract wouldn't apply anymore.

If you have a lot of investors, then you can start your own LLC and never introduce your investors to the other party. You collect what you need from your investors, then fund the deal through the LLC. The other party will never know who your list of investors are that way.

@Tailine Calheira Welcome to BP! It's not necessary to become a real estate agent. Besides learning all that you can, you should start building out your network. Go to local meetups and find wholesalers, real estate agents, lenders, contractors, etc. so that you have a team ready when you are.

Rather than quitting your job to learn more about real estate, I'd recommend you find a W-2 job if yours isn't already. It would make it easier to get a loan. If you purchase a multi-family as your first home and want to live in one of the units, then the other units income will contribute to your DTI, so that will also help.

You will need to put some money down, so you may actually want to start looking at prices for multi-family homes in the area you want to purchase. Talk to a lender and see what income and down payment would be necessary so that you can plan for the year ahead. If you won't be able to save enough down payment by end of next year, consider cutting back on your wedding to meet your real estate goals.

@Raj G. It depends on how much effort you want to put in and how much headache you want to put up with. I originally thought I just wanted to make as high of a return as possible, if that meant doing fix and flips or whatever I would do it. After speaking with a few investors who have done different types of real estate investments, I decided that private lending or providing capital for partnerships was the best choice for me.

My goal in real estate was just to make enough passive income to cover my expenses, which I can do. There wasn't a need to put more effort or take more risks just to get a higher return. If you can figure out your goals, then you can figure out how to best allocate your money to achieve those goals.

That being said, I'm currently slowing down on my lending so that I can reserve some cash in case the market corrects. If the market does correct I might switch my investment strategy to make a higher return.

@JJ Espinoza What kind of homes are your parameters trying to filter? Are these supposed to be good rental properties with cashflow? Are these just supposed to filter out bad neighborhoods? I think you need to be more clear what this filtered list is.