All Forum Posts by: Isiah Ferguson

@Isiah Ferguson He actually has $95k into the deal. You have to count the $6k for closing costs and the $4k for holding costs as part of the total.  So the $95k minus the $92k leaves $3k.

 Not expensive at all...in fact it's far less expensive.  Actually, it's free to me.  Financing, loans, are just another way to leverage cash...which is what you are actually leveraging.  In both cases, the original money comes back to me "with friends" (profit and cash flow).  There is more cash flow without the loan (no debt service, and no credit partner).

I'm not giving up 660/month...I'm getting my original money back, with friends...to use again on the next deal, repeated over and over and over and...  This is faster (no seasoning), and I can get a higher cash back.out (no 75% limit), than if I went the refi route.  That $36k goes right back into the next deal, flipped through cash leveraging, and repeated over and over again.  I'm not losing anything...I'm compounding my $36k.

Why would I want to wait 20 years to get anything back?  I get it all back right away.  If I left that in, even if I used only 20% as a down payment, I have to wait to get my money back through the cash flow.  My way, I'm not waiting for anything...and that reduced cash flow you are frowning at, is pure profit...from day one...and, that cash I put in, isn't just sitting there dead waiting for the cash flow to catch up in, what did you say?...20 years?  We could have 2 or more 2008's occur within those 20 years, and my "resting" cash and supposed equity build disappears.

If you understand what leveraging does, you'll see that this is in fact just a different way of leveraging...just without the added subtraction of loan cost and credit partner off the top.

If I took that $36k and split it up so that it represented 20% down payments, it would get me $720k in value...and I would be dead in the water until I generated more down payment funds...and, I would have spent that $36k since those funds went in one direction...away from me.

If I took that same $36k and paid cash, then took my route and recovered that cash plus profit (and kept CF), then move my recovered funds plus friends into the next bigger deal, then repeated this over and over again I would be light years ahead.

One more thing.  If I take the "spending" the $36k for DP's, how much have I spent and how many uses did I get out of that $36,000?  Answers:  I spent $36,000 for 1 use.

If I take that same $36k, and "use" it an unlimited number of times, with each time I use it I get it right back with a profit, to use it again, and again, and again...how much have I spent, and how many uses did I get out of it?  Answers:  I spent NOTHING for an unlimited number of uses.

@Brett Schickler So you're putting $12,750 down, $6k closing costs and $4k holding costs makes you're out of pocket investment $22,750 total. If you get 80% LTV based on ARV of $115k that would cash you back out $92,000 as you mentioned. $92,000 (cash out refinance value) minus $95,000 (total investment) leaves you with $3k of your own cash still in the deal which you'll easily make right back up through the positive cash flow. Is this how you're seeing it as well?