All Forum Posts by: Jody Sperling

Buy a high cash value life insurance policy. It's guaranteed rate of growth will be 4% The mutual companies that design these policies have paid the guaranteed rates plus dividends for 100+, meaning they remained above 5% real performance even through the great depression and great recession. I have a policy, but I do not sell life insurance, so I'm just someone who's passionate about using money well.

Please research the way it works, and if you're interested call my guy, Cy. A link to his video below will educate you further if your interested. High Cash Value Life Insurance is not an investment, per se, in itself, but a way to put money in a bank account with amazing yield. You can borrow against the policy without interrupting compounding, and you can invest that money in all the traditional ways while increasing your profits and building a safe guarantee.

Cy Kueffer Life Insurance

Avoid an FHA loan if you can. They require you to carry mortgage insurance for the life of the loan. It hurts cash flow, but if it's your only choice, don't let that stop you, either. You can refinance later.

As for determining the price range, the best way would be to reverse calculate. If you have 10,000 saved, and you're buying a primary home to house hack, you'll be approved for up to $200,000 (you need to come to the closing table with 5%, and don't forget closing costs are not part of that 5%, so you actually need 5% plus a couple thousand).

Usually you want to ensure that you don't spend the max the bank will approve you for, because it will severely cramp your cashflow, however, if you are hacking, you can throw that concern out the window (mostly). Find the biggest, well-cared-for 4-plex in your target market that you can get qualified for, and offer on it. 

Put renters in every unit, and if you're adventurous and want to be wealthy in record time, rent out any spare bedrooms in your personal unit too. At worst, you'll live for free while tenants pay down your mortgage. At best, you'll make extra money while tenants pay down your mortgage. Best of luck!

I wanted to correct one small detail here about a HELOC and your credit score. While it is true that HELOCs are revolving lines of credit just like credit cards, the credit bureaus do not view them like credit cards and having one that is 80, 90 or even 95% maxxed will not have a negative impact on your credit score.

Sadly, they will negatively view a credit card with a 90% balance, which I chose so I could float recent BRRRR materials 0% for 18 months. Everyone here has already hit on the great points about a HELOC. It is, in my opinion the most powerful financial tool in your toolbox.

If you want to see how powerful it is, ask your bank to convert all your debt to lines of credit, and I guarantee they'll say, "Sorry, you have to have some amortized debt." The reason for that is because lines always beat loans. Best of luck!

You should still be able to house hack, and that likely will produce more value than even live-in flipping. Buy a house that has an extra room and needs a bit of rehab to reach its full value. Rent one bedroom and slowly repair the house. You'll have an immediate income stream and a home that will increase in value by forced appreciation. In twelve to twenty-four months you can rent the room you were living in and repeat the process at a new house. This way you're creating a portfolio almost free of charge.

Best of luck!

I sell insurance for a living, though I'm not licensed in every state or for Health or Life. Please take my comments as general guidelines that I've observed from working in the industry.

Renter's Default Insurance is one of a few products in the insurance space that earns the insurance company the most money. What inevitably happens if you purchase the product is one of three outcomes:

1. You buy and pay the premiums without needing the coverage for many years. Pure profit for the carrier.

2. You buy and pay the premiums for a time, then file a claim. The carrier pays and raises your premium to offset the loss. In short order, you pay more than the carrier covered.

3. You buy and pay the premiums for a time, then file a claim. The carrier nonrenews and you can't find another carrier to cover you.

Instead of buying this coverage, build vacancy into your investment profile. Only purchase properties that will cashflow with a month of vacancy factored in per year. If you don't experience vacancy, the money is gravy. If you do, you'll float because it was part of your analysis.

Best of luck, whatever you choose!

Find a local bank or credit union in Chester since that's your home base. Open a business account with them. Local banks have huge advantages for investors over national banks. By opening a business account now, you pave a path to a future time when you may want to borrow. A bank or credit union you have history with is likely to give you better terms and express more risk when you need it.

Best of luck!

Perhaps some banks have different rules, but I have always encountered loan officers who require rent rolls to have been on the book for 2 years before counting them in the income to debt ratios, so you may not be able to use expected rents.

That said, if you are newer to the investment landscape, and this is your first or second rental, you shouldn't have an issue getting a competitive loan on a primary residence and converting your current primary into a rental. As long as you have a suitable downpayment, you should be approved. Best of luck to you!

If you aren't part of the social media arm of the local REIA that would be the lowest hanging fruit. Here in Omaha, we have two robust Facebook Groups with dedicated lists of cash buyers. Look to your market equivalent if you haven't already. Best of luck!

Traditional banks will lend based on your income-to-debt ratio. It matters very little how much capital you have. The bank wants to know can this person afford minimum payments if he takes on the loans. At the glacial pace you plan to move, you should have no issues obtaining loans for your first several properties as long as you have the 20%-25% detailed in your question for each property. Best of luck to you!

Offer market value; put the loan at 15-years; pay 4% interest, no money down. Remind them that the interest you offer is double what other buyers are paying in todays environment.

On a 200k house, that would be a $1,480 monthly payment, before adding taxes and insurance. Remind them that they won't be paying repairs or taxes and insurance, so they'll save that money in cashflow too. And selling it as they are will all but eliminate any tax burden of selling, plus they won't pay 4-6% fees to a real estate agent when selling.

Your lawyer fees to set up a sell agreement will be minimal.

Depending on your market, after taxes and insurance, you're likely looking at a slight cashflow setback, but nothing that will harm your ability to continue building a portfolio. Everyone wins.

Best of luck to you!