All Forum Posts by: John Morgan

@Justin Fantazier

2.9% is basically free money due to inflation. Take your 50k and get a 15-30% return on it unless you’ve hit your financial goals. The dumbest thing I’ve ever done was paying off my first two rentals and trying to pay off my primary. I was a Dave Ramsey guy and that probably cost me millions. Since then I’ve been leveraging my way to generational wealth with “good debt.” And my rental cash flow went from only $1500/month to 19k/month profit by taking on more loans and harvesting the equity in some of my properties including my primary. I’ve hit my goal now so I’m not taking out anymore loans. I’m able to pay cash for some houses occasionally when my savings builds up. But don’t pay things off until you hit your financial goal. You’ll scale up 10x’s faster by using loans. And this allowed us to retire a decade or more sooner.

@Zoe Brennan

I started investing in RE exactly 10 years ago and only had 25k in savings. I was clueless and didn't know what I was doing, but was determined to make 10k/month profit off RE. It was a slow process for me, but I finally hit that 10k/month goal after 6 years. I kept throwing all my RE profits back into the next deal or paying off a short term loan. I have a W2 and can survive off it, so I never really needed my RE profits to spend on myself. After a few years, things pick up and it's easier to acquire more and more properties. Especially when your equity builds up. I pulled equity out of some properties to use to buy more and more properties since I never had much cash sitting around. I focus on buying and holding SFR. A boring slow strategy, but over time my "base hits" have started to produce some runs. My profits now are 19k/month (not counting vacancies or things breaking).

If I were you in today's environment, I'd house hack with 5% down. Live in it for a year or so then repeat and put down 5% for your next house hack. I have 3 SFR I rent by the room and they are more profitable than my LTR because I'm able to charge $750-$1175/month per room. These are in the Fort Worth area. There is a huge demand for single people needing a cheap room to rent. I actually have three couples sharing rooms that have their own private bathrooms. They are fine sharing the kitchen and common areas with others. It's cheap for them compared to getting their own place and very profitable for me. And if you can get 0% interest for a year credit cards or 401k loans, you can really multiply your properties over time by using cheap money. That's been my strategy, but I'm sure there are better and faster ways to scale up. Good luck!

I don't think there were that many mom n pop investors in SFR back then. Maybe a few people had their old house as a rental? I assume because the profit wasn't that good and hard to get loans. Now anyone with a pulse can get a DSCR loan if the property cash flows. And everyone is into buying rentals as a good investment that creates generational wealth while more and more people will be life time renters.

@Paige Gardner

DFW is a great area to invest in. Lots of growth and appreciation potential. I’m a fan of C+ class areas.

Quote from @Haley Brodecki:

Quote from @John Morgan:

I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.

Hi John,

this is great to hear. I'm new to all of this and looking at 401k loans and HELOC as options. Were you investing with a vacation loan / 10% down? I'm curious what markets you've invested in if you don't mind sharing. Thanks!

My first properties were STR in Branson, MO. I paid cash for them (130k and 56k). I got the cash from a HELOC, Roth IRA and 401k loans. Then did cash out refis to get all my $ back. Then I’d take that cash and buy more and more properties with either putting 20% down or paying cash then doing a BRRRR. I kept recycling equity to buy more and more cash flowing houses since I didn’t have any savings. lol. I’d pay my 0% interest for a year credit card loans and 401k loans off asap then repeat. It was an easy way to scale up with no money out of pocket. I just keep using my rental cash flow to pay off these short term loans. Dave Ramsey probably wouldn’t approve, but it’s how I was able to scale up to 29 buy n hold SFR. The cash flow now is good enough for me to retire. 

@Curtis Cutler

I started investing 10 years ago at 44 years old. I was broke and didn't know what to do. I only had 25k in savings. lol. I bought my first two rental houses with a combination of using a HELOC on my primary and using my retirement $. People told me I shouldn't use my retirement funds to get started, but glad I did. I didn't have much money and needed to find a way to get in the game. 10 years later, I've got 29 SFR that profit 19k/month (not including things breaking or vacancies). Give yourself 5-10 years and you'll be set. And I'm all for tapping into funds anyway you can to buy cash flowing real estate. It's tax free profits due to our tax code. And a great hedge against inflation. Not to mention it will create generational wealth for your family if you keep scaling up with leverage over a 10 year period or so. Good luck!

I bought 8 out of state sight unseen. No regrets!

I'm a fan of sec 8. I only have 4 SFR with sec 8 but I'd highly recommend it. I may do more. These people get free govt money with these vouchers that never seem to expire.

@Josh Otero

The hardest part for me was being flexible with my tenants and realizing all these people are living paycheck to paycheck. Rent won’t hit on the first. For some people it won’t even hit on the 15th. But I’ve learned to be more relaxed with my 29 properties and the tenants.

@Jermaine Washington

This has happened to me a few times. Not a big deal. Keep their deposit and get the place cleaned up and rented out asap.