All Forum Posts by: John Morgan

RE investing definitely isn’t rocket science. Anyone can do it and it’s pretty simple. I would suggest listening to as many RE podcasts as you can. They interview people who are doing well in RE and they share their strategies. Once you have 25-40k saved up, you’ll be good to start in my opinion. I started with 30k and figured it out. Let me know if you have any questions.

I've talked to several people who say LLCs are worthless. That any attorney can pierce it proving you're behind your LLC. My lawyer friend who owned 30 rentals at one point told me the same thing. So I just have one LLC for the purpose of buying properties with commercial or DSCR loans. Most of my 29 properties are in my personal name. There are no tax advantages either. And if you ever go to court to evict, you need to hire an attorney to represent your LLC vs doing it yourself. So I went with the advice to just get extra liability on my properties and call it good. And it's extremely rare for a lawsuit to go for over 1 million in damages.

It's alive in lower appreciating areas. I have 10 SFR in areas like that. But my other 19 SFR are in higher appreciating areas that are currently getting just the .8% rule at first when I buy. I'm ok waiting a few years for market rent to ramp up because I know the appreciation will be there in 5-10 years and they'll do much better in the long run vs cheaper lower appreciating areas that I'm getting the 1 or 2% rule when I first buy.

Quote from @Bob S.:

Quote from @John Morgan:

You can still get the 1% rule in some areas but appreciation is weak most likely. I’ve bought 10 houses in a ghetto city in Arkansas that gets the 2% rule. I’m not expecting any appreciation but the cash flow is good. I’ve got 19 houses in a better appreciating area (Dallas), but I’m only hitting the .7% rule here. Appreciation is good in TX but I’m breaking even the first couple years when I buy here. Fortunately market rent is coming way up each year so that helps.

 One of my clients closes yesterday, all in 120k, RENT 1800, 1% rule is very easy. Mine are 2% + 

Yes the 1 or 2% rule area exist out there today. But appreciation is generally very weak in areas you can get better than the 1% rule. The 10 SFR I  bought in Arkansas that get the 2% rule won’t appreciate much over 10-15 years. Maybe 1%/year if I’m lucky. The 18 SFR I have in the Dallas area will most likely appreciate 3-6%/year. I’m lucky to get between the .8% or 1% rule in Dallas now and make only $200-$400/month when I first buy. So it’s cash flow vs the appreciation play. I like them both. But over 10-20 years, I prefer appreciation. You’re going to have to replace all the big cap ex things in that time frame. So the cheap homes in lower class areas that get the 2% rule will have the same cap ex issues and costs as the homes in higher appreciation areas that will need the same cap ex. But leveraged  appreciation on better appreciating homes and areas will win out every time. But it’s nice to have the cash flow from the cheap ones! 

@Tom Stevenson

I did a HELOC to get my first two properties. Then paid it off asap. So I'm a fan of using a HELOC to snag properties. Then I realized having 2 paid off rentals was the dumbest thing I could do financially. lol. So I used that equity and leveraged up. My cash flow went from only $1500/month with 2 paid off properties to 19k/month with 29 properties leveraged. Refi til you die!

@Don Konipol

I’m 54 years old and have 60% in RE and 40% in the SM. Because I have decent cash flow with my rentals (about 19k/month net), I invest aggressively in the SM. I could probably live off my real estate mailbox money now, so I’m aggressive with my stocks portfolio.

@Tyler Bilinovic

It’s simple to do yourself. You will be showing a paper loss on your rentals so you want be paying any taxes off them. I have 29 properties and use turbo tax to do my taxes. It walks you through everything. And it keeps track of all your capitalization from year to year with each property.

@Joseph Fenner

I bought 11 SFR in the last year. I used a couple 401k loans, a line of credit from a random local bank and a few 0% interest for a year credit card loans. I don't recommend doing this right out of the gate, but it's doable. These 11 houses have a profit of around 5k/month. It was worth it, but definitely not home runs. Some of these are crack shacks in the hood that only rent for $500/month. lol

@Corey Crowley

I've done 4 cash out refis on my properties that helped me buy 14 more houses without a penny out of pocket. I'm a fan of them. I'd just do one at a time. For every cash out you do, buy as many as you can with the cash putting 20% down. LLCs are worthless. Any decent attorney can pierce it. Just ask them. But some DSCR lenders require them. So I've bought 7 or 8 properties in my LLC with commercial and DSCR loans.

@Mary Jay

That’s on you. Even if they have a thousand trees on that lot. Act of god.