All Forum Posts by: John Morgan

Losing 5-10k/month? During the busy season in a good economy? I’d cut bait and sell that thing. People are still traveling and spending $ like there’s no tomorrow. When we go into a recession and people cut back on spending, you’ll be dead in the water with a lot more negative cash flow than that.

I'm a fan of SFR. I've got 28 and rarely ever have a vacancy. MF vacancies happen on average every 17 months. Turnovers will crush your profits. I invest in SFR in C+ class areas. These people won't ever be able to afford to buy a home or qualify. So I treat them well and hope they stay with me for a couple decades. Single family is much easier to sell when that time comes too. And SF has no drama unlike MF does between tenants.

I pass on my yearly increase in costs from taxes and insurance onto my tenants. I let them know every year when it’s lease renewal time. They appreciate the transparency and understand. I just raised rent only $25 to a tenant and told him my costs have only gone up $25/month so that’s his increase. I try and be fair. But at the same time not running a charity.

If the numbers work for me, I'll keep buying. I've bought 11 SFR in the last 10 months. The numbers work for me so I'll keep buying if it makes sense. In 10 years from now, I feel confident these will look like home runs. But some are only base hits for now. Time will tell! But I'm ok with taking the risk of buying RE in good times and bad. I look at it like dollar cost averaging over time with assets that have historically appreciated well over time. Throw in leverage and instant cash flow, you can't go wrong! Especially since you're using OPM and your tenants are paying off the loans.

Quote from @Ross Hayes:

Quote from @John Morgan:

@Bryan Galaz

I bought my first two houses with a HELOC from my house. I paid cash for them. And eventually did cash out refis on those properties to scale up big. I also did a cash out refi on my primary a couple years later to use the cash and buy 3 more houses. Since then I've bought 14 houses from equity just sitting in properties doing absolutely nothing for me. My cash flow goes way up after I tap into equity and buy more and more houses with zero out of pocket money. This has been the way I've been able to buy 29 rental houses basically for free with no out of pocket money. Tap that equity and make much more cash flow. Refi til you die! This is how you can build generational wealth without using your own money. Good luck!

Am I tracking that your strategy was using a HELOC from your primary residence to fund "cash" purchases on your first two properties?  Then, with equity on those two properties (since there was no mortgage directly against them due to the HELOC funding them), you did cash our refinances to go purchase additional properties?  Essentially rolling that equity from each property into the next one, with a cash out refinance each time?  Thanks for the context.

Yep, I used my HELOC to help me pay cash for my first two rentals. 3 years later I did a cash out refi on one of them and got all my cash back plus an extra 10k. I took that cash and BRRRR’d 3 houses with the cash  without using any of my own money. I sold the other property 18 months later and did a 1031 exchange to buy a nicer SFR. A couple years later, I did a cash out refi on it and pulled out 133k to play with. I bought 3 cash flowing houses with the cash. 

So my initial HELOC I used (about 60k total used from my HELOC between the two rentals) to buy my first two rentals turned into 8 houses that cash flow me $6200/month after all my expenses now. Some people say don’t do it, but I paid off my 60k I used from my HELOC 5 years ago with my Cashflow and I profit $6200/month and ended up with 8 houses from my first two houses I used from the HELOC. So don’t rule out using a HELOC to buy properties! I’m a fan of it despite what others say.  Consider 401k loans and 0% interest for a year credit card loans too. Or basic lines of credit from banks for around 11% which I do as well. I use OPM then pay it back with the cash flow. Then it’s all infinite cashflow once I use the rental income to pay off these temporary loans. Then I repeat and keep scaling up with zero out of pocket $. 

@Richie Linnon

I’ve bought 16 properties with tenants in place that were way below market rent. I call or meet with them the day I close and explain to them I’d love for them to stay but I’ll have to bring rent up because my mortgage payment is much higher than the seller’s. I tell them I will be negative cash flow at the current rent and tell them what market rent is. Then I tell them I’ll be raising rent 10% or whatever in 60 days. Then $100 or whatever amount I come up with each year so I can eventually get closer to market rent within few years. I always offer to fix and update things too. Most give me a list of broken things. lol. They love that part of it. I like to establish trust and a willingness to work with my new tenants. They all stay and it’s a win/win for me and them. And they’re all aware of what market rent it. lol

@Jordyn Ohs

I'd exhaust your HELOC. That's how I got started. Leverage your way to wealth with as little of your own money into it. That's how I scaled up to 28 SFR without using hardly any of my own money to get the deals. Then refi til you die! Good luck.

When rates a drop a half a percent or more, expect a spike in demand. However, if our economy tanks, then prices could soften until rates are dropped a couple points or more.

@Chengning Yang

Get on the DFW Construction Facebook page and get quotes. You can get some illegals to do it all for 5-10k.

@Jimmy Rojas

It took me 5 years to only make 9 or 10k/month in RE. I’m 9 years in now and profit about 18k/month now. It doesn’t happen over night. But if you can give yourself 5-10 years, you’ll be bringing in decent cash flow on the side. Most people can’t wait that long so I tell them to invest in crypto or something else if they need to hit home runs from the start. I’m just a “base hits” investor and work full time with my W2. But I invest on the side with RE to make a little extra.