All Forum Posts by: John Morgan

@Jordan Blanton

I would tap into that equity and do a cash out refi on your paid off property if you haven’t hit your financial goal yet. I’ve done cash outs on 5 paid off properties and used that cash to scale up and buy many more properties to ramp up my cash flow much more than it was with paid off properties. It feels like buying houses for free since all the new properties didn’t cost me a penny out of pocket. Then my cash flow multiplied after I got the new houses.

@Ying Tang

I’ve bought 25 rental houses this way with tenants in place with leases. I would go for it. Walk it first and talk to the tenants when you stop by to ask them what’s wrong with the house. lol. And how long they would like to stay if you keep them beyond the lease. Also ask the listing agent why they are selling it to help leverage your price. I only use the listing agents when I buy for this reason. They represent the seller first and foremost, but they always tell me good intel on the seller and I use that to my advantage when I make an offer. Especially the ones going through a divorce or are really motivated to sell it asap. I get great deals this way because the buyer has to honor their lease and that limits them to sell only to buy n hold investors. Flippers can’t buy the properties because they want to flip it right away. Families can’t buy them either. So I buy them at a steep discount because the seller is desperate and has no one else to sell to. And almost all of mine were rented out well under market rent so the sellers were really screwed because not many people want to buy rentals with low cash flow. I’ll take these “base hits” because they will be money makers for me over time as I raise rent. I do upgrade things while I raise rent over time and the tenants all appreciate it. I tell them all they can stay forever. But I’ll need to bring up rent due to my mortgage being much higher than the last owner. They all understand and most stay with me for many years. Keeping tenants happy with very low turnovers is my goal. I want them all to stay for a years/decades.

@Nithin Thampi

I've got 18 SFR in the DFW area. You'll need to put 25-30% down. It will be hard to cash flow with only 25% down around here with today's rates.

RE will be a good investment over time (5-10 years minimum). Don’t expect to make much the first 3-5 years. Appreciation rates will slow down for a while, and cashflow won’t be great for a few years as inventory increases. The wild card is how baby boomers dying off and downsizing will affect things. That could increase inventory where supply keeps home prices and rent in check. I’m personally throttling back on buying for a couple years.

California blows in so many ways other than the weather and scenery. We got out of there as soon as we could and moved to Texas. I would ditch the LLCs. Any attorney can pierce them if they really wanted to. Just get extra liability with your insurance and call it good.

Yes, I've done 7 DSCR loans for properties that were vacant and needed some work. The lender will send an appraiser out to determine market rent. Side note- I always tell the appraisers the market rent and appraisal value I'm hoping for. And somehow my appraisals always come out at those numbers or higher. lol

@Kenny Tran

I'd definitely 1031 it into a du that ramps up your cash flow. I did a 1031 exchange one time for this exact reason. Cost me 1k for an intermediary for the exchange and it was simple to do. Then 3 or 4 years later, I did a cash out refi on the new property to tap into that equity (133k) to deploy and buy 3 more good cash flowing SFR with 20% down on each with the cash. It's all about your return on your equity. Your equity is house money because you got all your money back with your BRRRR, but you've got a chance to 1031 it into something that cash flows well. I wouldn't wait. I'd do it now.

Turbo tax walks you through everything. And you won’t be paying taxes on your mailbox money for over a decade. If you are, then you’re not doing something right. lol

You're in a great situation at only 49 years old with all that equity. Why not keep the course and do nothing? Sure you'll always have cap ex issues, but your cashflow is probably insane so who cares? I'm 54 years old with 29 SFR that are always breaking and costing me $. Or an occasional vacancy that is expensive. I've got 9 houses paid off and probably around 50% equity on average in the ones that I've got mortgages on. Could I maximize my cashflow if I sold some and did 1031 exchanges or cash out refis to tap into equity? Sure. But I'm happy with my cashflow now and keeping things simple. Are you happy with your cashflow overall now considering your cap ex issues and an occasional vacancy etc? If so, don't do a thing. You've created generational wealth already. Or do you need/want much more cashflow? If that's the case then put some of that equity to use and buy some more good cash flowing properties. Or 1031 a few and scale up a little. My wife always asks me "when is enough?" She doesn't like that I keep adding more to our life when I keep buying great cash flowing houses than fall in my lap. She thinks our cashflow is good enough now and wants me to stop, so I will. Do you have enough now? That's the big question. If not, you've got some great options ahead of you with all that equity! Good luck.