All Forum Posts by: Jordan Blanton

Quote from @Marcus Auerbach:

Sounds like you are in a very early growth stage and I think in the beginning you should grow your portfolio wide and not deep. 

That means, acquire as many properties as you can as fast as you can (and without compromising quality too much). That is growing "wide''. The growing deep part comes later, when you decrease leverage and increase equity. 

The question is basically where do you direct your free cash flow at: downpayments for new properties or paying off existing loans.

Personally I have always used cash flow + W2 income for downpayments and never taped into equity for acquisitions (I also have never taken cash flow out of the biz). 

60% is good but not great, I would probably leave it alone. 

I was lucky to start in 2009 when RE was doom and gloom. If I would have to start over again in 2025 I would look to buy or build a business for additional cash flow. Biz is much better at cash flow than RE. There is a huge opportunity online, live selling is probably one of the lowest-hanging fruit. Watch some Gary Ve. 

Biz for cashflow + REI for equity (and tax shelter) is the dream team.

 So no go on cash out to refinance to fund another buy? That property would still be cash flowing over $400 per month. I turn 33 this summer and if I just continue to do what I'm doing, should be able to buy another again by end of 2026. If I do that, then that would be four properties in a little under 5 years pace. 

Quote from @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.

 That sounds great but it is hard to find properties where the cash flow would be larger than the cash out refi payment. I think given the current market it seems to be a good idea if I have a good deal lined up. 

Quote from @John Morgan:

That's what I'm leaning towards. With current markets and rates, it's giving me around $150 cash flow per property for a 300k house (if you can even call that monthly cash flow). But with my age, I'm targeting appreciation so I do not mind. 

I reinvest every dollar I make in cash flow. I also save w-2 income as well for down payments. That is what I've done to get my portfolio to this point. 

So you're suggesting keep doing that and no refi to pull out equity? What if I just do 75k? That would probably put my cash flow around $550 on that property still. Then I would have plenty of cash reserves, HELOC and would put my LTV around 64%. 

Marcus, 

My LTV is 60% (850k owed, total value of 1.38M), with approx. $2,000/month cashflow. Should I cash-out refinance my paid off property to scale faster? If I take out 100k, It'll still be cash flowing approx. $435 per month. Seems like a no brainer and goes with your original post. I'm in my early 30's and plan to keep w-2 to support portfolio.

Quote from @Gregory Schwartz:

What alternative provides the same level of risk adjusted return? Even if we assume that population is slowing, where else would you park money for 10-20 years? 

 And what else can you park your money in and have another human pay down your principal for you? It's amazing how many people talk about real estate not being a good investment, but never mention how you can by 20% of a 300k asset and have another income stream (that's not coming from your w-2) pay for the rest of that asset. Can one do that with stocks, bonds, crypto? NOOOOOPE

Just for context, being from the area, that is one of the worst inner city areas in Greater Cincinnati. Furthermore, it is on a very busy, very dangerous state route that is saturated with crime. 

I'm in the same boat, and are very close to your portfolio numbers. I am in the process of getting a HELOC on my primary residence at the moment. My plan is to possibly use it before the spring on a down payment, but then quickly pay it off (I'll have enough for 20% DP in spring but am trying to beat the buyer rush for that time of year). Having said that, I'm cautious to use it on a BRRR, unless a deal falls into my lap. I'm worried that i will purchase something based off burning a hole in my pocket and not for the sake of being a good investment (mentioned above already). But, in the end, a HELOC is great to just have in case that beautiful day comes where I get a great opportunity. Costs nothing to get and does nothing if you do not use it.

Quote from @Marcus Auerbach:

If you are a new investor, print this and read it once a day. You may not realize the full weight of it, but this is what decades of experience boil down to. It is funny to look back and evaluate some of my own ideas and believes I had 15 years ago when I bought my first investment. 

I'll add one more: buy the best quality you can afford at the time. 

We are just turning over a property that is worth about 260k that I bought for 64k at the time. Nice house, but it sits on a corner lot and lacks an ideal backyard. I found a few other MLS sheets in the folder, one was the property almost next to it, a little more square footage and a perfect backyard. It would have been 10k more and at the time I did not see the point, in hindsight I should have.

Today I think of my portfolio more of a collection and when I look at a property my main question is if this is something I will be happy that I bought it ten years from now?

My other tip is this: don't look at real estate (primarily) as a source of cash flow. It is called in-vesting for a reason. Real estate is as a concept much more geared towards equity than cash flow. If you don't believe me, head over to the BP rental calculator, plug in a $1 million property with very average appreciation and see what happens over 30 years.

Instead, look at buying or starting a business. As a concept a business is the opposite of real estate, it primarily generates cash flow. Equity is a bonus. Take that cash and then buy real estate with it. There are so many options to buy/start a business - and run it on the side. 

A young guy I know bought a cute vintage camper, sprayed it black, cut a window in the side and built it out as a mobile coffee shop, which is now parked outside of events and staffed with college girls. Do you think that has cost as much as a duplex? And which one do you think cashflows better?

 Marcus, 

I always enjoy reading your posts. Very honest, humble and direct advice with a glass half full mindset. When you write a book, let me know! 

Tenant is moving out of paid off property in August. The property was purchased seven years ago for 56k in a C- neighborhood, which is now paid off and worth approximately 170k. Light renovation of the kitchen and should be able to see increase of rent of $250-$300 month. After expenses, it will be cash flowing 1k/month.

My thought of doing a 1031 exchange seems like an option..trade in a 170k house for a few 250k homes and increase my portfolio by 600k. But that would decrease my cash flow significantly. In my local market, I can still find cash flowing properties in that price range, approx. 100-200 per SFH. Just tough to do in this market with mulitiple offers and a very tight window with the 1031. And before anyone asks, Multi-families are tough to get, as I've been outbid by cash offers three times now in the past two months. So to count on scoring one of those in the small window for a 1031 would be tough.

Should I just keep the property, do light reno's and increase rent and bank cash flow? Or get with an expierenced realtor, commit to 1031, and increase portfolio by considerable margin and sacrifice cash flow now? I'm 32 years old, with a good paying w-2 with an always abundance of overtime availability. Lastly, I do have enough cash reserve to acquire more property at the moment, which is my plan in the next 2-6 weeks. 

Thoughts are greatly appreciated.