All Forum Posts by: Anthony Gayden
Anthony Gayden has started 77 posts and replied 1981 times.
Post: How many loans can one practically take?
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Johann Jells:
I believe the max personal loans is 4. After that it's all commercial, no more 30 yr fixed.
That is not correct. I have 5 mortgages right now and I believe that a person can get up to 10 mortgages with conventional residential financing.
Post: Do any of you play the lottery?
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
I agree with Dave Ramsey. The lottery is a tax on poor people. I don’t play.
Post: From Full time job with benefits to....REI with nothing?
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Marisa Faulkner:
Real Estate Investing is all fun and games until you need medical insurance. This is a concern that I would like to get some feedback on. Can anyone provide any advice or suggestions on going from a job with benefits to no benefits at all?
Were you able to locate reasonably priced medical insurance?
Do you think 401k is a necessity?
Do you think the wealth that you can potentially receive as an REI makes up for the lost benefits from the full time job? Meaning, can/are you able to fully finance yourself with the funds from REI (able to pay your own medical bills out of pocket, savings built up enough so you don't need 401K, etc.)
I just don't know what to expect and It would be amazing to get some insight on it so that I know what to prepare for.
Thanks BP!
These are similar concerns for all people who are self employed. It is certainly something to consider for those who want to leave their full-time jobs.
In terms of retirement, I believe that there are solo 401K plans for retirement as well as several IRA options. Real estate investing itself will probably make up the majority of the retirement plans for investors.
I imagine medical insurance would be quite costly. I would love to hear answers from those who do it. It is rarely talked about on here.
Post: Trading W-2 for Self Management- 0-92 Units in 16 months!
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Collin Schwartz:
@Anthony Gayden I may be cool... but not podcast guest of Biggerpockets Money cool! Your story was awesome , I hope to connect soon!
I would love to hear the details of your story on the podcast. I will try to make it to the meetup on Wednesday.
Post: Trading W-2 for Self Management- 0-92 Units in 16 months!
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
You are a cool guy for putting on all of the Omaha meetups and you have done a great job in a very short period of time.
I met you at one of your meetups last year, but work, family, and my investment properties have kept me too busy to attend recently.
Post: Am I over leveraged?
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Michael Simolke:
I have 4 properties.
1 is break even 1 has $300 cash flow 1 has $500 cash flow 1 is going through eviction
I have about $330,000 in debt. And $18k in cash reserves. Am I over leveraged? What steps should I take now considering the current market conditions.. thanks everybody!
This question can't be answered easily. The problem is that each individual is different in terms of how comfortable they feel with leverage.
Post: Mistake I made starting out (15+ Years ago)
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Michael Zuber:
Having left the Rat Race this year after 15 Years of Buy and Hold Investing I find it is time to reflect, document and give back. One of the first areas I reviewed was my initial purchases and I believe I made a mistake on a lot of my first purchases and thus wanted to share. Let me explain.
My focus when I started out was "Cheap" Cash Flow Positive properties. This seems like a solid start but when I looked back I think I stunted my initial growth rate substantially. Let me do the math and explain what I could have done different.
Let's say I bought a property for $150,000 that had a After Repair Value of $200,000 (keeping Numbers Simple). Let's say the repair cost or make ready cost is $30,000. Seems like a great fit as I get to create $20,000 in forced equity by funding the repairs myself.
My first 7-8 purchase all those years ago were like this but here is the problem with what I did.
My Purchase from a Cash Stand Point.
$150,000 * 20% Down Payment = $30,000
Make Ready Cost = $30,000
Total Cash out of Pocket = $60,000
If I had bought the Property at $200,000
$200,000 *20% = $40,000
Make Ready = $0
Total Cash = $40,000 (Or $20,000 less)
The other area that is subtle is time to Cash Flow as my Cheap Property approach meant I could lose up to 6 months+ of rent if I bought the cheap property for 150K that was tenant occupied and paying under market. When this happens I have to give a 60 Day Notice to vacate, hope they leave and if not start evictions which could take 90 days+, then repair, release, etc.
In the end my cheap property approach 15 years ago meant I had to use more cash and I lost time to rent collection/cash flow.
In the beginning my mistake was not appreciating the value of my cash position for down payments and the time to start collecting market rent. What do you think? Does that make since?
Self reflection is always fun
Z
That's a good point, but what about the $20,000 in equity that you made by investing that $60,000? That is a much higher return on investment than the cash flow from buying a $200,000 property that requires no work. In fact it would take years to make that much from cash flow.
Using your numbers:
$150,000 property
$30,000 down + $30,000 repairs = $60,000 total investment
After repair value $200,000 = $20,000 in equity gained or 33% ROI + cash flow
$200,000 property
$40,000 down + $0 repairs = $40,000 total investment
After repair value $200,000 = Only return is from the cash flow as compared to the $40,000 you put down
It seems to me that fixing up the homes made you far wealthier. What I learned since I started investing is that appreciation will make you much wealthier than cash flow.
Post: Pulling Out $ From LLC-Owned Properties
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Alfred Litton:
Newby question here. I have 3 homes owned outright within an LLC. (No debt on them.) How might I go about extracting some of that equity from those to finance a fourth?
You may be able to get a business line of credit on your properties.
Post: What's the best way to snow ball your REI portfolio? (Rental REI)
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Brian Dudash:
I've had a few discussions about the best way to create a plan in order to "snow ball" your way to owning many REI properties (buy and hold for rent).
After Googling around and even reading blogs on this site, I've thought about doing something like the following:
- Buy my first rental property (SFH) with cash (around $60-70k) where I'd expect about $500 cashflow per month
- Currently I have about $105-110k available (after taking out an emergency fund)
- Then shortly after, buy my second rental property (SFH) but take out a mortgage and put down around 25% on a $60-70k house
- The cash flow on this property specifically would likely break even (at or near 0) but this would be on a 15 year mortgage and I can use some (or most) of the cash flow from the first to help pay down that mortgage faster, along with my corporate job monthly savings too
- I feel I could pay it off anywhere from 5 - 10 years depending on the exact strategy
- If/When I get the 2nd one, then shortly after that, try and get a 3rd SFH rental property and continue this snow ball effect to build up by rental portfolio
Obviously this is easier said than done, along with risks and I honestly do not have any real experience with rental properties as this is my first time diving into this type of investing.
My main questions would be --
- Has anyone done a similar strategy to help build their portfolio quicker?
- What are some of the major pros / cons of this type of strategy?
- Has anyone taken the risk of buying a rental property with a mortgage (like 15 year), where your cash flow is at or close to break even?
- Any other tips / tricks / experiences are appreciated!
Thanks!
-Brian
There are a ton of great ways to make your portfolio grow.
I personally have been buying one property a year for the last 5 years. In order to do that without having access to huge sums of cash I had to use some more creative methods. While I do live in a lower cost real estate market, none of my properties is valued under $100,000. I invest both locally and long distance. I both self manage and use property management.
Methods I have used include:
- House hacking - I lived in one unit of a 4 plex I bought using an FHA mortgage and 3.5% down payment
- BRRRR investing - I bought a house in rough shape, rehabbed it, did a cash out refinance, and rented it out, and repeated
- I bought a single family home, lived in it for 2 years then turned it into a rental
- I took three loans over the years from my 401K for the down payments on 3 of my houses
- I bought a 4 plex non-owner occupied using a conventional mortgage with 25% down, but over the course of 5 years it doubled in appraised value
I have one property with a 15 year mortgage and I break even every month with rent. The property is in a popular location so I have experienced significant appreciation since buying it and the debt pay down is great, but it will be the only property I buy with a 15 year mortgage.
Paying off my properties to get cash flow is not my strategy. Instead I am looking to get cash flow immediately as well as appreciation long term.
Post: How I went from 0-122 units mortgage free. My tips and secrets
- Rental Property Investor
- Omaha, NE
- Posts 2,030
- Votes 3,310
Originally posted by @Brian Ellis:
@Frank Wolter did you use leverage when you first started out? I would rather not use leverage and have my properties paid off, but it is my only option at this time, im just starting out. RE in my area is expensive.
Even here in Omaha, making a healthy six-figure salary, it would take quite a while to save up $100,000 to buy a single family home. I was able to put away about $30,000 in a single year saving every extra penny and living like a hermit, but that would have only bought me a class D house in the ghetto even here in Omaha.
Leverage is not the enemy, it is a force multiplier and while I appreciate the success that one person had without leverage, we should not demonize it and act as though that way is somehow superior.