All Forum Posts by: Mario Morales

Depending on the CPA's question regarding treatment of depreciation, one thing that you may be able to do is depreciate some expenses that you claimed as deductions. This is sorta the opposite of what most try to do but it may be a way to show more profit in 2022 and eventually get the depreciation over the next couple decades...

Is refinancing something that you MUST do or is it a preferred path. The DTI issue may not be fixable. What happens then?

Well, considering 2022 is over, it's not the best time to implement a strategy. This should have been under consideration 6 months ago. That said, your three properties don't show income? Are they new acquisitions?

@Sterling Pompey the home possible was our go to loan four or five years ago, but some changes were made in 2019 that made it very challenging to use sadly. You can't really add the income from a property to your income and still qualify based on the income limits.... but you have to use the income from the property to qualify. This little change made it harder and harder for us to use it. On my team, we jokingly call it the home "impossible" loan. 

We have had a lot greater success rate with some of the local portfolio lenders who do 5% or 10% down loans, or using FHA.

I think you should keep doing what you're doing but maybe set aside some of that equity to partner with someone so when you find an opportunity you'll be ready to act together. Going from 3 properties to 1-2 properties/year is still very solid growth in my opinion. But hard money/private money for renovations over your own cash would be preferable.

@Mario Morales

Well it seems like you've already built up some equity to leverage to buy more rentals so that's great. But eventually you'll run out of your own money so you should probably partner to get more capital and utilize debt to finance your rehabs.

I think it depends on what scaling looks like to you and the timeframe.

You will learn more and learn better by reading some books.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.