All Forum Posts by: Mary Jay

@Kevin Sobilo Very true regarding money not being dead if she never sells, based on your followup options. When I speak of selling though, I'm referring to "flipping the cash". not flipping the property. This can be done many ways, including the ones you mentioned here.

The key is to not leave your cash in equity. Equity built up from other means, such as appreciation and mortgage/principle contribution, is free money. Equity that you pay for, such as a down payment additional money paid towards the principle by the investor, is has the same value as if it were in your bank. The difference is, int is liquid in your bank, and thus it has more value based on the ability to keep it moving. When it's in your property it isn't moving, and is why I refer to it as being "dead".

I agree with you guys!
But nothing lasts forever, at one point your asset can become a liability, even if its mortgage free... For instance, I used to listen to DAve Ramsey who says to drive a beater...So I followed his advice and at one point I had to put 8K into that beater. (It was 500$ here, then 1K transmission, then it wont start, another 300, then something else. It was all over 18 months period. And every time I thought: well, I already put 2K /4k, etc, I guess I will fix this other thing too...) Anyway, that car became a huge liability, and it was very stupid of me to deal with it. But house can become a liability like that at one point too, right? When is it time to sell your asset, I guess? When its 80 year old? 100? 120? Or just keep it as long a its livable and I can get a rent cover the mortgage? But lets say house falls apart while I still have a mortgage on it, lets say 50K... With older homes you never know when it decides to fall apart, right? There are obvious signs of deterioration that are preventable. But nothing lasts forever...

I guess, at what point do you sell you a house? I guess the correct question would be at what age of the house you sell it so it does not become a liabilty?

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Thank you guys!

You all are so right!

my brain is just all over the place...All the time!!!

And its very hard to make decisions!

I think its kind of making more sense now in my head what I want so I will try to be more organized in relating this info to you guys:

in order to retire/do something else, here is what I think I need:

1) live in a paid off house

2) have 6 k in passive income...

Even if I stay in my job, which I probably will for a while, I really dont want to leverage my house to buy investment properties. I dont mind to leverage my house and downsize and buy a primary residence and live mortgage free...

Here is the big question, in order to buy more investment properties what do you think is a smarter way to go:

1) borrow from 401K

2) borrow from equity in a rental

Where would you borrow if you were me?

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Hi guys,

I have a question: cant seem to figure out my next move. Or actually how to spend or borrow 40K

1) I am buying now in florida for 200K and it will rent for 2K, will cash flow 200-300$ per month.

2) Have a rental out of state that is almost paid off, owe on it 6K, worth 80K. I can probably refinance it and get 50K out.

3) In my instate rental probably about 50K equity

4) House I live in has probably about 200K in equity

6) 115K in 401K, can borrow upto 40K

Plans:

1) Was thinking of buying a 4plex out of state that cash flows 1K/month. Have to come up with 50K in downpayment. Where should I get it from? My 401K? Or refi my out of state rental? Or get hard money and then refinance?

2) Was thinking of buying a house close to me, 4bdr/2bath and selling mine and move into the other one. The house below market value about 50K now. It wont cash flow. But if I sell mine and take that 200K in equity and but the other house, I will owe on it about 100K

3) Refi my house and pay off my instate rental completely and move there and be mortgage free? My goal is to get put of rat race ASAP, so may be this is the right choice? My Rental is only 3 bdr, so if my family moves in there it will be a bit tight...But I will have no mortgage on it

4) Buy cheap houses in the middle of nowhere that cash flow 300-400 per month...

Anyway, I am lost and cant figure out what to do.

What I know for sure is I am not sure how long can I handle my job, I cant stand it. So, probably it makes more sense selling my house and using equity to pay off my instate rental and move into it?

Anyway, what do you guys think?

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Originally posted by @Brian Robbins:

@Mary Jay I recommend Cutt Ableson at Berkadia in Houston for anything over 50 doors. They are outstanding and handled our last Freddie Mac loan.

Thank you..DId they make you put 20% down?

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Originally posted by @Scott Mclaren:

I do it all the time. Have never had a lender call the loan. I just get a warranty deed fill it out notarize it and record it. In Maricopa county it costs only a few bucks. As long as payments are getting made they dont care. Just keep your name on insurance policy as an additional insured.

Thank you, Scott!

1) Where do you get warranty deed? Does Maricopa assessors office provide the template for Warranty Deed?

2) So on your insurance policy, do you put your LLC name and your personal name as additional insured? Or is it only your personal name?

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Originally posted by @Mike S.:

The Garn St Germain Act protects you from a due on sale clause if you are the beneficiary of the land trust. What you do after with assignments is private, and you can always revert it back to you if needed by just signing the assignment paper and have it accepted by your trustee.

Thank you so much!

That is Interesting...I was not aware that there is an act that can do that...

It is from 1980, I wonder if its still valid, do you know?

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Thank you guys so,so,so much for all your help!

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Originally posted by @Joe Villeneuve:

Originally posted by @Mary Jay:

Originally posted by @Joe Villeneuve:

What you're missing are the 2 most important concepts of all...and they trump the rest.

Concept #1: "The Wealthy own nothing, but control everything".

It's not about being rich, or about ownership, it's about control...and control costs you "nothing". What you need to have control is the mindset that money is a verb not a noun. It must keep moving. The more it moves, the more it touches. The more things it touches, the more you can control.

Equity, bought by the investor, is dead money...mainly, because it stops moving. Equity, bought by the tenant in a property you control, is free money...to be accessed later.

Concept #2: When Einstein was asked, "What was the greatest invention of the 20th century"... he answered, "Compound Interest". What he said after that was more important. He said, "Those that understand it, will live off of those that don't". This concept is the secret to great wealth...and infinite control.

Love your posts! and always appreciate you sharing your thought!

1) So concept number 1: so when you say money needs moving, are you in favor of never selling (or almost never selling) and keeping leveraging?

2) Concept number 2: I always though that Einstein meant stock market, and never in my mind applied that quote to real estate. But I guess it does make sense to apply it to real estate...I bought one of my little rentals for 25K and now its probably worth 70-80K.... But even then, tenant practically paid my mortgage for me....

Unfortunately, I think you missed the point on both concepts...but you are one of many...actually most.

Concept #1: If you never sell, how is the money moving? It's not. It's standing still...and what's worse, it's dead.

Concept #2: Einstein meant "compound interest in general". The proof is a very simple equation. To show you just how powerful the compounding effect is, answer this question: If you took one penny, just 1 simple cent, and doubled the previous day's total for the next 30 days (i.e...day 1 = 2c, day 2 = 4c, day 3 = 8c, day 4 = 16c. and so on...), how much money would you have?

As far as that little rental you mentioned, for every month you had positive cash flow, you tenant WAS paying your mortgage for you. Also, the fact that the original value was $25k (notice I didn't say you paid $25k), and it's now worth $70-80k, isn't an example of compounding. That's just a straight line appreciation. Profitable, but a timid comparison to the impact compounding would have had on the original money you did pay for that little house.

Gotcha..., so in concept #1, if you paid for the house 25k, now its worth 70-80K, lets say u refinance and get 50K cash and go buy 4 houses with that as a downpayment...That is money movement, right? You still have control over your property plus 4 more houses, right?

You dont have to sell to make money move, right?

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Originally posted by @Joe Villeneuve:

What you're missing are the 2 most important concepts of all...and they trump the rest.

Concept #1: "The Wealthy own nothing, but control everything".

Equity, bought by the investor, is dead money...mainly, because it stops moving. Equity, bought by the tenant in a property you control, is free money...to be accessed later.

Love your posts! and always appreciate you sharing your thought!

1) So concept number 1: so when you say money needs moving, are you in favor of never selling (or almost never selling) and keeping leveraging?

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I love this forum! You guys are teaching me sooooooooo much!!!

A big thank you to all of you!!!!!!!

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All Forum Posts by: Mary Jay

Mary Jay has started 259 posts and replied 1269 times.

Post: Rich don't sell, they leverage

Post: Please help to figure out next move

Post: Please help to figure out next move

Post: multifamily lender- please advice

Post: LLC,transfering title, due on sale clause,+ making it all legit

Post: LLC,transfering title, due on sale clause,+ making it all legit

Post: Rich don't sell, they leverage

Post: Rich don't sell, they leverage

Post: Rich don't sell, they leverage

Post: Rich don't sell, they leverage