All Forum Posts by: Morgan M.

Hey BP,

We are listing our home for sale and expect to net $500,000 after paying off HELOC, closing costs, taxes etc. We are fortunate enough to have a decent income and flexible living circumstances for the next couple years.

Given these details I'm really interested in becoming a lender despite not having a large real estate portfolio.  Do any lenders out there have references (books/podcasts/courses) they would recommend for getting started?

Maybe I should start by networking to find a solid real estate attorney I can invest in?  Is $500,000 too low to start with?

My interest in becoming a lender stems from enjoying analysis and problem solving.  I'm also drawn to the power of networking to solve problems (which is why I enjoy BP so much).  Maybe some of you can share success stories you've had as a lender and what you enjoy about the industry.

@Roy Gottesdiener this is more so thinking out loud than a direct answer. After all, I’m not an expert:

-If I want $150,000 CF per year what does that mean I need in cash/equity?

-If I expect 10% cash on cash I’ll need $1.5MM in 2029

-$30,000 per year X 10 = $300,000

-$300,000+$250,000= $550,000

So your question becomes:

How would you make $250,000 work along side these savings contributions to produce $950,000 in 10 years.

Frank Gallineli points out 4 basic returns in real estate:

-Cash Flow

-Appreciation

-Loan Amortization

-Tax Shelter

If we go back to 10% cash on cash your $250,000 can be earning you $2,500/month or $30,000/year so that gets you 1/3 of the way there.  Now you need to decide what to do in addition to your current portfolio to earn $650,000 in 10 years.  I'm with @Geordy Rostad. I think the BRRRR method offers the scale you need without having to hit a home run. I would just add that broadening your approach to maximize the other three basic returns listed above eases the burden on cash flow and it doesn't sound like you have a burning need for additional income right now so that could open opportunities that other investors hyper focused on cash flow would pass on.

@Allan Foote

I graduated with a 4 yr degree in business. I don’t recommend college outside of having scientific ambitions.

Information flows much easier than money. Avoid the debt and time suck.

@Matt Stevi I’m enjoying reading Frank Gallinelli’s book https://books.google.com/books/about/What_Every_Real_Estate_Investor_Needs_to.html?id=53XLanyMUqwC.

Regardless of financing this book helps you understand how to break down a property from a cash flow perspective. Pair this with the bigger pockets money podcast and you should have your mind in a good place to get started.

@Ryan Heywood

I’m limited to weekends I’m afraid. I actually reside way north near Redding but have roots in Sonoma County so I’m happy to make the trip if it works out.

@James Dupont

It’s an expensive state as you know. If I were buying now I think I would look out of state. That being said, your rent might be really high and if you can’t get that down then it might make sense for a long term play on appreciation.

As a fellow Californian I think it makes sense to explore extreme ways to knock down your living expenses. But most of the people I know tend to like their California lifestyle. So the question becomes: what are you willing to sacrifice?

See if you can’t find a mentor that already invests out of state. Maybe they can plug you into a reliable management company and or good markets.

My understanding is that only licensed agents get access to the MLS is that right? That's really where my question was leading and thank you for pegging it down for me. I wasn't sure when it's appropriate to ask for them because I wouldn't hand them out like trick or treat candy either.

I really appreciate the input.  Certainly will incorporate this in due diligence.  I'll run a APOD on my property for practice.  Maybe see if I can't get a few other properties done for practice.  I'm loving these forums.

@Frank Chin

Makes sense. So doing market research on rents independent of seller details, and then I assume, add a clause in the offer about current tenant rate that survives the transaction.

Do you have any practical methodology for analyzing operating expenses if the owner doesn’t disclose?

How do you get an operating statement for a property that’s for sale? Is that something a broker or agent has to request or can an investor just ask?