All Forum Posts by: Mike Fingleton

Zach, @Zach Chilelli

Good timing! I’ve dealt with insruance in markets like Bridgeport, CT, and a few other places, so I get where you’re coming from. One of my clients ran into a similar situation with a rental in an area where property values were fluctuating fast and they needed coverage quickly. I reached out to a local firm...Miller Insurance in Bridgeport; and they had a solid grasp on the rental market there. They're great because they understand the unique aspects of insuring properties in areas like this, where you’re balancing tenant risk, property conditions, and potential for higher claim rates.

Here’s the kicker: depending on your specific situation, you might want to look at vacant property insurance as well if your place is going to sit empty between tenants, even for a short period. I had a client in a similar area and they were caught off guard when their property was vacant for a month and they weren’t covered for that gap. From what I’ve read in the Wall Street Journal, there’s a lot more risk in high-turnover rental markets right now, especially with weather-related claims spiking.

Anyway, I'd call Miller Insurance (they’ve got a small office, but they’re real people...not a faceless 1-800 number), and if they can’t handle it for you ASAP, they should be able to point you to someone who can. Let me know how it goes, and feel free to ask if you hit a wall on this.

Oh, and funny story...my friend was managing a couple of rentals over in Norwalk (just a bit outside Bridgeport), and they almost lost a tenant because of a delay with their insruance policy renewal. They had to get creative with their covergae to make sure everything was smooth. Tapping into a good local broker made all the difference for them.

- Jasper / Pat Aboukhaled

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey John @John Salcedo, great question. I’ve had a couple of clients in both Austin and Scottsdale who’ve looked into similar options, and the truth is, it’s one of those niche areas where the institution you choose can make a big difference. From what I’ve seen, a lot of the bigger banks like Chase or Wells fargo tend to shy away from offering lines of credit backed by whole life policies. They just don’t see enough of these deals to feel comfortable with them.

That said, I’ve had more luck with smaller regional banks and credit unions.. especially those that cater to higher-net-worth individuals. For example, last year a friend of mine was able to secure a line of credit through a regional bank in Phoenix.. Western Alliance, I think it was. They were familiar with the whole life policy collateral structure and gave him a decent rate. In Austin, I know Horizon Bank has been open to more creative financing strategies too, so it’s worth checking with them.

One thing to keep in mind is that the terms can vary wildly depending on the institution, so I always recommend reaching out to a financial advisor who’s well-versed in life insurance-backed loans before pulling the trigger. It’s one of those situations where the fine print can really bite you if you're not careful.

From what I read in the Wall Street Journal a while back, a lot of these deals tend to come down to relationships.. having a good banker who understands the value of your policy is key. If you’re in an area with a strong private banking community, that might be your best bet.

Hope that helps! Oh.. and one thing I learned the hard way is that some policies have restrictions on borrowing against them, so double-check with your insurance provider first. Wouldn’t want you to get down the road and hit a wall there.

- Jasper / Pat Aboukhaled

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

 You're welcome! As for when I’d start paying down the loans, it really depends on your goals and financial situation. If you're comfortable with the debt and your rental income continues to cover your expenses, you might not need to rush into paying them off. Here are a few things I’d consider before making that decision:

1. Cash Flow: If your rentals are generating solid cash flow, you could keep using that money to build reserves, reinvest in more properties, or improve your existing ones. Paying off loans early might reduce your liquidity and limit your ability to grow your portfolio.

2. Interest rates: Since your rental mortgages have relatively low interest rates (2.99%–4.375%), it might be better to keep them as they are, especially since borrowing at those rates is pretty cheap compared to current market rates. Paying down your primary mortgage (at 6%) could be a priority if you want to reduce your higher-interest debt first.

3. Personal Comfort: If the debt is causing you stress or impacting your peace of mind, paying down the loans could make sense for your mental well-being. Some people just sleep better knowing they owe less, even if the math doesn’t favor it financially.


4. Future Opportunities: Keep in mind that by not paying off the loans early, you free up more cash for future investment opportunities. Whether that’s another rental property or another form of investment, having liquid capital gives you flexibility.

If it were me, I’d probably hold off on paying down the rental loans unless I had nothing better to do with the cash or if my long-term plan was to be completely debt-free. But if you’re feeling over-leveraged, it might make sense to chip away at the debt, starting with the highest-interest loan.

What are your thoughts? Would paying them down give you a sense of relief, or are you more focused on expanding your portfolio?

Hey Mark,

I totally get where you're coming from. I remember when I was first getting started in real estate, I had similar feelings about being over-leveraged. It’s easy to feel like the walls are closing in when you see those big debt numbers stacking up. But from the numbers you shared, you’ve got some really solid things going for you here.

First off, your rental income is already covering your mortgage payments with a nice little surplus, which is a great position to be in. That $1,300 a month buffer is your safety net, and trust me, that’s going to be a game-changer if any unexpected maintenance pops up or you need to cover a vacancy for a month or two.

Now, about that feeling of being overwhelmed with debt..I had a client once, let’s call him John, who felt the same way when he hit the $1M mark in mortgages across a few properties. What helped him was really focusing on the long-term strategy. Mortgages aren’t necessarily a bad thing, especially when they’re tied to assets like real estate, which generally appreciates over time. Plus, with interest rates like 2.99% and 4.375%, you’re essentially borrowing money at a really low cost, especially in today’s market where rates on new loans are much higher.

One thing John did that helped ease his mind was to focus on building up reserves. He kept 6 months' worth of mortgage payments for all his properties in a liquid account.. just in case something went sideways. That cushion made him feel less anxious and more in control. From what you’ve said, it sounds like you’re already building up reserves, which is exactly what I’d recommend. You might even think about bumping that up a bit if it would help you sleep better at night.

Another thing to consider is leveraging your extra income from your sales job. I know you’re nervous about losing that job...who hasn’t had those thoughts? But with your income level, you have an opportunity to either pay down your primary mortgage a bit faster (the one at 6%) or reinvest in something that could boost your cash flow, like improving your rental properties or maybe even adding another one at a great deal. From what I’ve heard, rates like yours are considered low in today’s market..

Real estate is a long game. My advice would be not to rush into paying off all your mortgages at once, especially when the cost of borrowing is as low as it is for you on your rentals. Let your tenants pay those down over time while you continue to build wealth through appreciation and cash flow. You’re building equit every month, even if it feels slow right now.

Also, if you ever want to chat about specific strategies or even just vent about the stress of it all, I’ve been there, and I’d be happy to share more of what I’ve learned along the way.

Hang in there;you’re doing beter than you think!

- Jasper / Pat Aboukhaled

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

-Pat

Hey Art,

Your Athene strategy definitely piqued my interest. A few months back, a longtime client of mine was enticed by a similar annuity offer promising to cover conversion taxes with a cash bonus. On the surface, it seemed like a fantastic deal. But as we sat down over coffee and sifted through the details, a few things didn't sit right.

Those indexes... AIGO, AIPEX, BNPIMAD5, and the rest... they're not exactly the kind you hear about every day. He found it challenging to get comprehensive info on their historical performance and the underlying assets. Plus, commiting his funds for ten years felt like a significant leap, especially since he was eyeing some promising real estate opportunities.

We ended up exploring investment properties in Phoenix. Jim invested in a small apartment complex, and within two years, not only did the property's value appreciate significantly, but the rental income also provided a steady cash flow.

Real estate offers a level of control and tangible value that can be really rewarding. You can influence your investment's performance through property improvements, rent adjustments, and savvy management... something you can't quite do with an annuity tied to obscure indexes.

An Individual Retirement Account (IRA), particularly a Self-Directed IRA, can be used to invest in real estate and employ leverage to potentially enhance returns. By purchasing property within the IRA, you can use non-recourse loans-where the property itself is the only collateral-to finance a portion of the investment. This means the IRA can own a leveraged real estate asset, and any income or gains from the property grow tax-deferred (or tax-free in a Roth IRA). However, it's important to note that using leverage in an IRA can trigger Unrelated Business Income Tax (UBIT), and there are strict IRS rules to follow to avoid prohibited transactions. Consulting with a financial advisor or tax professional can help navigate these complexities.

It might be worth considering how real estate investments could align with your retirement goals, especially in thriving markets like Phoenix or Austin.

Just my two cents based on experiences with clients like Jim. If you'd like to toss around some ideas, I'm here.

- Jasper / Pat Aboukhaled
Turning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey Rob,

First off, congrats on your upcoming settlement... that's a big deal! I remember when a close friend of mine bought his first duplex in Philly; the excitement was off the charts.

Your idea to pick up the neighboring property is pretty smart, especially with that shared backyard. I actually had a client who managed something similar. He convinced the seller to do owner financing for the second property since he was already buying the first one. It's not super common, but sometimes sellers are open to it, especially if it helps close the deal faster.

Have you thought about checking with local credit unions or smaller banks? From what I've heard, they sometimes have more flexibile lending options. A buddy of mine managed to get a better deal because the local lender understood the potential of owning adjacent properties.

Honestly, the financing world can be a bit of a maze, and it's easy to feel a little lost.

Anyway, hope that gives you a few ideas to chew on. Buying property can be a wild ride, but it's definitely worth it in the end. If you ever want to chat more or swap stories, just let me know.

- Jasper / Pat Aboukhaled
Turning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey Graham,

I've been watching the Philly market pretty closely...it always has its unique ebb and flow. Recently, I noticed that while some neighborhoods are steady, others are seeing a slight dip in prices. My cousin actually lives in Philly and was telling me how the area around Fishtown is still buzzing, but some other parts are cooling off.

For first-time homebuyers and investors, the competition isn't as fierce as it was last year. A good friend of mine just helped a client get a duplex in South Philly. They had more room to negotiate than exepcted. I'm happy to make the intro to that agent there if you would like.

But I've got to share what's happening here in Phoenix... it's pretty exciting. The city's experiencing massive population growth...from what I've heard, people are moving here for the booming job market and, well, the great weather doesn't hurt. Companies like TSMC and Intel are investing billions into new facilities, and it's creating a real surge in housing demand.

One of my clients was set on investing in Philly but decided to explore Phoenix after we talked.

From what I read in The Wall Street Journal, Phoenix is one of the fastest-growing cities right now. I genuinely think Phoenix offers a strong potential for ROI given all the growth. If you're open to it, I'd love to share more about what we're seeing here.

Just thought I'd pass along some insights.

Pat & Jasper

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey Scott,

Your experience really brings back memories. I worked with a client who made a similar move in Peoria about a decade ago. Back in 2012, he purchased a property in a partially developed subdivision for around $215,000. The area had stalled after the 2008 downturn, but he saw the potential for growth, just like you did.

He held onto the property, renting it out and watching the neighborhood gradually come back to life. Earlier this year, after some thoughtful renovations, he decided to sell. The market had appreciated significantly, and he ended up selling the property for just over $430,000. The combination of rental income over the years and the appreciation on a 40K downpayment (over 500% return on cash) made it a standout investment for him.

It's fantastic to see you've tapped into Peoria's growth as well. With the appreciation you've experienced, have you thought about what's next? Whether it's leveraging a 1031 exchange to defer capital gains taxes or exploring new investment opportunities in areas like Austin or the Phoenix area, there are plenty of options out there.

If you're considering your next steps, I'd be happy to share some insights from what I've seen in these markets. Sometimes a casual chat can spark new ideas or strategies.

Cheers to your success, and hope we get a chance to connect soon!

- Jasper / Pat Aboukhaled
Turning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey Tyler,

First off, huge congrats on your duplex... making that leap is no small feat! I remember back when I got my first property, and the itch to expand was real.

You asked if it's just a waiting game until there's enough equity. Well, not necessarily. There are a few strategies you might consider to accelerate things.

One option is a cash-out refinance. If your property's value has increased since you bought it... given the market trends in Albany, that's quite possible... you could tap into that equity sooner than you might think. From what I've heard, local banks are sometimes more flexible than the big guys.

A buddy of mine managed to snag a HELOC on his rental property, which isn't always straightforward, but it opened doors for him. He used it to put a down payment on his next investement.

Have you looked into partnerships? Sometimes teaming up with another investor can help you scale up faster. I had a freind who partnered with someone in a similar situation, and they were able to acquire their third property much quicker than going solo.

There's also the BRRRR strategy... Buy, Rehab, Rent, Refinance, Repeat. It can be a bit of a juggling act, but it's a method some investors use to grow their portfolio without waiting years for equity to build.

I guess what I'm saying is, it's not just about waiting.. it's about finding creative ways to leverage what you already have. If you ever want to chat more about this... or if you're curious how these strategies play out in markets like Austin or Scottsdale... feel free to reach out. I'm always up for swapping stories and ideas.

- Jasper / Pat Aboukhaled
Turning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

Hey Brian,

First off, congrats on building that equity over the past five years...that's a solid accomplishment. I remember when I was in a similar spot, debating whether to leverage my first rental to acquire another property. The numbers didn't look spectacular at first glance, especially with rising interest rates nibbling at cash flow.

Here's the thing: while your immediate cash flow only bumps up slightly from $1,300 to $1,400, you're doubling your assets. Think of it like planting two trees instead of one...they might not bear a ton of fruit right away, but over time, you'll have a richer harvest. Plus, owning multiple properties spreads out your risk. If one tenant moves out or unexpected repairs pop up, the other property can help cushion the impact.

Of course, more properties mean more responsibilities...double the maintenance and potential headaches. But if your goal is long-term financial freedom, adding another appreciating asset could be a smart move. Rents tend to rise over time, and that extra $100 in cash flow might look a lot better a few years down the road.

Have you considered exploring markets like Austin or Scottsdale? I've noticed investors finding some promising opportunities there despite the current rates, partly because of strong rental demand and growth potential.

At the end of the day, it's about aligning with your long-term goals and comfort level. Maybe run a few scenarios...what if interest rates climb higher, or if property values plateau? It's not a one-size-fits-all answer, but hopefully this gives you some food for thought.

Whatever path you choose, I'm here rooting for your success.

Jasper & Pat

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC