All Forum Posts by: Steve Smith
Steve Smith has started 11 posts and replied 212 times.
Bill Bronchick
William Tingle
Jeff Watson
Dyches Boddiford (deceased recently, so not sure who's handling things)
And others, perhaps some on this site.
Perhaps other members here can comment on the best training.
Post: The Myth of Cashflow – and understanding how to reserve properly and model.
- Posts 215
- Votes 167
Quote from @Devin Scott:
Quote from @Steve Smith:
Quote from @Devin Scott:
Quote from @Steve Smith:
Devin,
There's a LOT of difference! The 20yr house should be cash flowing handsomely! Why kill that income stream with a refi? If you need cash, borrow against the equity if you have to. Don't kill a good note (assuming you had a good note when you bought).
There's on case where one might want to refi, and that's if you bought a property that had bad debt on it from the start...pay that off with a new note. And there's ways to do that without much risk using a joint venture with other investors. Give them a piece of the deal if they pay off the bad loan. That can work well for both of you. I have worked both sides of that deal and works well.
No. There is literally zero difference between a house you just refinanced at 80% LTV and the same house if you buy it today with 80% LTV. I'm talking post-refinance. "Why kill that income stream with a refi?" Well that applies to new acquisitions as well, if that's your thought process. A new deal is also theoretically cash flowing handsomely.... unless you use a mortgage to buy it, lol. Any mortgage of any type kills cash flow. So why do it? I don't think I need to explain that on this board.
Again, the fact that you've owned the house for a long time makes no difference. There's nothing inherently different about re-leveraging a property versus a brand new mortgage. In both cases you're keeping more of your own cash and paying a bank interest to do that. But if you're making the assumption there's a low-interest mortgage in place, so why refi that out, then yea that's a little different. But if you've held for 20 years that mortgage is going to be next to nothing anyway.
Whether you are buying a new place or evaluating your own portfolio, if you value current cash flow over leverage to allow you to buy more properties, then you shouldn't have any debt whatsoever. No argument on that point.
There's a BIG difference in a refi and a new a acquisition. There are many more ways to structure a purchase than a refi, and often at mush lower cost. And where are you getting the money for a refi? Don't tell me you still use banks.. ugh? Private money, use it for a purchase, not a refi.
Like I said, why would you kill a nice cash flow with a refi? Isn't the cash flow what we want for the betterment of our lives?
And you can certainly have good cash flow and leverage and still go out an buy more. I could argue a balance makes sense.
Post: The Myth of Cashflow – and understanding how to reserve properly and model.
- Posts 215
- Votes 167
Quote from @Eric James:
A lot of people have the same experience you did after they buy only 1 or 2 rentals. For me, rental real estate wouldn't be worthwhile without having multiple advantages. Living in the area of my rentals, self managing, being onsite frequently, able to do repairs cheaply by doing them myself or having employees do them, owning in a relatively landlord friendly area, etc.
Eric, You're spot on! Buy homes close to you, do your own management, and keep a close eye on them. However, there's and argument to let the tenant do almost all of the maintenance items. Work well if you train them. However, I do maintain the AC (if the tenant changes the filters on time, major structural issues and roofs. Rarely do I have any major issues... far and few between. Usually nothing between 15 to 20 year roof replacements. Maybe an AC unit, but not much. Love my houses, and my tenants!
Post: The Myth of Cashflow – and understanding how to reserve properly and model.
- Posts 215
- Votes 167
Quote from @Devin Scott:
Quote from @Steve Smith:
Devin,
There's a LOT of difference! The 20yr house should be cash flowing handsomely! Why kill that income stream with a refi? If you need cash, borrow against the equity if you have to. Don't kill a good note (assuming you had a good note when you bought).
There's on case where one might want to refi, and that's if you bought a property that had bad debt on it from the start...pay that off with a new note. And there's ways to do that without much risk using a joint venture with other investors. Give them a piece of the deal if they pay off the bad loan. That can work well for both of you. I have worked both sides of that deal and works well.
I like the idea of hiring a couple of large obnoxious males to move in, also as squatters. A guy in Calif did that and it worked pretty well.
Hoping the laws will change, and think they will.
Post: Adding a lien holder to the property title
- Posts 215
- Votes 167
However, for a note, a more common way is to give him a mortgage to secure the note, and you'd record the mortgage at the court house. And if you have other assets, you could give your lender a security interest in that.
Personally, I much prefer a trust for property ownership and not holding title in ones personal name.
Post: Is it really a great deal if it's on a 30 yr mortgage?
- Posts 215
- Votes 167
Seeing how 85% of my properties are seller financed or "subject to", sometimes I get terms that I can't change and sometimes I can dictate what I'll pay.
Post: The Myth of Cashflow – and understanding how to reserve properly and model.
- Posts 215
- Votes 167
Quote from @David Lutz:
@Steve Smith Congrats that you’ve got a system that works for you and it’s finding success.
One of the challenges of living in California is that buying local doesn’t make sense. The properties are so expensive due to the land that if you need a mortgage you’re going to be cashflow negative, and the laws are so anti-landlord that I’m not sure it would be smart to buy here regardless.
How are you going about finding your seller financed and subject too opportunities?
But we're not talking about California, but it still works. Have several friends that are doing well out there. Yes, it's pricey, but the basic concepts still work. I won't do California, nor will I live there with the crazy liberal politicians that want to tax and harass you to death. Life is too precious to spend it there, but a beautiful state to visit, just not going back there for now.
As for seller financing, I have not issue finding it. Just ask for it and it it doesn't work, go on to the next deal. You just don't need that many deals to afford to wait for a good one. I'm finding it all the time.
Post: The Myth of Cashflow – and understanding how to reserve properly and model.
- Posts 215
- Votes 167
Wow, is all I can say. You got some bad training and headed down the wrong path. You don't need 5 houses, you need ONE good one, PERIOD. Buy local, manage it yourself and LEARN the house investing business. Get a GOOD quality house, and a GOOD quality tenant. Have the tenant do the basic maintenance as part of his lease. Let him pay you monthly ON TIME, or AHEAD OF TIME, without fail. If you give him a good deal on a great house and you get a qualified tenant, he will do this for you.
THEN, buy house number two next year. Repeat this over and over again. If you do it right, it will be easy and you should create about $1M in net worth in 10 years. As time goes on, sell your worst rental and replace it with a better one. NEVER ReFi anything! Every time you do that, you loose money. As time goes on, pay off your small loans and end up with free and clear houses.
Once you have 10 free and clear houses you can live off of them debt free for the rest of your life. If you want to live a bit higher on the hog and buy expensive stuff, get 15 or 20 or a few more, but do it with the same formula as above.
You don't need 100s of houses. I cringe when I hear about folks that bought 100 or 200 or 1000 houses. Makes NO sense. I keep reminding myself: KEEP IT SIMPLE, STUPID.
And, YES you can do subject too's and seller financing. 90% of mine are that way. And lease options to sell work great.
Just learn how to do it right. And you don't have to do repairs and remodels yourself (unless you like to work for low wages and sweat). My hammer is for cracking open nuts, not remodeling.
Just food for thought....