All Forum Posts by: Sean Johnson
Sean Johnson has started 5 posts and replied 22 times.
Post: New investor looking for advice on a deal
- Rental Property Investor
- San Diego, CA
- Posts 22
- Votes 5
Hi everyone,
I am a new investor looking to buy my first out of state rental property in North Carolina. I really like the power of reusing my money with the BRRRR strategy and have been focused on that so far.
I happened to find an investor looking to offload 3 properties at once, all of which generally fit what I am looking for and all with good cash flow and ROI numbers.
The issue I am having is that I would not be able to pull all of my money back out in the refinance, I would be leaving roughly 20% of my cash in this deal, thereby not having as much for more traditional BRRRRs down the road.
Looking for any thoughts/inputs people have, thank you!
Post: Rentals in rough neighborhood
- Rental Property Investor
- San Diego, CA
- Posts 22
- Votes 5
Originally posted by @Thomas S.:
In C/D areas you must treat your tenants like children...bad children.
By the 2 year mark if your property is paid off your cash flow will be reduced to almost zero due to the rent being eaten by paying for the opportunity value of your equity. Your highest cash flow is today and it will only be reduced as your equity grows. ROI diminishes with time.
If you value cash you would never allow it to sit as dead equity.
Thomas, I am also new here and was wondering if you could expand a bit on your comment above. I am not really grasping how your cash flow will be going down as the equity goes up (if I am interpreting that correctly?). Also, what do you mean by "dead equity." Thank you, any help is much appreciated.