All Forum Posts by: Tucker Cummings

Just put another property under contract in Fayetteville on Monday, closing on Wednesday

Just bought my first investment property last December - 26 years old. Had a small IRA and my 401k outside of those. Closing on my second property on Monday!

@Colin Reid such a good analogy - "Investing isn't apples and oranges, it's the whole grocery store."

One of those nuggets where I had that same thought process as you, but never new the right words to put to you. thanks for that bit of knowledge!

So cool, so inspiring. LOVE THIS!!! Can't wait to hear more about it and how it develops over the years. 

@Joe Villeneuve I see what you're saying, thanks for the clarification. 

@George W.& @Randall Alan Thank you both. Yes I have a 401k, it's maxed out. I also have a very small roth IRA account that I max out. I need to look into borrowing money from my 401k as a possibility. As far as borrowing money from family or private partners, I just finished reading "Raising Private Capital" by Matt Faircloth and this is definitely a strategy I will employ in the future. I actually just closed on my first BRRRR investment on Monday. I wanted to develop a track record/resume first before asking others to trust me with their money.

I'm not looking at trying to speculate on Apple or Amazon or Kodak, rather park some money in index funds while I'm saving up money. Ironically, after I posted this last night, the very next page I read in @Scott Trench "Set for Life" seemed to advise a strategy like what I'm asking about above, so I think I'll give it a shot.

Hi @Anthony Then, I'm a newer investor as well, bought my first property last year in December, and it was the best financial decision I ever made. My mortgage is $534/month, I rent out the house to two soldiers so I get a premium on rent by renting by room (plus I'm in touch with their HR department on base for quicker tenant placement, and if they act a fool I have direct contact with their Commanding Officer - I am 100% not afraid to be a tattle tale on them!). I cash flow $541/month after all my expenses, and I'm currently running a 44% ROI in the first year. This is only taking into account the cash flow, not the other forms of wealth creation below, which would further add to my ROI. It also is near completely passive since I have property management in place. I just put my second property under contract on Monday!

@Joe Villeneuve I respectfully disagree with your points about stocks making exponential returns. We've all seen charts where they show that stocks make that "hockey stick curve" in 30-40 years that encourage us to invest in the stock market and our retirement accounts. I think we can agree though that none of us want to wait 30-40 years to make exponential returns, and perhaps this is what you're getting at and where we find common ground. 

Back to Anthony, keep in mind that real estate is just one part of investing. There's no reason why you can't do both stock investing and real estate investing for the purpose of diversification. Who's to say that you can't buy a rental property, and use the cash flow to supplement your stock portfolio? That's my strategy, I hold a larger stock portfolio in index funds to accelerate growth, and monitor deals to purchase. When I find a good deal, I cash out stocks, do the deal, put my capital back into stocks after refinancing (see BRRRR below), then use the cash flow to accelerate the stock portfolio growth again. If anyone says putting the cash in stocks is risky - they're wrong. Stocks are more volatile than real estate, bonds, or cash. Not more risky - a post for a different day.

The huge benefit with REI is that you're getting a lot of different forms of wealth creation through real estate investing:

1) Cash Flow - How much is left over after expenses. Cash in your pocket either for reinvestment or lifestyle.

2) Appreciation - How much a property increases in value each year, generally 3.2% or inflation rates. So if you have a 100,000 house, it will likely appreciate to $103,200 in Year 2. This is just "icing on the cake" and the more speculative part of real estate investing. Most investors would tell you not to invest for the purpose of appreciation, because of its speculative nature.

3) Debt Paydown - How much you're paying down the mortgage each month. It can't really be easily used for purchasing purposes, but attributes still to your net worth. 

4) Depreciation - Contrary to appreciation (the market value of your home), you can depreciate your asset each year for 27.5 years on your taxes. So that $103,200, well you only have to pay taxes $97,000(ish) on your property and the income you've made against it. This one is a little tricky, and I might be wrong on the mechanics actually. Check with your CPA.

5) Value Add Opportunities - Finding opportunities in a home to make it worth much more than what you bought it and repaired it for. For example, you buy a 2 bed 2 bath house for 50k, then put 25k worth of work into it (new kitchen, floors, paint, add a bedroom, etc.), so now its a 3 bed, 2 bath house worth 100k. You just created an additional 25k in equity, plus you can refinance the house with a 75% Loan to value, so you get back all your capital back out. This is called the BRRRR method, and while it requires a little more work, it allows you to recycle your money faster. This is what I'm doing with the property I put under contract this week.

I also really encourage you on whatever investing journey you take. Don't let the 9-5 discourage you, this entire site's targeted audience is the average joe making 50,000/year (give or take), who wants to be financially free quicker. Of course there are very veteran investors here, but a lot of them started in the same shoes as us. I'm also a 9-5er, trying to get financially free. Subscribe to the forums, listen to podcasts, watch Youtube videos on the subject, decide if it's right for you.I'm sure you'll pick what's best for your needs.

Best Regards,

Tucker Cummings

Just having this thought today on building my cash reserves for investing and wanted to throw the thoughts into BP.

I've been saving my personal cash reserves for a while so I could buy my own properties and BRRRR/flip them using my own money. I have them in a high interest savings account, and by high interest I mean it was 2% pre-COVID and now it's 0.82%. The thought crossed my mind about "what if I tried to accelerate growth moderately by keeping half my reserves in the stock market, in index funds?" The purpose of doing this is to acquire funds for down payments or powerful cash offers on property.

On one hand you have higher growth rate, on the other hand you carry the risk of an unforeseen downturn. Keeping half in just traditional cash would help mitigate loss.

Traditional financial advice tells us not to invest anything we’ll need in the next 5 years. Traditional financial advice also tells us that our primary residence is the best investment we’ll ever make and that getting a 9-5 job and working endlessly through my most lively years to retire in my most crippled is the dream.

I’m a younger/newer investor, just trying to seek methods for quicker, but sensible wealth creation. So my question is - Does anybody do this? What’s been your experience? What do people see as pros and cons? Let’s open the discussion.

Coming from the perspective of somebody who tried his hand at wholesaling:

My day job is sales, I spend a lot of time making cold calls, sending cold emails, making cold connections, getting rejected constantly but also finding opportunities otherwise unknown and closing deals. I’m quite good at it, so I thought wholesaling would be a good niche for me in the RE world to try my hand.

I got LeadSherpa, a texting platform that is in fact TCPA compliant (therefore not illegal, as that was my major concern when jumping in), and started hammering away. The most common response you get is “Please for (explicit) sake, I get 4 of these texts every day. I already told you to stop texting me. So (explicit) OFF!!”

Coming from a sales & marketing background, prospecting is necessary to produce growth. I think just waiting for deals to come to you is the “casual investors” method, and that’s just not the pace a lot of people want to go. Having said that, I think there is a point where the market is oversaturated and it starts to become almost immoral, where we’re constantly blowing up people’s phones. It wasn’t long after I started wholesaling that I put myself in the homeowner’s shoes and thought how much I would hate it if I had people blowing me up all day. I don’t want to contribute to that type of environment in this space, so I stopped. However, I’m very thankful for the service they provide, because I think they do help people get out of tough situations, and simultaneously provide investors with good deals. In fact, I just put a property under contract from a wholesaler today!

The point I’m trying to make is - yes I agree with you that it’s super annoying and frustrating. There should be some sort of regulation put in place for it.

The best solution I can think of is to, I don’t know, have some sort of program or schooling where you could go learn how to fundamentally and legally sell real estate. Maybe we call it a... a uh... real estate license. Call me crazy. Just a thought.

I am part of my local REIA (TREIA) group, but am looking for other investor meet ups and networking events in and around Raleigh and Fayetteville NC. Hoping to get to meet other RE connections face-to-face (or mask to mask?) to learn and exchange best practices. Feel free to post below or shoot a direct message!