All Forum Posts by: Account Closed

Quote from @Eli Kim:

Hey guys, 

So I currently have 3 properties and I want to purchase another one but the issue is I've maxed out DTI. What other methods should I use to acquire another property? I've been thinking DSCR but don't they typically have higher down payments and closing costs? I was also thinking of looking for seller finance deals. What are you guys thoughts for my best course of action?

I ran into the same issue. I pivoted to doing creative financing. My last deal was an exact wrap at 3.5% granted I had to put $80k down to pull it off, but it’s a great way to keep the train on the tracks. 

@Dave Meyer it is hands down still the best asset class. As an investor and an agent I can put 5% down and get 3% (more or less) back in commission. If the property cash flows $0, gives me $0 in tax benefits and appreciates at 3% per year on pace with traditional inflation it’s still a massive winner. Let’s put some numbers to it.

$500k purchase price. $25k down. $15k in commissions on an 80/20 split yields a $12k commission. $13k net cash out of pocket (plus closing costs if you can’t get a seller credit to cover, I usually can).

3% appreciation is $15k per year on my original investment of $13k. 

Show me another asset class where I can make 115% on my money. It simply does not exist. I did this 8 times in the last 8 years. It is simple and repeatable. 

Nice work! Now you just need to run this same play about 10 more times! 

I would not necessarily stop the extra principle payment. I would use it as more of a valve. Turn the valve off for a while and start saving up your cash reserves. When your cash reserves reach a comfortable point, turn the valve back on 20%, 30%, 40%…. There is something huge to be said for having a fully paid off primary as an investor. It will make your DTI calculation for almost all future investments almost laughable (in a good way) to the lender.

*This is not financial advice. This is just what I would do in your situation.

Do you need a CPA to get started? Absolutely not.

Will they be beneficiary to you in the long run? 1000%

That said, having a CPA should never be the thing that prevents you from doing your first deal. Ever. 

Quote from @Neal Z.:

You'll operate without issue in Phoenix. It's easy to get licensed and they are reasonable with enforcement. But, Phoenix exploded the last few years with listings. To perform well, you'll need a top tier place with lots of amenities. Decked out backyard and ability to sleep large groups. Also, low season May - November is rough. You'll battle to break even. Basic clean house with pool no longer cuts it. 

Speaking of, if anyone wants to rental arbitrage 5 houses in Arizona, I'll give them to you. I'm focused elsewhere and likely getting out of these. 

DM me about these. If they are in my markets I may be able to take them off your hands. 

Quote from @Grant Stuard:

Quote from @Account Closed:

Quote from @Justin Brickman:

Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc. 

Nothing quite like openly admitting to mortgage fraud on a public forum.

For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison. 

But don’t let me stop you. 

 clarify what you mean. If the lender is aware of this strategy, and they have a 6 month primary residence term, how could this be fraud (legally)

I’ll just drop this link, it’s a lengthy explanation but worth a read. In short, the lender doesn’t have the option of giving you a 6 month primary residence term. 

https://www.supermoney.com/encyclopedia/occupancy-fraud

Quote from @Justin Brickman:

Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc. 

Nothing quite like openly admitting to mortgage fraud on a public forum.

For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison. 

But don’t let me stop you. 

Quote from @Christie Gahan:

Hi Grant:

Ignore everyone else.  

We have come out of a period of velocity that was crazy.  Cheap money, multiple offers.  Economic conditions have changed. 

Let's be clear.  Folks that made a lot of money from 2019 to 2023 had Perfect Economic conditions.  They made money and I am happy for them.  But, that is not a flex.  It is so cringe.  

People have made some "Change Your Life " money.  But, it only changes your life if you keep it!  

Listen carefully to what people say.  " My portfolio is worth ten million" does not mean the same thing as " I manage a portfolio worth ten million dollars."  This does not mean "My net worth is ten million dollars".   

"My portfolio is worth ten million."  Okay.  This could be true.  At the same time, it could also be true that your portfolio is worth ten million and you owe twelve million.  This would mean you are negative two million.  Not good.  Or it could have negative cash flow.

"I manage a portfolio worth ten million."  Okay.  This could be true.  At the same time, do you own any of it?  "I manage" does not mean that you own anything.

"My net worth is ten million."  Okay. This could be true.  This would mean that all of your assets ( stocks, bonds, real estate) is worth A.  Subtract all debt. ( IRS debt, mortgage debt, student loans)  If the amount left over is ten million then you would have a net worth of ten million.  Great!  But, can they prove it?  

Focus on the Quality of the Deal not the number of deals.

Best of Luck!

I think I speak for everyone who was actively investing from 2019 to 2023 when I say that you are way off base here. These were not "perfect economic conditions." In fact, I don't think such a thing exists but for the sake of argument here are a few things you seem to fail to appreciate the gravity of.

My company laid of 20% of its staff in March 2020.
An ungodly amount of in person services closed their doors leaving their staff (our rental pool) scrambling to pay the bills.
Local governments shut down schools leaving mothers and fathers (ourselves and our rental pool) scrambling for childcare.
Local governments put a moratorium on evictions for non paying tenants
Small businesses who didn't fraudulently apply for PPP loans took a bath for years.

The list goes on and on. The people who survived 2019 - 2023 did so through unprecedented conditions. You owe them the respect they've earned. It may look good to you in hindsight, but if you moved through the weeds as I did, you'd have a very different appreciation and a much less cavalier attitude. 

The lesson here is that you will always face obstacles as a RE investor. Your longevity in this business will live and die with your ability to adapt. Sure, some of us made a ton of money through this period. But some of us were wiped out entirely. I'll bet dollars to doughnuts that the ones who survived don't consider this period "perfect economic conditions." FFS

@Grant Stuard you have to have balance. Flip two buy one. Say it takes you 1 month to do a lipstick flip and make $30k. If you do that twice you now have the capital to put 25% down on a $240k home. You could conceivably do this 6 times a year. 6 houses a year would put you into a building mode of cash flow. Now you have the flip money, cash flow, tax savings, and appreciation all feeding the beast. The more you focus on this very basic approach, the fast the beast grows.

Don’t get bogged down with learning everything under the sun. Pick a strategy where you can see the light at the end of the tunnel and get moving.