Real Estate Investing: Mindset shift: cash flow to equity |
- Mindset shift: cash flow to equity
- Sharing My Real Estate Investing Experience - 10 Years in the making
- Do people constantly tell you real estate is a bad idea?
- When can one stop paying PMI?
- Cash Out Refinance: Why NOT Take Out The Max Amount (80% LTV)?
- Refinancing my primary home. Should I cash out enough to pay most of a rental property off? Or refi the rental? My brain is fogging over with all the numbers.
- What monthly net income would you take over selling?
- Getting started need some guidance
- Any other sources you receive good RE info?
- Invest into a condo in LA/OC or a House in Las Vegas?
- Converting to 1st Rental
- 2 2nd home mortgages?
- Should I Find a Buying Agent?
- LLC for new real estate investor
- I been robbed
- Undergrad Real Estate Class Suggestions
- Is it stupid to request mortgage forbearance?
- Advice on vacation rental opportunity
- First Time Investers
- Should I do a cashout refinance if I already refinanced last year
- What service or help could a real-estate investor use ?
- Refinanced Primary residence recently- now converting to Rental
- Annual cash on cash return
- Best website to list rentals?
| Mindset shift: cash flow to equity Posted: 23 Apr 2021 08:13 PM PDT This sub has been so beneficial and really enjoy sharing my real journey as a real estate investor. If you see my post history, I had recently moved out of state and went from self-management to a professional manager. My mindset had changed and things have gotten a lot better, because, at the time of my last post, things looked very grim because after all of the fees, vacancies, etc we took close to a 32% loss in profit in our cash flow by using professional property management. However, I came to a new conclusion, and here is why. Quick overview - We started our single-family rental property journey in 2017 and now today have accumulated 10 properties. At the time, all of the deals we did 30-year, 20% down, fixed-rate financing (I.e. maximum cash flow). While self-managing, cash flow was roughly $4,000 a month and now with a property manager it is down to $2,700 a month but it is a lot less headache. BUT the reason for the title. Originally I was so bummed and thought the hit was huge and really contemplating if this was still worth it to do REI. But this sub helped me to realize that my major learning was having a property manager would allow me to scale to many more like 50+ properties whereas the 10 properties I was capped out on time and honestly hated it. Hence, it was worth for just that sole basis on the opportunity cost and personal preference. In addition, there was always the possibility that rents would increase over time, and eventually, we would break even or even more profitable one day. New Learnings I.e. title reference However, since moving out of state, our portfolio has just skyrocketed in value, at the time of acquisition our portfolio was roughly worth $637k and now today it is worth close to $1M in only 4 years while still cash flowing every month to cover expenses and an emergency fund. Hence, here is the major learning I took away is: home appreciation is where the real money is over cash flow. Though we took a loss of $1,300 a month, even if we only see 3-5% appreciation per year, it is completely worth it to hold our portfolio. Tax benefits and cash flow are just the icings on the cake. Cash flow is really important, BUT, a loss of $1,300 a month to gain many thousands more in appreciation really put it into perspective on the value of holding long-term. Going forward We are now in talks with a commercial lender to refinance all properties under one loan to a lower rate on a 20-year amortization and going to do a cashout refinance and purchase more properties. Once the final appraisals come out, we will be able to pull out almost $175k cash (80% LTV), lower our monthly payments, and increase cash flow and drastically increase our principal pay-down payments. Our plan is to use the $175k + $100k of our cash to purchase a $1M+ apartment complex. We are using the same bank that is doing the refi and the same property manager on our single-family residences to manage it. We will ultimately be lowering our overall property management fees and doubling the value of our rental portfolio to $2M and almost tripling our monthly cash flow. Conclusion The moral of the story. Had I have given up and been discouraged from the frustration of a property manager (I.e. losing $1,300 a month), none of this would have happened. If you are reading this and frustrated too, stick it out, continue to read this sub, educate yourself, and network with mentors to learn new strategies! Hence, if you are feeling discouraged and want to quit, there is always an angle and a play, keep on going! I would love to get any feedback and happy to answer any questions that anyone has. I hope this helps someone to keep on going! Happy investing! [link] [comments] |
| Sharing My Real Estate Investing Experience - 10 Years in the making Posted: 23 Apr 2021 09:13 AM PDT Our current situation is we have our home, and one single family home that we are currently renting. My wife and I work together as a team, we've been together since college (10 years ago) and have always had a plan to do real estate as a way to grow our wealth. When we finished college we looked for a cheap house that needed a lot of sweat equity. And boy did we find one. We got a single family 3 Bed 1.5 Bath home with a walkout basement for around $80k (probably worth $130k now easily). We lived in the house while we fixed it up. We redid everything ourselves and learned a lot in the process. Learned how to tile when we did our kitchen and bathroom, but more importantly we learned a lot of things NOT to do. The goal was to keep buying fixer upper houses live in them while we fix them up, and then look for another one when the house is paid off (kind of a snowball method). That plan was setback due to the fact that my grandparents decided to sell their house and 2 acre property. I always loved the property and worked with my Grandmother to buy it from them. We paid $170k for the house, which was slightly more than it was worth but that was what my grandparents needed to pay for their new patio home without getting a mortgage so I was okay with it for that reason. This is the house we are currently living in. Our first house that we bought and fixed up is now fully paid off and has great tenants. Take the time to get good tenants, and make the effort to keep them. Every year our good tenants stay with us we give them an extra $100 off their rent in December. They got $300 off this year. We like doing this, it's our way of giving back and it makes for a better holiday season for our tenants. We are not real estate moguls by any means but this is where we are at on our journey. We aspire to pay off our current house (hopefully doable in the next few years) and then start buying more properties to rent. We don't mind doing the fixer upper stuff which gives us a lot of options when looking for houses. Real estate is a long term investment. 10 years ago when my wife and I first started talking about doing this I had no idea what to imagine, but it has been a very rewarding experience. Financially we could have bought more properties, and leveraged our debt and credit more, but we are risk averse people and decided to play it safe which is comfortable for us. Everyone has a unique perspective and that's how we are currently doing things. Hope some of you find some insight from this post. And as always I'll answer any questions you got. [link] [comments] |
| Do people constantly tell you real estate is a bad idea? Posted: 23 Apr 2021 05:48 PM PDT Whenever I tell people (esp older generation) I own 7 properties I'm met with remarks about what a bad idea it is. Horror stories from their personal experience or someone they know. My parents were 100% against me doing this. Nothing positive to say at all. It's a bit exhausting. I have yet to have a true horror story. Just some bumps. I am making good money compared to the effort. Do you just move on from your "horror experiences" or have you not had any? [link] [comments] |
| Posted: 23 Apr 2021 10:35 PM PDT If I only put 10% down do i stop paying once i get to 20% of the home or does it not work like that? [link] [comments] |
| Cash Out Refinance: Why NOT Take Out The Max Amount (80% LTV)? Posted: 23 Apr 2021 08:10 AM PDT Mortgage broker is asking if I want to take out 70% or 80% LTV on a cash out refi for my current primary residence. I plan to purchase a second property - a multi unit, and live in one of the units at some point. I could really use the extra 10% to do so and the rates are so low right now, it seems to make sense to borrow as much as possible and sink it into a 30-year mortgage on an income-producing property. However, I want to make sure I'm considering all the factors. From what I can tell, the dangers are 1) the value of my current property declines by more than 20%, leaving me underwater on the mortgage. This doesn't really worry me bc a) I don't think the value will drop that much and b) even if it did, I will be renting the place out to cover the mortgage. 2) My total monthly bills will be higher and if I can't rent the new property for as much as anticipated, I could have a hard time paying. I also don't anticipate this bc I'm going to be VERY specific / careful about this next purchase. Any other potential pitfalls that I may be missing? Thanks! EDIT: Thanks to everyone for the insightful comments! For our situation, the emergency fund is the biggest thing we need to make sure of, since properties require maintenance and... sh*t happens. We will need to figure out how much to keep in reserve (I'm sure there's a formula for this somewhere). I'm going to do 80%. Here's why:
The key to making this whole thing work is buying the right property next. No risk no reward... I just have to choose wisely! [link] [comments] |
| Posted: 23 Apr 2021 07:12 PM PDT Decisions decisions! I'm going from a 4.5 rate to 2.75 on my home mortgage refi. 1st scenario: I can add cash out with this refi, enough to pay off 110k of a rental mortgage currently10 years into a 30y at 4.75%. I'd pay 30k out of pocket to pay off the rest, which I would make back in rent in 4 years after taxes. My primary premiums would increase by about $100. 2nd scenario: Or I can refi them separately. The primary without cash out would lower my premiums by $400. And refinancing the rental at 3.5%, my payments would decrease by $300. Or I could do a 15yr refi on the rental at 2.87% and the payments would stay about the same. Please help me see this more clearly. What else do you need to know to help me? What should I consider as I try to decide? What would you do? I can post the itemized quotes if that could help. I just really need *edited because I used "premiums" instead of payments. My brain is zapped! to go make dinner for my kids and put this to rest! [link] [comments] |
| What monthly net income would you take over selling? Posted: 23 Apr 2021 06:09 PM PDT My current property has around 140k in equity. I thought about doing a cash out refinance and then rent it out. Average rent is around 2k and minus all expenses and property management it would profit me around $265 a month. I would then use my cash refinance ~80k to buy another property for myself to live in. Or my other option is to sell the house and get around $122k in profit tax free. Then buy another house with that $122k. I'm a disabled vet with no income besides va checks so that is a concern for me too, if I were to get approved for a loan or not. Should I rent or sell? I also thought about cash out then invest in the stock market. That would net me around 400-500 a month for dividend stocks, higher than rental income. My goal is cash flow and I'm not entirely sure 265 a month is worth the hassle of this rental. Any help is greatly appreciated. [link] [comments] |
| Getting started need some guidance Posted: 23 Apr 2021 06:00 PM PDT I wanna get into real estate Investing and hopefully eventually do it full time I hate the 9-5 rat race. I'm not sure where to start ? Live in Southern California and it's impossible to break into this market. I'm worried about investing out of state because I won't be there and property managers I've heard horror stories. I like the idea of multifamily multiple doors think it's better than Single family homes. Sites like roofstock seem attractive turn key and reasonable priced markets just need some advice and a good way to approach I have about 60k [link] [comments] |
| Any other sources you receive good RE info? Posted: 23 Apr 2021 04:53 PM PDT Besides Reddit, are there other sources you frequent to receive good RE info? [link] [comments] |
| Invest into a condo in LA/OC or a House in Las Vegas? Posted: 23 Apr 2021 02:59 PM PDT I currently have a rental property that is almost done being sold in escrow that I originally inherited free and clear here in LA County. After capital gains, commissions, etc. I'm going to be left with around 450-500k to reinvest. Unfortunately that's barely ANYTHING with trying to buy a house- let alone a condo- in decent areas of southern CA (LA/OC). I've also have lived in Vegas before and love the thought of having a 'house' that isn't over 20 years old, no HOA possibly, etc. Which would be a better investment appreciation-wise (it will be a rental- I am not moving into it)? I'm not sure on what to do and some people are even suggesting me to sit on the money and wait (which drives me crazy because that same money could be in an investment appreciating that whole time). Not sure on what to do. Any advice would be great. [link] [comments] |
| Posted: 23 Apr 2021 09:00 AM PDT Hi, first time poster, long time lurker. I'm new to the real estate world, bought my first townhome to close 2020, what a year, and was wanting to get the communities advice on my future plans. I'm "house hacking" so it's my understanding since I put 5% I need to hit one year to make it a rental or I'll have issues with my mortgage so that's the plan. What I'm most curious about from other house hackers is, how did you make a smooth transition? Did you list as a rental while you were still living in it? Did you have a long vacancy period or a rushed exit? What I hear most is to know where you're going next and my thought it, we're young, we don't have much, we have family in the city or can go back to an apartment in the short term while looking for the next house. Really interested in everyone's thoughts on how to make that period the least stressful (mentally/financially) as possible. [link] [comments] |
| Posted: 23 Apr 2021 07:51 PM PDT Greetings fellow investors... I currently own 2 short term rentals. One is a 2nd home mortgage and the other is an investment property. I want to buy another in a different state. I want to purchase it with another 2nd home mortgage. Is it possible to have 2 2nd home mortgages? Much appreciated. Thanks. [link] [comments] |
| Posted: 23 Apr 2021 03:56 PM PDT Hey there, I was approved for a investment property loan a little over a month ago. I've been shopping around online, found a couple properties under $100k and went looked at them the other day with the Seller's agent. I'm definitely interested in buying one of them, should I find a buying agent to represent me? I have not made an offer yet, but made it clear that I'm interested and sent my approval letter to the buyer's agent. Thank you. [link] [comments] |
| LLC for new real estate investor Posted: 23 Apr 2021 03:52 PM PDT Hi fam! I've been lurking and reading a lot of these posts and doing my research for a couple of months and now am ready to bite the bullet and start actively looking for homes to purchase. I have a bit of capital with me and I was just wondering what are the benefits of creating an LLC to put the house titles under? My future plan is to have multiple homes (5+) under this LLC. Thanks in advance. [link] [comments] |
| Posted: 23 Apr 2021 03:02 PM PDT Someone broke into my rental property that I'm remodeling and stole my power tools, materials, etc. Any suggestions? I'm going to file a police report. [link] [comments] |
| Undergrad Real Estate Class Suggestions Posted: 23 Apr 2021 06:32 PM PDT Recently I've began exploring real estate investing and decided to add a minor in real estate to my undergraduate degree. The problem is I only have limited room in my schedule. Here's some background on the type of real estate investor I'd like to be. When I graduate I will be paid a tech industry salary and come out debt free, so I'll have a good stream of income to start investing (I think). I don't think I will be able to manage properties on my own and I don't have the skills required to do a lot of rehab/contractor work. Also, if it's not clear already, I'm a beginner which is why I want to take classes to learn about real estate investing. As far as the minor's curriculum, I'm required to take the Real Estate Principles class, then pick from 3 of the following:
Could you guys offer me some suggestions on which classes might be most beneficial for me? I'm always looking for new people to add to my network as well, so feel free to private message me. [link] [comments] |
| Is it stupid to request mortgage forbearance? Posted: 23 Apr 2021 06:15 PM PDT I was looking around on this site: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/request-forbearance-or-mortgage-relief/ And it seems like I can basically just tell my lender I have COVID hardship and I can get 3-6 months of no mortgage payments. From what I understand this basically just extends your mortgage an extra 3-6 months interest free. Has anyone actually done this? [link] [comments] |
| Advice on vacation rental opportunity Posted: 23 Apr 2021 06:08 PM PDT We are looking to invest in a short term rental that we can also use for our family periodically. We have two small children so our highest priorities are convenience on the mgmt side, and in an area with lots to do / near skiing (we're in Denver). We've found a place that checks all the boxes but the circumstances are a bit different and I would love some 3rd party opinions. Details:
I was told other similar units in the resort have already grossed $20k in bookings for this coming summer. I'm not sure of the terms of the contract re the resort fee and the property mgmt %, and whether there are any limitations in terms of those increasing. This feels like a place that would pay for itself and that our family would legitimately enjoy, but I'm hesitant about the high fee and not owning the land. We have had rental property before in Denver and it worked out well for us. Just curious what I'm overlooking and what other questions I should be asking. [link] [comments] |
| Posted: 23 Apr 2021 05:13 PM PDT Hey y'all! I am in my early twenties and have slowly accumulated around $65,000 in capital. I am now chasing my goals of possessing a real restate portfolio but have no idea where to start. Any ideas or advice? Thanks so much in advance. [link] [comments] |
| Should I do a cashout refinance if I already refinanced last year Posted: 23 Apr 2021 07:59 AM PDT Struggling with pulling the trigger on making a decision. A little backstory, I have owned my house since 2018 when I purchased for roughly $247k on a 30 year at 4.4%. Fast forward to March 2020 when the pandemic took off and I jumped at the "record low interest rates" at the time, I was single, and didn't plan on buying a new home. In doing that I lowered from the 4.4% to a 3.2%, cost me $7k roughly to refi, and saved me roughly $300 a month and helped out huge. However, since then my life has gotten busier with a girl friend and her dog + my 2 dogs and its starting to feel a little tight so we have considered buying a new place. I currently don't have the down payment required to play ball in this market due to paying to DIY a master bath remodel which I am super proud of and I believe has helped equity huge. I have always wanted to have a rental property and my current house would net (after mortgage, taxes, insurance) $500 or so and is in great shape and fully updated so it should be minimal problems for years. To wrap up, I am considering another refinance to buy another home and turn my current home into a rental. My home value has risen from $247k to $340k or so and I think I could get close to a 3% 30 year, but obviously refinances are very expensive and their isn't much to gain from the 3.2% to 3%, any advice would be appreciated. [link] [comments] |
| What service or help could a real-estate investor use ? Posted: 23 Apr 2021 02:54 PM PDT I have a small amount of capital but still very new at this. I was hoping i could di some of the grunt work for an investor in order to get familiar with the profession I have learned there is far too much i dont know and dont want to learn by losing money [link] [comments] |
| Refinanced Primary residence recently- now converting to Rental Posted: 23 Apr 2021 10:45 AM PDT Im fairly new here so apologies if Im not following all the rules in the post. As the title says, we just refinanced our primary residence in February of this year. A month after we closed, my wife accepted a new job out of state (coast to coast move). We will be moving in a few weeks and are planning on converting our current home to a rental. We are seeing this as a temporary (2-3 year) move with the intention of moving back to this house after that time period which is why we don't want to sell. I've also always wanted to try out the real estate investment front. Ive checked my refi loan docs and they don't say anything specific about needing to reside in this house for xxxx amount of time before it can be considered not your primary residence. However, I've also seen around here alot that most of the time you need to have the property be your primary residence for 12 months before it can be converted. Do I need to talk to my bank and explain this situation or do you think I'll be okay in letting it ride out? Im not trying to commit fraud. All my docs say is that I must be "currently residing in the residence or move into the residence within 60 days of closing", and nothing about how long I have to claim this property as my residence. Thanks in advance for any info you could provide [link] [comments] |
| Posted: 23 Apr 2021 06:54 AM PDT What's a number where you would pull the trigger on the deal. 10%, 15%? Do you expect a higher return for a commercial property vs residential? [link] [comments] |
| Posted: 23 Apr 2021 10:26 AM PDT One of my properties will be vacant as of 5/1 and I have posted the listing on Zillow but have only gotten 1 request in over a week. Any other sites you would recommend with high traffic? Could be free or with charge. Thank you in advance! [link] [comments] |
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