Excellent David! You are a good dude and very humble. I have followed bigger pockets these last 3 years and it inspired me to have acquired, 2 homes, a Tri plex and 2 four plex’s and I am currently in escrow on another property and I own my main home. All due to taking action. 5 years ago my credit sucked back then, I was in debt and I had student loans. I cleaned up all of those problems and that was 5 years ago. Now I am building a small portfolio. I also plan to pay off 3 properties in the next 3 years. If I can do it anyone can do it! Get to work fellas and start your new life!
Using your home as collateral on investment properties is a major risk. I know people who did this and were WIPE OUT when the government screwed landlords with the ''renters protection.'' Losing an income property sucks, losing your home is catastrophic.
What would you do if you were in my shoes!? I purchased a 10 acre farm in central Fl in early 21 for 460k, put 20% down and currently owe 349k on it. When I purchased the property 6 acres of it was wooded, I cleared that wooded land, planted grass, put more paddocks in, made it beautiful and it just so happens to be 4 miles from something called the World Equestrian Center which has made the properties in that area sky rocket. I have a 2.5% interest rate on it, monthly mortgage is $1,518. I currently have the entire farm rented out (annual rental, they pay all expenses) for 6,885 a month. The one year rental is over Feb 8th 2024 and my tenant just signed a new annual lease for $7,350 a month. The farm is now worth over a million dollars. so I have about 650k equity in it. Id like to tap into that equity however as you know getting a HELOC on a rental is very difficult. Selling a property with a 2.5% interest rate that is producing 5x its mortgage just seems dumb. What do I do!?
Awesome story I actually wanted to buy land in central Florida to have a “gateway” from the city , any tips ? What type of loan did you use or was it cash buy?
David I Love the macroeconomics stuff , also , love the way you explain and simplify real estate. break it down for us newbies . Thank you we definitely appreciate it
David, regarding the chair swiveling comment, you made a great point about having to think about what to say, and being able to say it in an informative yet easy-to-understand way, while also getting it across in an engaging and even entertaining way, without flubbing your words, getting side-tracked or losing your train of thought. That’s SUPER difficult to do, and there’s very few people who can do that, but you do it very well. Kudos to you!
Thanks for answering my question, David! You’re right tho I wasn’t crazy about your answers. I was able to get a line of credit in the works on one of the properties. It is with the lender that has the first position, small local bank.
Hi there! I just stumbled onto your channel and absolutely enjoyed how you approach each question and the concrete examples that you use to elucidate the underlaying economic concept(s). I’d like to know how I can ask a question of my own. Thanks!
And this is how many people went into bankruptcy in 2008. Concept sounds smart and definitely a good pitch for a real estate broker like yourself. But highly dangerous and most people will get burned. Borrowing equity at these giant interest rates and buying more negative cash flow is a lose lose situation.
2008 was Interest only loans and never explained to the borrowers correctly. The ninja loans had people walking into properties they couldn't afford. The smart people bought multi units and those same people are millionaires today
I think you need to be careful with leverage. That being said, I bought 18 units in 2017 and sold my 12 unit property that had 8 storage units for almost double what I paid for it. I was retiring and with that property, I felt overextended. So I sold it and bought into 2 DSTs that created a monthly income stream. I felt it was Gods direction by using my husbands advice. At the time I bought the property, I used my HELOC on my paid off home as a down payment for that property. I was working full time making 6 figures and it didn’t seem like I was overleveraged at that time. I sold it in 2022 May.
Gas station sushi! 😂 That’s also the perfect analogy for committing to a less-than-reciprocal, less-than-satisfying, less-than-reasonable relationship.
I actually was able to get my banker to approve a line of credit on some land that I own and have a good bit of equity in. They’re in the first position and they’re a local bank in Sherman. For now it’s hold the duplexes and single fam home. I’m just getting that line of credit tee’d up in case a smoking deal comes along!
What would you say is the best recommendation to get into real estate for someone who only owns a PPOR and works full time 50 hours a week? My residence is 3bd 1 bath, bought it for 210k about a year and a half ago at a 3.25% interest with conventional loan
Hey David, I know insurance is not a fun topic to discuss, but what is enough insurance for each property, when's it good to get an umbrella, commercial vs residential, and where should it be held under as far as the LLC for the property or under personal name? We've got our trifecta of our trust, management LLC and individual LLCs per property as that's what we are comfortable with. We have 6 LTR with strong cashflow and continue to grow! Thanks, David!
2nd Question: Yikes that’s not a good investment. Love that. CashFlow, Equity, Headache value. EXACTLY. This investment would be a headache. No sometimes when you are hungry, you make a bad financial choice.
Well to be fair, they say residential is in a correction not a crash. They also are careful to note that each market has nuance so become an expert on what is taking place in your target market. They say commercial is in a bit more trouble because of the debt service. It’s difficult to flesh out every detail when responding to people’s questions. They probably assume you have been listening a while and have heard these principles if you are a person who is writing a question on the podcast.. it is not a cookie cutter market right now. There is not a one size fits all or an easy checklist to just follow..JS
Was able to get a local bank to give a line of credit agains the equity in some land I have. This question was posed a while ago. I don’t think I’m going to tap into the equity on the duplexes and single fam rentals for now.
This was kinda my issue. My interest rate is 0.851% and my mortgage payment with property taxes and insurance is $900 monthly. My tenant pays 2k currently and is in a month to month. The house is in a wonderful neighborhood, close to Dallas maverick arena, 27 minutes from cowboys stadium and 30 minutes from Texas Rangers Field. I owe 96,740 and it is worth roughy 375k-390k. It makes sense to cash out refinance and buy a few more properties. I can get like 3000/monthly in rent when the tenant leaves. I am also in the process building 2 houses.
Worry for loss of cash flow is the problem. Especially in a falling market lol. The interest rate is a huge reason. I agree bigger and better, but that only works if your not already in a premium location. The idea of not selling for inflation is understandable when is like... 1-2%. But they went up 4% this year and it's still climbing. Curious about Rolling his properties into a trust and then pulling a loan off the portfolio. Is their something their?
David, this was so helpful! Hearing you troubleshoot and strategize people’s very specific situations is so instructive. I liked learning about the four kinds of equity, the 3 criteria for whether to buy or not, and I was happy and sad to have my commercial property dreams dashed preemptively when you outlined all the problems with it, especially early in one’s investing career. 😂
I love love love your content and appreciate the information you provide. It's simple, easy to digest, seemingly honest and the chair swival isn't annoying at all😂. But I have to say that my favorite is the pettiness between you and Brandon 🤷♀️
I need to know if this is financing that I need to use or not (line of credit), I'm gonna be ramping my revenue ASAP as a new contractor installing windows and doors, I've got a property I'll buy in the immediate future, Is it blow or no show? please let me know why otherwise thank you.
Hello there david, first of all, want to say thank you for the amazing content...... i bout my first home 1year ago, right now it has around 124k equity, i want to buy an investment property, can not get a HELOC since i'm close to my DTI max cuz some other debt (credit cards), what is a better way to go about it, thanks in advance, yimy perez
Hello I am in the Bay Area and would like to attend some meetups so please let me know where can I look for them and get connected . Thanks a lot for sharing so much information about RE , totally appreciated.
That's exactly what I was thinking. DG's advice looks in the rear view mirror and he knows it. I think David wants the best for people and he is overly optimistic so that people take action (which is correct in the right environment). But his words are dangerous right now in this environment. He should point this out.
I like this option too! I was able to tee up a line of credit on some land I have in case a smoking deal comes along. Im not going to sell and not going to refi. It makes no sense to do either of those right now.
From all the macroeconomics arguments here, the only one that is truth is that interest rates doesn’t control inflation at all. The rest are myths that needs to be debunked and I can explain it. Kudos ;)
Hi everyone !!😃I have a dilemma, my husband want to sell our house $180k equity to pay $75 debt and apply for FHA $20k down payment get a duplex , Hight interest now days,in Myrtle Beach,SC, Airbnb one side and live in the other one. 🤷🏼♀️.. so if the duplex need to get fix it will $30k…we will have some cash left . But we need to find new jobs there.. He is a contractor and he can move the company there find clients.. Do you guys think this is a good idea??? Any input I will appreciated ! Thank you !
This is a great question, and you might find an answer if you post this in our Short Term Rental & Airbnb Investing Forum found here! : www.biggerpockets.com/forums/530
Loved your podcast, but my situation was not covered..... I own my 5 unit rental property (that I reside in) and and wonder how I can extract some equity from it? Thank you for your expertise.
If you have a loan on it, wouldn't you just take a cash out refi? Or if you own free and clear, take out a mortgage on it, getting it all in cash. Either way there's no tax because its not considered income. However this being a 5 unit, it would be a commercial loan.
@@localone1597 I asked the lender ( JPMC, who had my mortgage that I paid off ) and they told me that they don't "do that". I have excellent credit, no debt, income from the house and a full time job, so I am not sure where or how to proceed. I REALLY want to do another property, but I'm not savvy re financing. Btw, I could very easily convert into a four unit.
@@localone1597 oh, I own it free and clear and a smaller comp on the same block sold easily for 500k and new buildings across the street sold for 750k.
Can you please shed some light on investing in real estate properties when the dollar is collapsing? I know invest in GOLD but should I take money out of my equity line of credit to invest in rental properties during this crazy time?
