Advice: Ways to Diversify Investment Portfolio/Find connections/Develop partnerships

[ndwilli6]

Hi Everyone,

I’m 27. I would love advice and ways to diversify my investments and/or eliminate debt. I earn W2 income ($40k full-time job, 4.7k part-time job).

I own 5 homes. 4 rentals. (Earned $18,516.00).
Home #1: Worth $162k—owe $133k, 29k equity
Home #2: Worth $148k—owe $111k, 37k equity
Home #3: Worth $120k – owe $84k, 36k equity
Home #4: Worth $120k – owe $96k, 24k equity
Home #5: Worth $78k – owe $49.5k, 28.5k equity

$117,500.00 in RE equity.

I have approximately $85,878.00 in various accounts (checking’s/savings/CD’s), and around $10k in 401k.


Great things about 2017.
- I paid off my car (around $9k)
- I paid off $5k CC debt, I owe around $19.5k (with 0% interest).
- Purchased multiple RE investments!

Two priority goals for 2018.
1. I plan to purchase a minimum of 3 rental properties this year.
2. I want to pay off $10k (credit card debt).
3. Find other investors to partner with!

I would love to hear more of ways to invest outside of RE. And, would love to connect with other savers and RE investors!

[james.hendrickson]

Just based on your posting, you sound like you're doing pretty well so far.

Are you doing any of the following:

1. Peer to peer lending
2. Investing in stocks
3. Investing in bonds
4. Investing or starting a small business on the side

All of these are proven ways to generate wealth.

[LivingAlmostLarge]

How did you buy so many homes making $40k/year and qualify?

[Atretes1]

How did you buy so many homes making $40k/year and qualify?

Different person but my numbers are kind of close to his. I am older than him tho (42). Man If I started at his age I can only imagine where I would be now. I gross 50k a year and qualify to buy as many rental properties as I want as long as I have the down payments. They use income from my other properties to help qualify. I also have been working overtime since 2014 for the down payments. I do not use the overtime numbers on my loan application. Right now I have 2 rentals and I am trying to find 2 more. I also have no debt beside my rentals.

[Benderz]

To me the personal debt is a non starter and I would go the other way till i had my cash flow in hand, ideally including the personal residence. Then restart will less leverage and higher profit margin. I'm interested to know how many cycles you have weathered?

[LivingAlmostLarge]

How do you make in such a short time so much money for $170k equity. If bought in the last year then $170k is 4 years of gross income. Even saving over 10 years since age 17 then it's $10k/year which seems like a lot. Plus another $85k in checking account, $10k in 401k, paying off $9k car and $5k CC debt. Which is fine but I'm a bit confused by how you do it on $40k even keeping every penny and living at home for so $40k after SS and Medicare and no other expenses.

I guess I'm not a bank. I would probably question how you can keep buying what if a renter stops paying? Do you not need cushion?

[Fishindude77]

Rather than buying more, I would start paying off the ones with lower debt. Once those are paid for, sock some away for maintenance and expenses and the rest is all gravy.

[ndwilli6]

How I'm purchasing homes

How did you buy so many homes making $40k/year and qualify?

Good question. I'm licensed as a real estate agent too. I find motivated sellers and/or homes in need of cosmetic repairs and purchased 75%-80% of current value and wait for appreciation to cash-out refinance.

If I find a home for $80k (and worth $105k), pay 15% down and find renter willing to pay $1000.00, on a $550.00 mortgage it shows I am earning $200.00 monthly according to banking standards. That means I not only make $3500.00 for W2 employment but earn $200.00 from that investment. Does that make sense?

[ndwilli6]

How do you make in such a short time so much money for $170k equity. If bought in the last year then $170k is 4 years of gross income. Even saving over 10 years since age 17 then it's $10k/year which seems like a lot. Plus another $85k in checking account, $10k in 401k, paying off $9k car and $5k CC debt. Which is fine but I'm a bit confused by how you do it on $40k even keeping every penny and living at home for so $40k after SS and Medicare and no other expenses.

I guess I'm not a bank. I would probably question how you can keep buying what if a renter stops paying? Do you not need cushion?

I have over $80k liquid assets (cash). Banks want 6-months worth of reserves for each property. I feel actually very secure, as if I am already wealthy. The homes I own pay my entire mortgage and I save my entire W2 salary.

[ndwilli6]

Maintenance

Rather than buying more, I would start paying off the ones with lower debt. Once those are paid for, sock some away for maintenance and expenses and the rest is all gravy.

I agree with socking some away for maintenance! I've replaced two HVAC systems and has had 2 tenants call about their heat. Thankfully, I am pretty proactive. Next year I'll focus on servicing HVAC systems, especially before wintery chills occur.

[ndwilli6]

High Profit Margins

To me the personal debt is a non starter and I would go the other way till i had my cash flow in hand, ideally including the personal residence. Then restart will less leverage and higher profit margin. I'm interested to know how many cycles you have weathered?

Same. It seems like we think alike. I have focused on maximizing savings. Beginning this year I'll save my entire W2 income ($3300.00) monthly after taxes. I plan on buying a home by the end of the month. Needs a few things so I'll be spending thousands upfront but will cash out refinance in 6 months to earn money back and maximize cash flow. Based on the numbers I crunched, I can have $100k saved by March. That's the goal. I'm selling two homes this year and should earn around $20k each.

Do you own real properties?

[ndwilli6]

Rentals/Goals

Different person but my numbers are kind of close to his. I am older than him tho (42). Man If I started at his age I can only imagine where I would be now. I gross 50k a year and qualify to buy as many rental properties as I want as long as I have the down payments. They use income from my other properties to help qualify. I also have been working overtime since 2014 for the down payments. I do not use the overtime numbers on my loan application. Right now I have 2 rentals and I am trying to find 2 more. I also have no debt beside my rentals.

I'm trying to have at least 20 by the time I'm 30. Its' getting difficult to find motivated sellers. I believe I have two already closing to accepting offers of mine. I need to own 12 by the end of the year. That's one of my LARGE goals. I do want a higher W2 career. I love my career but need more income to support investments. I almost had a difficult time refinancing and had to wait because my income dropped (from 48k to 40k). No more bonuses.

If you don't mind me asking where are you located and your properties? I'd love to purchase properties even outside of my state (NC).

[ndwilli6]

How did you buy so many homes making $40k/year and qualify?

And, I earn no income during summer months....

[ndwilli6]

How do you make in such a short time so much money for $170k equity. If bought in the last year then $170k is 4 years of gross income. Even saving over 10 years since age 17 then it's $10k/year which seems like a lot. Plus another $85k in checking account, $10k in 401k, paying off $9k car and $5k CC debt. Which is fine but I'm a bit confused by how you do it on $40k even keeping every penny and living at home for so $40k after SS and Medicare and no other expenses.

I did earn $48k before last year. I work part-time jobs (2). I have always saved part-time job incomes. I earn income from rental properties ($1450.00 monthly and should increase). I earn cash from refinancing. I saved on average $2k a month. This year because car is paid off and some CC debt, I'll be saving $3.3k monthly. I just got another part-time job (which starts at end of this month). I hope that helps.


I guess I'm not a bank. I would probably question how you can keep buying what if a renter stops paying? Do you not need cushion?

$15,354.00 is a 6-month reserve for all properties, excluding my home. Including mine, I should have $21,027.00 saved. I have over $80k saved. I feel pretty comfortable, and actually I feel like I've made it already...although I want more.

[LivingAlmostLarge]

I'm still confused where did you get all this cash for down payments and cash? I mean to save $80k cash1 year you have to be saving 6k/month in cash right from your work $3300 and $2700 in rent after expenses and taxes and living expenses.

I guess I'm just confused how it all works. How do you make $40k/year and generate save double that without any living expenses?

$15k for 6 months reserves is what you pay if you had no tenants? So your entire 5 homes mortgages is $2500/month right?

So if you go from $80k in january to $100k in march in cash that's $20k. But how do you save $20k when you don't make $20k/month? I'm being seriously stupid.