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

[ndwilli6]

Questions answered

I'm still confused where did you get all this cash for down payments and cash?

I use my business LOC.
My downpayment is only 10% of purchase price of homes and they finance majority of renovations. From that 10%, 3% is provided back to me as my commission (I'm a real estate agent).

I then receive more funds when I refinance homes (either 90 days after being on title) or 6-months. It honestly depends if I want to move forward with a conventional loan or commercial. Does that help clear that part?

Here's a situation now: I'm purchasing a home for $70k now. The home needs around $10k renovations. I'll receive a loan around $80k. I'll pay $7k upfront (down payment) and will receive 3% back as commission. Renovate with funds given by lender and rent out. By August I should be able to receive cash out (around $10k). Which means I will have earn a few grand more than what I initially put in all the while earning a positive cash flow by renting more than mortgage amount.

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?

I earn more than $40k. I earn $40k from basic salary (full-time) job. I am also a licensed RE agent. I am also a part-time healthcare professional (earning around $4.7k) and hold one other part-time (earning around $1.2k) annually. Part-time incomes I stash away. I also have multiple rentals and stash that cash away. I also earn money when I refinance.


$15k for 6 months reserves is what you pay if you had no tenants? So your entire 5 homes mortgages is $2500/month right?
Mortgages are $3,504.00. My personal mortgage is $1000.00. Investment properties are $2,559.00. I'm refinancing one now and will drop mortgage by $100.00 (possibly). That's not really important. What's more important is cashing out and purchasing additional (high quality) properties and securing even better tenants. Reserves should be approximately $21,500.00 for me.


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.

-85k in January. My tenant funds haven't posted to my account yet but will they do should increase to around $88k.
-7K from purchasing property, get back 3% of purchase price. Renovate. Rental out.
That's going to leave me around $82k + savings for Feb and march ($4k each) + new rent from new property purchased ($2k). That's 92k late March.
And, finally I am refinancing a property and hope to receive $8k cash out from it. That gives me $100k. In 6-months I'll refinance the home I purchase this month and try to receive $6-8k back as well. I'm saving $3500.00 to $4000 monthly. Off on a tangent but does that help?

You are not. Those are good questions. I hope I am able to answer clearly. (review above).

[Gailete]

I understand how LivingAlmostLarge is confused. I feel like I am reading one of those RE infomercials from late night TV. I'm generally good with numbers, but things still seem strange. We own one rental property that should be paid off in a couple of months, and no we aren't going to buy another as we are tired of tenants that seem to live by their own rules of when to pay the rent. When the city is socked in with snow, it isn't like you can run right over and post a note on the door of pay or get out. Who wants an empty property in the middle of winter? Anyhow, in the years we have had that property we never counted it as income that we could spend. Not that we haven't had to tap it a few times, but I can't even see us trying to refinance it now. Yeah we might get all the equity back out, but we wanted the income for our retirement. Not to start another round of mortgage payments.

I think the thing that is puzzling is for the most part all you ever mention is the income, never the corresponding expenses, other than the HVAC you mentioned but didn't attach numbers to it. You claim to be saving all your income which you call W2 income which is something I have never heard it referred to like that before.

[LivingAlmostLarge]

how do you keep doing cash out refinances? Then you take the cash and save and live on what?

[disneysteve]

How much do you actually earn? I think that’s the missing info that has us all confused.

[ndwilli6]

I understand how LivingAlmostLarge is confused. I feel like I am reading one of those RE infomercials from late night TV. I'm generally good with numbers, but things still seem strange. We own one rental property that should be paid off in a couple of months, and no we aren't going to buy another as we are tired of tenants that seem to live by their own rules of when to pay the rent. When the city is socked in with snow, it isn't like you can run right over and post a note on the door of pay or get out. Who wants an empty property in the middle of winter? Anyhow, in the years we have had that property we never counted it as income that we could spend. Not that we haven't had to tap it a few times, but I can't even see us trying to refinance it now. Yeah we might get all the equity back out, but we wanted the income for our retirement. Not to start another round of mortgage payments.

I think the thing that is puzzling is for the most part all you ever mention is the income, never the corresponding expenses, other than the HVAC you mentioned but didn't attach numbers to it. You claim to be saving all your income which you call W2 income which is something I have never heard it referred to like that before.

Interesting-- investors call it W2 income and my 'go to' lender does as well.

My tenants aren't calling me any and all times of night. I screen tenants thoroughly. And, before any tenant moved into properties I had inspections completed and fixed problems beforehand. Just an FYI*

I understand you aren't interested in another round of mortgages but that's you. It's paid off for me and I hope it continues to do so.

I recommend re-examining numbers presented and trying again. If that doesn't help feel free to send a PM.

[ndwilli6]

how do you keep doing cash out refinances? Then you take the cash and save and live on what?

I think you should reach out to a lender that's great with investments if you honestly don't understand out cash out refinances work. You buy the properties low-renovate-and receive 75% or 70% of new appraised values. This isn't new. Many people just don't know...

And as I said before the lender paid off my car and many CC's when I refinanced my primary home. I can't get anymore clearer.

[disneysteve]

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.

You buy the properties low-renovate-and receive 75% or 70% of new appraised values. This isn't new. Many people just don't know...

So to help us understand, how much did you pay for each of these properties?

And again, without knowing how much you earn, we can't really make sense of what you've posted. You initially made it sound like you earn 45K but you later hinted that you actually earn more than that (which would make a lot more sense). You have almost $475,000 in mortgage debt which wouldn't happen if you only made 45K.

[ndwilli6]

How much do you actually earn? I think that’s the missing info that has us all confused.

I'm confused by the question...are you asking how much I earn from rentals or employment?

I earn $3200.00 from full-time job/$250.00 (approximately) from part-time, $150.00 (approximately) from 2nd part-time.

Rentals I earn $522.00 from 1. $494 from 2nd. $355 from 3rd. 200 from 4th (the one I am refinancing). Once refinance is completed it should increase to earning $293.00 monthly. Without any maintenance that's all mine. ($1,571.00) monthly. I receive 2 or less calls monthly from all tenants combined.

Total monthly earnings are $5171.00 (approximately). My only bill is my personal mortgage ($950.00) but I pay $1000.00. And, CC's. 200 for food (monthly). $100.00 (gas monthly). $100.00 personal appearance/products (monthly). $125.00-200.00 CC's depending on if I want to pay more. Most are $25.00 monthly.

I save all of my *employment income* That should answer your question.

[disneysteve]

I'm confused by the question...are you asking how much I earn from rentals or employment?

I earn $3200.00 from full-time job/$250.00 (approximately) from part-time, $150.00 (approximately) from 2nd part-time.

I didn't think "How much do you earn?" was a confusing question.

Anyway, so not counting rental income, you gross $43,200/year? Is that correct? I'm assuming the numbers listed above are monthly gross.

So before you bought your first rental, that's what you had to work with pretty much. Right?

[disneysteve]

Total monthly earnings are $5171.00

So that's $62,000/year and yet you have $475,000 in mortgage debt which is nearly 8 times your income. How did you qualify for all of those mortgages?

[Gailete]

I understand you aren't interested in another round of mortgages but that's you. It's paid off for me and I hope it continues to do so.

I recommend re-examining numbers presented and trying again

I am 62 an on disability and the last thing I wants is the stress of another rental. I should be paid off soon, March or April. My husband is in poor health as well. When we bought it he took 3 months off work to do all the needed work for the property. No longer up for that in the least. Hopefully we can keep up with it for the next 4-5 years as I would like to make a huge dent in our house loan. He built our house without a conventional mortgage, so it isn't like he can't do the renovations. Just doesn't have the health or vision to do it anymore. That is what happens to some of us as we get old.

I still have plenty of ideas on making money that would allow me to do it sitting in a chair. I have severe arthritis and standing more than a minute or to is excruciatingly painful.

As for W-2s I haven't been given one in 15 years and I don't know the last time hubby did. We are a combo of self-employment/disability and pension money. But over the years, when working I have had to opportunity to apply for multiple different mortgages and while they may ask to see our W-2s, they don't call it W-2 income. They call it earned income if anything. They want to see all income and all expenses.

Total monthly earnings are $5171.00 (approximately). My only bill is my personal mortgage ($950.00) but I pay $1000.00. And, CC's. 200 for food (monthly). $100.00 (gas monthly). $100.00 personal appearance/products (monthly). $125.00-200.00 CC's depending on if I want to pay more. Most are $25.00 monthly.

Do you not have utility bills, medical bills/insurance, fire insurance, estimated income taxes, which I would think would be HUGE at this point, I'm assuming the most of the fire insurance and property taxes are being paid through your mortgage. We have to pay ours separately and that is no fun at all! What about phone/cell phone bills, etc.

[ndwilli6]

So that's $62,000/year and yet you have $475,000 in mortgage debt which is nearly 8 times your income. How did you qualify for all of those mortgages?

The mortgage debt is incorrect-- I have $401,500.00 in mortgages. Tenants are paying all of that monthly. Lenders' understand that which is why it's on my tax return.

Even if you look at it that way...realize from that $62,000.00 taxes are already accounted for (except from rentals), $11,400.00 for personal property, $1200.00 for gas, $1200.00 for personal products, $2400.00 for food.

That leaves me with $45,800.00. Then if I refinance any problems I receive cash back ($4k-$8k depending on appraised value)...If do 3 like last year that's an additional $12k to $24k in account. Before you know it you have more than you earn from your basic career. Understand?

[ndwilli6]

I am 62 an on disability and the last thing I wants is the stress of another rental. I should be paid off soon, March or April. My husband is in poor health as well. When we bought it he took 3 months off work to do all the needed work for the property. No longer up for that in the least. Hopefully we can keep up with it for the next 4-5 years as I would like to make a huge dent in our house loan. He built our house without a conventional mortgage, so it isn't like he can't do the renovations. Just doesn't have the health or vision to do it anymore. That is what happens to some of us as we get old.

I still have plenty of ideas on making money that would allow me to do it sitting in a chair. I have severe arthritis and standing more than a minute or to is excruciatingly painful.

As for W-2s I haven't been given one in 15 years and I don't know the last time hubby did. We are a combo of self-employment/disability and pension money. But over the years, when working I have had to opportunity to apply for multiple different mortgages and while they may ask to see our W-2s, they don't call it W-2 income. They call it earned income if anything. They want to see all income and all expenses.

Do you not have utility bills, medical bills/insurance, fire insurance, estimated income taxes, which I would think would be HUGE at this point, I'm assuming the most of the fire insurance and property taxes are being paid through your mortgage. We have to pay ours separately and that is no fun at all! What about phone/cell phone bills, etc.

It sounds like you're in a great place financially. And, I understand not wanting to have another rental property. If I were older I wouldn't manage my own. I'm only 27 though, so its pretty fun and interesting at the moment.

Many people ask me why I continue to work (employment) but I love my career as an educator. I am making a difference.

And, I don't pay utility bills or cell phone bills. My other person in my household does. She also pays cable and alarm as well. And, quite a lot of food is supplied through her as well.

I don't have any medical bills. I do have insurance given my employer but I have additional insurance through Metlife paying $52.00 monthly. All insurance and taxes are in mortgage payment (PITI).


I hope that helps

And congrats on getting so close to paying off the home.

[ndwilli6]

I didn't think "How much do you earn?" was a confusing question.

I wasn't sure if you were asking how much do I earn from rentals or W2 positions?


Anyway, so not counting rental income, you gross $43,200/year? Is that correct? I'm assuming the numbers listed above are monthly gross.

No, I gross $40k from full-time (salary). Approximately $4,500.00-$5,000.00 from 1st part time. Approximately $1200.00-$2400.00 from 2nd part-time. Those depends on hours worked. No more than $50k for sure, no less than $45.5k. This is my first year making less than $48k from full-time job FYI* bonuses stopped

So before you bought your first rental, that's what you had to work with pretty much. Right?

Before my 1st rental I earned around $53.7k ($48k from full time), $4.5k part-time #1 and $1.2k part-time #2.

[AnotherReader]

What kind of mortgages are you getting? It's tough to do conventional paper after eight.