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ChrisGav

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HELP. This is nuts guys. I am making more money than I know what to do with and I need some big time help from you experienced guys. I don't even say any of this to brag. I say all of this because everything is moving so quickly, and I have never experienced anything like it. This is LITERALLY a Fastlane.

I'm a real estate investor, I jumped into this full time 6 months ago.
But these past 4 months have been absolutely insane. Here's what I've done since October 1st:
-Syndicated a $1.2m 16 unit apartment complex that I own 20% of with $0 of my own money.
-Bought a duplex to buy and hold
-Bought my first ever single family home that will be an AIRBNB (I now officially have 32 rentals and never owned a single family home before)
-Done over $90k in wholesale assignments alone
-Flipped 3 houses
-This month I have made over 100k alone. My first ever 6-figure month
-My rental property portfolio has gone from 13 doors to 32 in 4 months.
-just got my first creative finance deal locked up under contract

I have no overhead. I have no marketing budget. It's literally just been me and a phone cold-calling like a telephone terrorist to land me all of this in 4 months.
I say none of this to brag or boast, I say all of this to say I'm excited, terrified, anxious, and deal with imposter syndrome probably on a daily basis. Now here's where I need help. For you big players in this, how in the world do you deal with this? This has all happened so fast. I have so many freaking deals coming through right now I literally do not know what to do. How do I balance finishing the projects I currently have on my plate, whilst simultaneously making sure my pipeline doesn't dry up and continue marketing??

It's a good problem to have no doubt. I am definitely beyond grateful for everything that has happened. I just don't know how to handle it. Every single dime I make I save, or I go buy another rental with it. I live in a duplex in the ghetto for crying outloud. (I'm house hacking it) I'm not blowing my money at all, but I need help from you experienced guys.
How do I continue to scale without biting off more than I can chew, but at the same time continuing to push myself to new heights? If I stop marketing and just finish my current projects then I will wake up to an empty pipeline in 3 months, however, my current pipeline is literally overflowing. knock on wood....
What do I do?!?!?
 
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Antifragile

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First of all - congratulations.

If you are serious about hearing advice that you won't like but need to hear, then set ego aside and buckle up.

Half of all the USD in circulation today has been printed in the past 1.5 years. Real estate is generally inflation proof. It is to be expected the results you are posting. Meaning anyone in our business should be making big money even if you aren't good.

This too shall pass. (Search for @SteveO posts, his examples are a lesson best learned on a forum, not your own skin).

My advice is in the order of priorities:
  1. Prepare to be wrong - how are you defending yourself against a change in the market? There is an old saying "don't confuse bull market for brains". I am in RE and have both seen (lived through) and studied market cycles. An example question: assume your interest rates go up by 1% to 2% in the next 3 years. Then assume properties you bought at the top come off 20% in value. The bank wants to "negotiate" with you by asking you make a bigger downpayment to reduce your total debt or repay the loans. How prepared are you?
  2. Continue the hustle. You must be in the game to see the signs of opportunity and the signs of things changing. I find that when money is easy to find (both capital for equity and debt!) prices tend to skyrocket and overshoot. This means you have to stay sharp and on your feet. Build up a small piggy bank and try to for a full war chest - one day you may need it. It's offence + defence all in one.
  3. Study. Yes, I said it - what can you find in history that you (as a very young and smart person) have not yet seen but will happen to you. Will there be maintenance issues with your properties that will cost too much? A roof or a seismic upgrade can wipe out all of your gains. Has there been regulation that impacted ability to use short term rental or increase rents during the "bad economic times"? Governments have a way to hit landlords in the nuts.
  4. Focus on your current projects more than on new business. That's because if you bite too much you may fail to see something and gain the valuable experience and lose confidence (trust) of your investors. You have the net 30 years to have fun here, make sure your reputation is solid.
  5. Consider hiring staff and/or just getting a partner. Partners cost nothing and can really up your game. Who's most dissimilar from you? Who could frustrate you with questions but is also smart, very smart? You don't want another you, you already have you. You want someone who'll contribute in another way.

Most people in your position will ignore what I am sharing. I hope I didn't waste my time typing this up. My advice is to play offence with defence with 50/50 split on effort. But it's hard not to feel like a king when your success screams "I just can't miss".

I am glad you are being frugal, it bodes well for your future success. Most people who come into big money find ways to spend even more than their highest earnings.

Congratulations again and all the best.
 

ChrisGav

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First of all - congratulations.

If you are serious about hearing advice that you won't like but need to hear, then set ego aside and buckle up.

Half of all the USD in circulation today has been printed in the past 1.5 years. Real estate is generally inflation proof. It is to be expected the results you are posting. Meaning anyone in our business should be making big money even if you aren't good.

This too shall pass. (Search for @SteveO posts, his examples are a lesson best learned on a forum, not your own skin).

My advice is in the order of priorities:
  1. Prepare to be wrong - how are you defending yourself against a change in the market? There is an old saying "don't confuse bull market for brains". I am in RE and have both seen (lived through) and studied market cycles. An example question: assume your interest rates go up by 1% to 2% in the next 3 years. Then assume properties you bought at the top come off 20% in value. The bank wants to "negotiate" with you by asking you make a bigger downpayment to reduce your total debt or repay the loans. How prepared are you?
  2. Continue the hustle. You must be in the game to see the signs of opportunity and the signs of things changing. I find that when money is easy to find (both capital for equity and debt!) prices tend to skyrocket and overshoot. This means you have to stay sharp and on your feet. Build up a small piggy bank and try to for a full war chest - one day you may need it. It's offence + defence all in one.
  3. Study. Yes, I said it - what can you find in history that you (as a very young and smart person) have not yet seen but will happen to you. Will there be maintenance issues with your properties that will cost too much? A roof or a seismic upgrade can wipe out all of your gains. Has there been regulation that impacted ability to use short term rental or increase rents during the "bad economic times"? Governments have a way to hit landlords in the nuts.
  4. Focus on your current projects more than on new business. That's because if you bite too much you may fail to see something and gain the valuable experience and lose confidence (trust) of your investors. You have the net 30 years to have fun here, make sure your reputation is solid.
  5. Consider hiring staff and/or just getting a partner. Partners cost nothing and can really up your game. Who's most dissimilar from you? Who could frustrate you with questions but is also smart, very smart? You don't want another you, you already have you. You want someone who'll contribute in another way.

Most people in your position will ignore what I am sharing. I hope I didn't waste my time typing this up. My advice is to play offence with defence with 50/50 split on effort. But it's hard not to feel like a king when your success screams "I just can't miss".

I am glad you are being frugal, it bodes well for your future success. Most people who come into big money find ways to spend even more than their highest earnings.

Congratulations again and all the best.
Dude this is awesome thank you for taking the time. Here's what I've been thinking I should do moving forward, but please correct me if you think otherwise. Continue to wholesale and assign contracts while this market is buying every deal that is available. There could come a time where wholesaling is not as easy as it is now, so take advantage of it while I can.
Continue to get cheap debt for as long as I can but be careful to keep enough liquid in case of surprises or issues that inevitably pop up.

Things I don't know though:
1. How do you balance playing defence and offence? How much cash do you keep liquid, versus how much do you throw into new deals and take advantage of the cheap money?
2. When the market starts to shift, how does this impact wholesaling/rentals? What sort of challenges should I prepare for, but not be overly concerned with fear about?
3. How do you juggle finishing your projects, but keeping an eye out to make sure you don't miss other smoking deals?

I know there are not set in stone answers to these questions, or definitive rules. But I'm definitely curious to hear what you think. Thanks man
 

ljean

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I do not get impressed when people brag about buying rentals and the # of doors etc - who gives a shit, anyone can go out and buy x number of doors tomorrow if they outbid the next guy.

But profitable wholesales & flips mean you can in fact source good deals. Keep it up. Doing it with no marketing spend is quite a feat.
 
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ChrisGav

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I do not get impressed when people brag about buying rentals and the # of doors etc - who gives a shit, anyone can go out and buy x number of doors tomorrow if they outbid the next guy.

But profitable wholesales & flips mean you can in fact source good deals. Keep it up. Doing it with no marketing spend is quite a feat.
I appreciate that, thank you. I usually say it not as a brag, but more of a way to say "hey, I'm out here actually doing deals guys". There's a lot of people that stand on the sidelines hoping to get into real estate, but not so many that are really playing the game. I like to connect with people I know are actually playing the game, as I'm sure everyone does. I say it as another way of saying "I'm doing deals, I'm really in the trenches everyday lets connect"
 

ChrisGav

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You having 32 rentals in 6 months starting from 15k in savings smells fishy. Did you start off by wholesaling or what?
I went from 13 to 32 doors, I already had 13 to begin with when I was doing this part time. I bought my first ever rental a year and a half ago. 32 - 13 = I got 19 doors. 16 of those being the apartment complex, 2 of which being the duplex, one of which being the single family airbnb totaling to 32 doors.

I started buying rentals before I got into wholesaling. It was 6 months ago when I started wholesaling. I've grossed a total of $137,000 in 6 months strictlly from wholesaling. Through wholesaling I've met a bunch of private money lenders, and people that have partnered with me to do the apartment complex. Those lenders have also lent me money to flip the 3 houses that I've done. Majority of this has all been done with none of my own money.
 
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Jobless

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Do you know, understand and track your assets and liabilities? Your cashflow? Tax situation? It helps me stay sane.

If I were you (I'm not so don't take me that seriously) I'd hire someone just to keep track of the numbers. Also someone that can make your life easier. If you make up to 100K per month your time is too valuable to be spent on daily chores etc.
 

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I usually don't give advice... I just share my experiences. But, I'm going to give advice:

If you are truly doing this yourself - get help. Now.
Build a team.
Lawyer. CPA. Banker

Maybe you have these, but, what about a manager?
COO. Someone to watch your back

You've launched a operation. Cool. You've hustled to build a great start.
Awesome.

What's the plan to sustain? To build a business that isn't just you grinding?
You're 23 and having success - AWESOME.

Stay humble. Keep your head down.
Expect kicks to the shins.
Expect a downturn.
Expect a crushing correction.

Be ready. Maybe it's time to pause, collect yourself.
Save cash for rainy day.
Build a team, consolidate.

Defend your castle - barbarians will come.
Build a killer team to keep growing with you. Find people you trust, build relationships.

That's what I would do.
 

ChrisGav

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Do you know, understand and track your assets and liabilities? Your cashflow? Tax situation? It helps me stay sane.

If I were you (I'm not so don't take me that seriously) I'd hire someone just to keep track of the numbers. Also someone that can make your life easier. If you make up to 100K per month your time is too valuable to be spent on daily chores etc.
Thanks for the feedback! This is my first time making 100k per month, hopefully not the last time! I've kept track of my debt situation and what goes in/out every month.
 

ChrisGav

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I usually don't give advice... I just share my experiences. But, I'm going to give advice:

If you are truly doing this yourself - get help. Now.
Build a team.
Lawyer. CPA. Banker

Maybe you have these, but, what about a manager?
COO. Someone to watch your back

You've launched a operation. Cool. You've hustled to build a great start.
Awesome.

What's the plan to sustain? To build a business that isn't just you grinding?
You're 23 and having success - AWESOME.

Stay humble. Keep your head down.
Expect kicks to the shins.
Expect a downturn.
Expect a crushing correction.

Be ready. Maybe it's time to pause, collect yourself.
Save cash for rainy day.
Build a team, consolidate.

Defend your castle - barbarians will come.
Build a killer team to keep growing with you. Find people you trust, build relationships.

That's what I would do.
I appreciate the insight. I don't know the plan to be entirely honest. I'm great at execution. I'm great at showing up every day and taking the action that actually moves the needle. What I'm not great at, or what I don't really know, is the actual steps of growing a business. I'm sure there's no one right answer. But, how do you gauge things such as: how much cash do I keep on hand in reserves, and how much do I play offense with? How quick do you scale? Should I start building this team, or maybe bring on an assistant and continue to run a very lean business?

Would like to hear some insight on those sort of things if you have any. I don't want to be so aggressive that I end up under water with too many unforeseen barbarians. But, I don't want to play so cautious that it halts all of my momentum and let fear hold the keys to my kingdom.
 

ChrisGav

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Wow, all from cold calling?

Maybe start a series LLC for each property for asset protection.
Yes from tons and tons of rejection and people cussing me out, haha!

Got them in LLCs and everything is protected from the legal angle.
 
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BizyDad

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continue to run a very lean business?
This.

I don't have any experience in real estate, but I've seen the guts of a lot of real estate businesses, so this is just my 2 cents.

Keep wearing as many hats as you can until you really feel like you understand the different hats.

You need to build processes, not let others build them for you.

If you hire people too soon and just "trust" them to do their jobs, they often don't have your hustle but can easily BS you into thinking they are valuable.

Getting one assistant to help you sounds like a logical next step.

Lastly, different people build different real estate empires different ways through different systems.

You can ask everybody's advice, and you can learn from lots of people. But at the end of the day, you are building your business. Their advice might not apply. You will someday discern what is helpful advice and what isn't. Your market is different than other people's markets. You're going to build your processes. Keep going, keep learning, keep growing.

And congrats on hitting a mile stone.
 

ChrisGav

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This.

I don't have any experience in real estate, but I've seen the guts of a lot of real estate businesses, so this is just my 2 cents.

Keep wearing as many hats as you can until you really feel like you understand the different hats.

You need to build processes, not let others build them for you.

If you hire people too soon and just "trust" them to do their jobs, they often don't have your hustle but can easily BS you into thinking they are valuable.

Getting one assistant to help you sounds like a logical next step.

Lastly, different people build different real estate empires different ways through different systems.

You can ask everybody's advice, and you can learn from lots of people. But at the end of the day, you are building your business. Their advice might not apply. You will someday discern what is helpful advice and what isn't. Your market is different than other people's markets. You're going to build your processes. Keep going, keep learning, keep growing.

And congrats on hitting a mile stone.
Thank you. I really appreciate that. I think I have just surprised myself and did not expect all of this to happen I just was running with my head down.
 
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Jim Zontos

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Long post ahead.

First of all, congratulations. Many would hope to be in your shoes, but very few are willing to do what you have done, and thus never will.

I think your fear is mostly psychological and less truly warranted.

Think long term. Utilise your deal flow in the most efficient manner.
Here's how i see it: You should be buying deals except when you're too busy buying deals to buy more (because of closing, financing, rehabbing, etc.)
When youre too busy, wholesale. This allows you to make even more cash aside for any possible unplanned negative occurences.

Frankly how much risk there is in how many deals you do comes from 2 main factors:
1 are you setting up too many deals at the same time that you wont be able to be present and execute all their intermediary steps? if no, then keep going
2 are your deals set up correctly in terms of cash flow? (is your deal analysis correct)? if the answer is yes, then each deal accounts for its own safety

The more deals you make in fact, the higher your cash flow will be and thus the greater your ability to mitigate any unplanned negative occurences.
The most important factor again is, buying right into the deal,and correct cash flow calculations.

Always keep a chunk of cash aside for each property you own in accordance with its size for any potential unplanned issues.

Make sure you have accountants,attorneys, and any other staff you might need.

It's great that you both wholesale and invest. You can approach the business from both sides like this.
But also most importantly from all market cycles.

You seem like a very knowledgeable guy in real estate. Read into how to behave in all cycles of the economy.
One excellent book on this is: Recession proof real estate investing by J Scott. Basically the gist of it is: you can make money in any phase, but with different approaches.
Wholesaling works differently in a recession than in an expansion. It's basic stuff, you'll get it in an instant, you seem pretty genius.

Lastly, relax. You're experiencing growth like never before. It almost seems like it isn't you anymore I'd guess, but we are all built for success and freedom. This is a core belief of mine.
Take a breather, don't hasten. Close your deals right, make sure you're not involved in too many deals at the same time that you cannot handle their schedules, and keep that pipe flowing man! Either buy it or sell it!

Congratulations, this is merely the beginning. I wish you the best.
 

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Things I don't know though:
1. How do you balance playing defence and offence? How much cash do you keep liquid, versus how much do you throw into new deals and take advantage of the cheap money?

Defence can be viewed from two angles:
a) cash you personally hold and
b) access to cash

If you set up your deals in such way that you have no personal guarantees tied to loans, you are already safer. Next is to take care of yourself. If times get tough, how will you live? How will you pay for your own food, clothes, shelter etc? If you have enough savings to last you a year or two, you are playing good defence (even if your business fails, you'll be fine).

Access to cash can mean having your investors commit and contribute more. Raising cash in this environment is easy. How prepared are you for a change when raising even $1,000 becomes hard?

2. When the market starts to shift, how does this impact wholesaling/rentals? What sort of challenges should I prepare for, but not be overly concerned with fear about?

What do you fear most about change in the economy for wholesaling RE?

Rentals can be studies as there are many examples of how rentals behaved in the worst of economic times. Governments tend to protect their voters and it usually means restrictions on the rental rates or evictions etc. Banks can call the loans, the property values can tank and wealth can be "wiped out" to let the new owners come in a buy at a discount. What is there to fear today?
- Repairs and maintenance costs
- Did you overpay per door to get the properties you hold? What cap rate are you buying them at?
- What loan terms do you have? Fixed, variable? How long? What's the spread to the cap rates? Yield on cost?

3. How do you juggle finishing your projects, but keeping an eye out to make sure you don't miss other smoking deals?
I don't juggle. I focus. It pays better. Even your choice of words "juggle" implies you understand the risk. You are asking this because you already intuitively know the answer, don't you?

What happens when your projects start to look like stinkers? What happens when your investors start talking in public about how you are going from one shiny new rock to another failing to execute on what you promised?
 
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biophase

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Sounds like you have a good cash flow problem. My question is, how much of that $100k is from wholesale and flip deals vs rental income.

If you truly have too much cash, I would start paying down the mortgage on the rentals. Look at getting a few properties free and clear and spewing out consistent monthly income. This way those properties can’t be taken from you during a downturn.
 

ChrisGav

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Sounds like you have a good cash flow problem. My question is, how much of that $100k is from wholesale and flip deals vs rental income.

If you truly have too much cash, I would start paying down the mortgage on the rentals. Look at getting a few properties free and clear and spewing out consistent monthly income. This way those properties can’t be taken from you during a downturn.
All of the 100k is from wholesales and flips. I haven’t even included my rental income in that figure.
Here’s essentially what’s been going through my head:
I’m making pretty decent money and it happened really quickly. I know that it may not always be this way, and I also know that I don’t know how to run a business that brings in that kind of money because I’ve never done it before.


When you’re making 100k/year you can afford to not understand tax strategies and you can do everything by yourself if needed because the numbers are smaller. But if I finish this year making 500k or something, I know I don’t have the knowledge, systems, or infrastructure to know how to manage that.

I think I have been so focused on just putting one foot in front of the other and taking action every day that I haven’t stopped to look at what I’ve already done. And so I paused for the first time the other day, and realized what was actually happening and had a minor panic attack to be honest.

I also don’t have a mentor or coach helping me unravel all of this. I’m not a part of any masterminds and I don’t really know where else to turn other than on here to ask. I did what the YouTube videos said and it got me here now what. Lol
 
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biophase

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All of the 100k is from wholesales and flips. I haven’t even included my rental income in that figure.
Here’s essentially what’s been going through my head:
I’m making pretty decent money and it happened really quickly. I know that it may not always be this way, and I also know that I don’t know how to run a business that brings in that kind of money because I’ve never done it before.


When you’re making 100k/year you can afford to not understand tax strategies and you can do everything by yourself if needed because the numbers are smaller. But if I finish this year making 500k or something, I know I don’t have the knowledge, systems, or infrastructure to know how to manage that.

I think I have been so focused on just putting one foot in front of the other and taking action every day that I haven’t stopped to look at what I’ve already done. And so I paused for the first time the other day, and realized what was actually happening and had a minor panic attack to be honest.

I also don’t have a mentor or coach helping me unravel all of this. I’m not a part of any masterminds and I don’t really know where else to turn other than on here to ask. I did what the YouTube videos said and it got me here now what. Lol
If you think you are going to make 500 K this year you could look at purchasing a $1 million property and then using cost segregation to depreciate a big chunk to offset your taxes. You could end up paying nothing in taxes this year. I’m pretty sure you would qualify as a real estate professional.
 
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ChrisGav

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If you think you are going to make 500 K this year you could look at purchasing a $1 million property and then using cost segregation to depreciate a big chunk to offset your taxes. You could end up paying nothing in taxes this year. I’m pretty sure he would qualify as a real estate professional.
You got me curious and here’s what’s currently happening with my passive income from rentals:

I make $4k/month profit from rentals (after maintenance, debt service, taxes, insurance, my partners take their cuts etc)

It costs me 2k/month to live and to run my business (I house hack where I live so no mortgage payment, but this is after I pay for gas In car, food, miscellaneous spending,etc and all my business expenses which includes my dialer to Cold call and other software etc)

If I laid in bed all day I’d make 48k/year, and would be able to keep 24k/year after every single expense I have in life
 
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biophase

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How many rentals do you have yourself with no partners?

Who is managing the day to day operations on your rentals?
 
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ChrisGav

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How many rentals do you have yourself with no partners?

Who is managing the day to day operations on your rentals?
I have 4 doors with no partners (2 duplexes)
The rest of my portfolio consists of:
9 unit mobile home park 1 partner 50/50
16 unit apartment complex: 1 partner 20% owner ship but I get 30% of revenue as cashflow every month too
2 doors (1 duplex): 50/50 partners
The Airbnb: 50/50 partners

My partner that I’m 50/50 on manages the rentals and they also manage the 2 I own by myself for free.
 
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Just curious, what would your cash flow be if you paid off the mortgages to both of the duplexes?
It would increase $2,300/mo if I didn’t have those 2 mortgages. I owe a total of about 280k between the 2 of them. However, 1 of those I have $0 of my own money in it.

That deal broke down as such:
Purchased it for 90k owner financed with 23k down there was 16k worth of rehab it needed, the owner financed that as well. Borrowed 23k for down payment

All in: 106k
After rehab it’s now worth about 150k-160k
Both 23k down payment and owner financed note are on 20 year terms with no balloon

I could refinance that deal and pull out a free 14k and pay back other loans.
150k valuation
80%LTV get a 120k note
Pay back 106k,
keep 14k
 
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Antifragile

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@biophase is spot on with his advice here. There is “financial wealth” and “real wealth”. We make first financial wealth to later transfer it to real wealth. If you can pay off debt, you’ll own real wealth - properties. That’s as good a “defence” pay as you can get. While still staying in the game to keep adding!
 

ChrisGav

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@biophase is spot on with his advice here. There is “financial wealth” and “real wealth”. We make first financial wealth to later transfer it to real wealth. If you can pay off debt, you’ll own real wealth - properties. That’s as good a “defence” pay as you can get. While still staying in the game to keep adding!
Correct me if I’m wrong, but wouldn’t that hurt tax benefits a little bit in the process of paying them off?
 

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