Flip Tip Summary
Many things can go wrong with rental properties. Loss of rents, lengthy eviction processes and other things that eat cash flow can spell trouble…so make sure you’re rental portfolio is properly financed, and you have enough equity to get through tough times. Check out this Expert Tip to learn more!
Flip Tip Transcript:
Speaker: Hi, this is Blake Yarborogh and I just wanted to share a little tidbit of information that I’ve used, in my process of buying properties. One of the things I always like to do, is buy with equity and cash flow. The way this forces me to do this is using hard money loans or what I call smart money loans, because it only finances 70% of the after repaired value, up to 100% loan to cost.
Now, if you’re all in at 70% of the fixed up value, you have equity. Provided you’re buying in the Houston, Texas area, properties that are worth 130 or less… So if you’re buying at 70% of that, then you should be, in today’s fair market, cash flowing.
The way I always do it, is buy with hard money loan to rebuy. And by doing this, it’s protecting me. And I’ve got cash flow on all of my properties. One of the things I don’t want to do is be over-leveraged in this market because if you’re conservative in buying properties, you’re buying it with this kind of equity, even if the market dips 10%, you’re 30% lower than the next door neighbor that might want to rent out his property and you could drop your rents if you needed to. Those are little ways that I’ve internalized the process. And it’s worked for me, and I feel comfortable about my portfolio.
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Mike: Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.