Author Topic: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE  (Read 25903 times)

JGS1980

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PTF

sammybiker

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    • Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
@Bicycle_B Thank you, I appreciate that.

@Spitfire Thanks and I agree, for a MMM types, it's a liberating income level, absolutely.

@Trifele Thank you!

@Dicey Hey, thank you, hope you've been well.  Pretty sure your one house still has more light cans vs all mine...combined.

@tralfamadorian Thank you and good call on the lessons learned. 

- Try and get more inspections done when possible.  It's not always possible and because of this, I largely stopped doing them all together.  But I should still strive to perform an inspection to weed out the nightmare projects like #6.

- Continue to seek bids from other contractors.  I had declined to work with a couple other folks as I had a good thing going with my contractor but in reality, I probably could have saved a lot more money, especially on the last couple of projects, by going elsewhere.  I got lazy and comfortable.

- Establish a schedule and track it religiously.  I did this on the first couple of projects but again got lazy and comfortable.  It's real dollars that are lost every day a property isn't occupied or is waiting on utilities turn on because I forgot, etc. 

- Be more selective and stick to the original goal.  The last two properties I really didn't need and the funding and rehab for these caused some stress that if I could do it over again, I probably would have just passed.  It's hard to say no to another $1500/mo in cashflow and $48k in equity (originally planned for closer to $80k) but it was stressful. 

These are the key lessons learned that come to mind.

@theoverlook Thank you.  Correct, sole owner.  Bank leverage is as follows and you'll see that the amount correlates closely to the monthly cashflow:

Property #1:  $178k mortgage balance
Property #2:  $129k mortgage balance
Property #3:  $115k mortgage balance
Property #4:  $189k mortgage balance
Property #5:  $115k mortgage balance
Property #6:  No mortgage
Property #7:  $79k mortgage balance

@zoochadookdook Thanks and sounds good.   Shoot me a PM, always happy to chat RE.


Chuck Ditallin

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I've had nothing useful to add, but I've really enjoyed following your successful journey @sammybiker . Many congratulations!

Can I ask what the plan is now? I suppose what I really want to know is whether you've enjoyed it so much that you're going to continue mostly because it's fun, rather than just to make money out of it (or was it just a means to an end?)

I guess there are parallels with 'one more year syndrome' vs. 'being liberated from having to work for money but continuing to work because it's fun.' I'd appreciate your thoughts on how you feel about the process.

sammybiker

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    • Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
Thanks @Chuck Ditallin

Rough plan now is to focus on stabilizing these new properties and debt paydown on at least the lower leveraged properties with a goal to get to a more comfortable portfolio debt to income ratio.  I don't necessarily want to pay off everything but getting a few more free and clear properties is the near term goal. 

Further to that, I want to go back into private lending - lending out 60-70% LTV on projects that investors in my circle are working on, namely single family flips.  I keep first position lien on the property and get to pick and choose my projects.  I was doing a little bit of private lending in 2017 before Hurricane Harvey and have done a couple deals already this year.  Getting more involved with lending and being more passive all while still being involved at a high level in projects and the market is fun.

Spitfire

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@sammybiker any chance you would want to start a thread like this and document some private lending adventures? That's an interesting topic to me and likely to others as well. Seems like a reasonably secure investment with good returns.

sammybiker

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    • Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
@Spitfire   Sure thing, that sounds fun.  It would probably be later this year.

@sammybiker any chance you would want to start a thread like this and document some private lending adventures? That's an interesting topic to me and likely to others as well. Seems like a reasonably secure investment with good returns.

Dicey

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Hey@sammybiker, it's been almost a year. Seems like a goood time for an update. I loved following along, and I'm hoping your efforts have been richly rewarded. What have you been up to in the interim and is this pandemic having an effect on your properties?

Steeze

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Can't believe it has already been a year!

sammybiker

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    • Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
Thanks @Dicey & @Steeze

High level, things have been good.  No issues from the pandemic to my Texas portfolio, I think we suffered one late payment in April but they caught up and that was all, thankfully.  My Ohio portfolio just suffered its first tenant loss but they were questionable even before the pandemic, so I'm not stressed/probably a good thing.

I still wish I had not done properties 6 & 7 as it spread my cash reserves very thin and as I never refinanced property #6 and only refinanced property #7 about 50%, I left a ton of cash in the properties, more than $160k+.  I've taken on short term debt in the mean time while allowing cash reserves to come back up.  To me, the extra equity and additional cashflow wasn't worth being spread so thin and running with low cash reserves for so long, not to mention the additional stress of the renovations, #6 going way over budget, etc. 

I'm happy to say now that cash reserves are back up just shy of $90k and that continues to grow.  This summer I'll begin the pivot to eliminate outstanding shorter term debt and probably refinance #6 and possibly #7 to lock in additional long term, low interest debt and bump cash reserves even higher.

I've not pursued any further private lending after closing out a couple successful loans at the end of last summer.  I think I would still like to move in that direction eventually but this pandemic has me more motivated to increase cash reserves and rethink my debt load.  Personally, I'm thankful to still have strong W2 income and I'm fighting some lifestyle inflation, as mentioned in our PM but working those issues out.

All good, thanks for checking!  I sure hope to have another journal here soon as it kept me accountable, focused and motivated.
« Last Edit: June 12, 2020, 09:35:24 AM by sammybiker »

BicycleB

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Love the honesty in the update. Congrats on staying stable financially and moving towards your chosen cash level. Good luck on lifestyle inflation!

Trifele

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Thanks for the update @sammybiker!  Glad you are doing well.