Real Estate, Property & Homes
I don't have a tolerance for debt, so I would funnel all my cash flow from the rental property back into the mortgage, this is called accelerating debt?
Great way to describe the thinking process. The way you put it really helps those who would benefit from paying down debt and those who should invest in a new property. Really like your channel . I am with you.
What kind of property are you buying for $40-60k?? That would be a total rebuild where I am
good chemistry these two
I think it really comes down to tax advantages. The way I look at is: I run a business out of my primary home, well actually 2 businesses the rental business and HVAC business. I pay more tax thru HVAC business because of self employment tax with the HVAC business, because the rental business is capital gains, it's taxed at 20% after all expenses there is no self employment tax with that. Because I am taxed at a higher rate for the HVAC business I carry a loan on my primary home then deduct a portion of the use of this house and all expenses on the higher taxed business entity loan interest costs and so on. The flip side of this for me at least is I wind up double depreciating. I depreciate my main home for business use of the home while I live here fixing it up / making typically what amount to high value changes and then, convert it to rental after so many years of living here and running my HVAC business from it AND then: I depreciate the whole thing again at a higher valuation after I turn it into a rental. Nice area, great schools. I think the main thing is to figure out what is going to give you the highest advantage. A few points here and there all add up over time. If the government gives you a tax break cookie, it's time to turn yourself into the biggest cookie monster you can.
You guys are great!!
I've hear him say many times the buy homes for 40k where are these homes? I cant even find something for 60k
she is sounds more knowledgeable on the topic
All these other big real estate youtubers miss a lot of things in their videos that you talk about. When Natali asked the question if you should get a loan on the second property or buy it in cash I instantly subbed since most youtubers don't answer these questions that seem straight forward to them.
Mortgages are crazy tho..youll end up paying more than double..plus more closing costs and fees and mandatory insurances..alot of money(interest) and stress you can save buy using cash instead..there are advantages (tax advantages..etc…using debt(mortgages)i guess it all boils down to the actual math ..its alot of mathematics involved in deciding.i hate owing money tho..
Lol @ the monopoly ..yall are great..thanks again!
Thank you ;]
I have to say your channel is one of the most rich in real usable information i have found. I am currently looking to move to the southwest and looking to become a rental property owner. I would love to talk to you about what options would be available to someone like me who would basically be starting from zero with student debt.
I’ve watched too many videos and I’m waiting for the “why”….”how” How do I write off everything (depreciation, etc.) to offset the debt service?
If you told me to clean a table sure I could clean it but is it clean?
What are you using the table for? Changing a diaper? Playing poker? Having dinner? Do I clean it with winded and pledge? Vinegar and water? Sweep it off and throw a bowl of chips on it?
This is both informative and entertaining lol
I followed you on Fox You are Tops…..HOW I WILL BE FOLLOWING YOU GUYS FOR FINANCIAL FREEDOM…
So glad I found you guys!
Wow guys, thank you so much for all this valuable information. I just subscribed.
where are you finding 40k to 50k properties?
I have 8 paid off rentals cash flow. My next move is 10 financed 4 plex units. I'm 56 debt free living below my means. It does work. Just buy 1 to start the rest gets easier.
What if you want to build a primary residence and use the current house to rent. And use home equity for the down payment? And oh forgot to.mention, the equity would then be maxed out
Hey clayton look to buy properties here in Deming N.M they are cheap and every one rents here
Principal pay down is taxable income. You didn't bring this up. It feels awful to pay tax on money you don't have to expand or repair. Having more properties means more repairs, showings, and labor. Leverage up and create more of a job for yourself.
Clayton, would you suggest paying off mortgage before buying rental property?
Have you got an email address I can ask you a few questions??
Eye rolling probably due to her repeatedly interrupting his thought process. Eye rolling = "I'm trying to make a point here…..darling…. Thank you very much….lol."
love your dynamic. your advice is great! keep expanding topics.
40k house?? Yeah wont be finding that here in the DC metro area =(
this is awesome.. Clayton is amazing.. his wife seems nice and knowledgeable as well…Will definitely be contacting you guys.
How many LLC do you have ? I heard you on another video you put 150 thousand worth of properties under one LLC.
I got my thinking cap on
Clayton, you have so many great videos. I'm 31 and if you could point to a Youtube video of yours that lays out a possible "blueprint" to follow so that someone like me can accumulate 50 rentals, which could I watch?
Banks will only make new loans of your DTI is not something like 50 or lower.
Where do you live….I can't buy a house lot for 40-80k in my area haha
In my home town 110k to 130k homes in b class neighborhoods are bringing in 1200-1500 rent depending 3 or 4 bedrooms
Is this a good approach
My town cheaper “ghetto” homes are 40-80k and none are concrete home they are all on pier and beAm should i be afraid of these??
Im about to close a deal on a 130k home and gonna rent at 1450 a month not exacly super positive cash flow but i want to have equity to later down the line use equity lines of credit to get cheaper home with better improved cash flow that i can buy out cash money with the equity loan
Me and my girlfriend are planning to pool money and go this route we combine almost 110k income and have no big bills at the moment
Dave Ramsey would have a stroke
How do you do not to fight? I fight with my husband every time and we love each other. That's vey funny though. You should coach my coule😜😜😜😜
2.5 years to get 40k? you rent 40k properties at 1333 / month?
Morris Invest i just wanted to thankyou for your videos the have really inspired me to buy an investment property
always calculate opportunity cost
Hilarious when she sent the text on the side about you rolling your eyes. lol. You guys are fun.
But you don’t speak about cash on cash ROI which is why some ppl prefer debt
So many gimmicks. ONe way to be a millionaire…..start before age 40 or so….buy a house for 100K, get a 30 year mortgage. As you can and prove your ability to manage to a lender, buy another for 100k. Do this over the years until you have ten of them. Even assuming No cash flow, just breakeven after past repairs, etc, and no appreciation factored in – in 30 years yo u have 10 houses paid off, with a value of 100K each. 100K times ten, one million. Done. So many people do this, but, with ONE house that they live in, and have to sell it when they retire to get the equity out. It IS THAT SIMPLE> NOW, imagine you buy these so that the rents DO CAah FLOW, and there IS APPRECIATION over 30 years – you will be very comfortable. Best is start to be young, I am not. Most investors combine the two types – they have long term holds and they have some fix and flips. Legal advice Ive had – either have a big mortgage or paid off. A low mortgage in first place means the bank has a lot of your equity to go after, as well as liability things.
The problem of trading off between a 5 percent mortgage and investing it someplace else at 12 percent is this.. when things crash, and with the government pumpiong up the market to big heights, you suddenly have a 12 percent return that isnt -and yo still owe on the 5 percent loan. The NUMBER ONE reason people fail in long term holds in crisis is a LACK OF LIQUIDITY. I had breakfast with people worth millions in property equity, but had no cash to pay for breakfast. Leverage debt is a double edged sword – it can cut you a path, or cut yo in half. Be careful. There is also the quality of life issue as you get older….paying something off is not always the optimum use of money, but, you sure sleep well and cant be foreclosed on when no mortgage. Be careful of overextending yourself taking one thing that cash flows right now while everyone has a job and paying their rent, but might falter in a bad market. Take it slow, try to buy low. Right now the market is very high. Good to get in when young, but in a few years things will crash.
I love this video, it's so informative. by the way I'm in my early 30's, 2 kids and a wife – I have a mortgage of 180k but my home is valued at 320. At the same time I may have a an apportunity to pay off my Mortgage home within a 1 year and 6 months. My question – Should I pay off my home within the amount of time?
Should I take the Heloc equity to buy a investment property and where, cause where I live in Maryland, properties are really expensive.
Last question, I am really interested in a particular property however it cost about 130k, I could rent it for $1400 give or take according to the comparable around that area, at the same time I got approved for another mortgage loan through Navy Federal Credit Union. I would like to investment in this property which by the way the mortgage would be 1200 a month according to the bank/ that includes tax, homeowners, principle and interest – I don't know what to do – if it even makes sense to buy this 130k and only get about $250 a month on this investment property or should I concentrate on buying 40-60k homes with my HELOC? Thank you in advance, please comment need your help, you're the best? Or simply, should I do both? Help. Thanks so much..
Where do you buy house for $40K, mobil home?
Where on earth do you find houses for 40k in 2018???
your wife is hilarious and brilliant! Don't roll your eyes at her! 🙂
Boys see, I da ho
Boise, in French/Haitian Kreyol means people of the woods or of the woods. Boi, which pronounces as "bwa" means stick or woodAnd "se" being of or an adjective or associate with.
I did not believe in rentals until now
Think of it as opportunity cost and find a calculator. Not sure if this was recommended.
Monopoly: We used to hide money EVERYWHERE and borrow from anyone who was willing to give it up. Younger ones never kept a written tally so lost. In the long run, siblings and cousins LOST in the real game. But I'm thankful for getting an early lesson. btw He always rolls his eyes at you but you tend to interrupt somewhat.
Where do you find 40k properties?
She is very distracting.
Hey I ordered that book 3 days sgo and didnt even know it was you guys. Omen/Oh man!!!
What’s your book?
You guys are AWESOME! My wife and I have 3 rental properties in the New England area. Hoping to get into more soon. KUDOS
Great realness of a married team. .. "Goose" LOL love it thanks M.I.!!
At what point do the bank say your debt to income ratio is too high and what is plan B to get over that hurdle.. should multiple duplexes be part of the equation
How long have you guys been married this is cool..
Did we just witness a marital dispute?😂😂😂
Dont roll your eyes on me….😂😂😂 . So me&my hubby. Lol
Ya’ll are so cute! Totally didn’t think about all the tax benefits you get when holding a mortgage. Great info. Period
I have a property that I'm about to do a short sale on. My question is should I apply for a HELOC before I sell the place with higher debt or wait until I sell which would show lower debt but lower credit score too?
He looks like Michael Cohen to a tee with the glasses!
Last 6 homes, I simply put down 20% and finance the rest over 10 years (through my LLC). Homes are generally in the $110-130k range (mostly 3 bed / 2 bath) and lease for $1200-1400 per month. This model allows for the home to essentially pay for itself each month.
Also, super important for people to remember: LOOK AT THE TAX RATE BEFORE PURCHASE. A $110k home in one neighborhood may only have a property tax of $800 but the same home in a different neighborhood can cost $3,800 in taxes per year. The annual tax expense is a huge factor in my search parameters. And, be sure to protest tax increases every single year.
Paying off your houses should be the number 1 priority. I would rather have 20 debt free houses than 50 with thousands still owed on them.
Who is your portfolio lender?
I love your videos. I was in real estate back in 2008 straight out of HS and it didnt go well for me. I bought a house a couple of years ago for 25k which is now worth 120k this year and i thought about selling but instead decided to rent. Ive been watching your videos and i feel motivated to start my own small businness instead. I want to own my whole neighborhood if possible 😁
With a half-second of delay it's difficult not to interrupt. You think they've stopped talking when really they started again half a second ago.
great minds and so much love,,,u are best
I'm I the only one that cought that??, I would keep that debt rolling. So I can buy more debt, cause the more debt we have the more money we are making correct. So it would be. It's up to the person tolerance!!! I would keep trading till. The interest didn't make sense
Nicely done!!! so many eye rolls. HaaaaaaI’m sharing…
Great presentation. I enjoyed the the sincerity of husband and wife team presenting the different approaches available. Thanks for sharing the information from your experience.
Discussing rate of return & internal rate of return while using leverage and non leverage is the best way to explain this topic and weigh the option in my opinion. Rate of return is generally higher if you stay leveraged and raise rents as debt is paid down to maintain the rate of return. The less of your own money down the better rate of return. But always have reserves for each property.
Clayton – if I can only get 6 mortgages in my name (not married), how would I go about getting 50 more properties if I don’t have $3M cash to buy them? Cash flow from the 3 or 4 I could pay cash on would take a decade to buy another 3 or 4. How do investors finance and obtain 50-100 properties by themselves? Even using a HELOC will only get a few more properties.
Curious to learn how investors are able to get a large portfolio of properties if we can only get 6 mortgages. Thanks!
Can you tell me what are some good places to apply for loans for rentals under 60k? A lot of places won't loan you less than that.
Is it possible to email you directly?
YOU TO ARE A REALLY CUTE COUPLE… YOU SHOULD DO MORE TOGETHER….
I don't know how applicable this all is in the bay area
Morris please dont make another video we ur wife. She just dont talk clear.. I love ur video u talk really clear
Find a wife that loves you the way Ms. Morris loves real estate.
interest is tax deductible too, soo if you have less write offs you pay more taxes so its not how much you make its how much you keep
Debt Monopoly! Love it.
You guys are fortunate to get $50k property across your town. I could have acquired 30-40 with the amount of property values we paid. Here in Ontario Canada the props are expensive usually you don't get positive cash flows most of the time. So for folks like us in Canada how shall we do? Payoff rental debts by using HELOC? FYI min more than half a mil for single home. At least 300$ for apt. Currently our loan interest is 3-4%. 80% mortgage interest is easily 8-9k a year. So how to manage rental property debts with under water cash flows for folks in the North?
.Is Buying cash on cash the only way to get 10% to 12 % net roi . Having a mortgage on the prooerty lowers roi to 10% gross and 6% net . It wouldnt be worth it right ?
This was hard to watch…
Cool video Morris man, you know your stuff and your wife is pleasant to say the least
“HELOCs are something the banks don’t want you to know about”…yet they still offer them? This video was so good but lost credibility with that 😢
Sunglasses to avoid body language surveillance. LOLOLOL 😀😍😂😇 You guys are so fun!
I loved watching this! Lol cute dynamic. I'm glad she interrupted him on point one because I found that clarification valuable. 🙂 Thank you both so much!
Usually husband and wife fight is annoying, BUT you two are too CUTE!!! thx for this video!
I was thinking after watching a few other videos, How to make it possible when buying a property to have the land and building in two separate entities "like the tax shelter video for business" where in one way you could lease the property to yourself " so in effect you would have to on paper pay more expenses from the rental income you get ? If u understand what I mean can u do video about it lol thanks
where are these properties that are so inexpensive?
So if you're Goose… then she's Maverick. Okay got it. LOL — my wife and I are currently working on a 5th rental financed with a HELOC. The rest are free and clear but because we pay off the financing as soon as possible… growing the portfolio is a slow process.
Depending on what one does as an employee, shorter-term pay-off is will suited for people who labor for their living. White collar people may tend to take longer to pay-off rentals because they also invest in stock ownership. Pick your poison and go forward.
Depending on one's income situation, it's cheaper to have loan debt on one's home and more free and clear with the rentals. Rentals valued under 125K are better being paid-off as you can't get favorable lower interest rate loans under 100K. Do the hard work with more risk when in 20's -40's and lower the debt numbers by age 50 going forward. Pick your poison.
Question for Natalie; Do you have a favorite type of financial report that you use for decision making? I'm partial to a Cash on Cash ROI report for each property than combined to see the bigger picture.
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