I think a lot of individuals misunderstood the strategy. It's explained in 28:00. He uses equity of one home to pay another. Then, he quickly pays off the loan(s). Then repeats. He also focuses on homes where they are purchased cheap but appreciate quickly from renovations. This not only removes debt concerns but it helps mitigate risk. He isn't sitting on several loans all at once.
I'm one of those people. Ok, so if you use equity from one home to pay another. You have to either A: take out a 2nd mortgage/HELOC on it, B: refinance and take the cash out or C: sell it. The only of those options in which he's de-levereging is C. Are you saying the strategy is to use existing equity(in mortgaged homes) to get new homes, while using the profit from sales of old homes to pay down the existing mortgages?
@@ryansatchell2302yeah im kinda confused too. But i think at the beginning he was not getting heloc but using equity in his existing property as a Collateral as a downpayment instead of another loan. Therefore i think he doesn’t have to pay another mortgage but if something goes wrong bank gonna take both of his properties. So its good deal for bank. David cemented on that in the video. I do t have a timestamp but its there.
@@silverx5733 Ok yea that makes sense. Seems pretty risky since the bank essentially has access to all of your assets. I mean people go through the trouble of setting up different LLC's for each property JUST to avoid cross collateralization. If his portfolio were to go above say ~15% defualt rate, the entire portfolio would be in jeapordy.
@@ryansatchell2302 Yes; however, the key is the cost of the home i.e., "great deals". He mentions the homes in his area cost $25k, not $250k/$300k. Because of this, he is able to pay off the homes pretty quickly. Realistically, there's also rehab costs. Therefore, using this method on +5 homes simultaneously is very dangerous. But if you use this on two homes, pay them both off, then use house #2 to buy house #3, all previous homes remain untouched. If something bad happens, you lose two homes worth +$25k each. The "De-leveraging" is paying it completely off where you just pay taxes, insurance, and water for rest of your ownership of it.
@@ryansatchell2302 That's correct, what he is doing is extremely risky especially when you are just starting out. Once you get to the point where your rental income can pay off the loans very quickly it becomes a lot less risky unless you continue to just stack and stack your debt-equity. For example, he said he paid 15k cash for his personal residence, and cash for the 2nd property which I don't recall him saying the price of. The 3rd property he used the equity of those properties to close on. Majority of banks will only let you pull ~70% of your homes equity for a loan, so assuming both his first properties value of 15k he would get up to 21k worth of equity in cash. To keep the example simple, purchases the 3rd property for 15k as well, 20% down payment would be 3k. He now has 18k worth of equity to use to renovate the property. He uses 10k of that equity so he has 13k total into the 3rd property but now that it's fixed up the property appraises for 40k and rents for 300/month. With that new appraisal value his equity in the property jumps from 3k(down payment) to 28k because of the difference between his purchase price of 15k and the new value of the home. With that purchase which cost him 13k worth of equity, he's now got 70% equity in a property that's worth 40k. If he were to pull as much equity as the bank allowed him back out of that property that would be 19.6k giving him a net profit of 6.6k as well as adding 300/month to his rental income. He can continue to use this strategy to increase his monthly cashflow and equity as long as he can keep finding good deals. So basically tldr buy properties cash then use their equity to buy more property that's undervalued and can be improved. Then cash-out refi the new property, pay off the loans on the first 2 properties until you find another good deal so you're only sitting on one mortgage on the 3rd property. When you do find that 4th property you can use the equity from the first 2 properties again. Rinse and repeat.
This was an inspiring story by Lamon! Love “if my wife and I with less than 30k/yr each can do it so can anyone else”. Thanks for having Lamon on the show.
Not all C-class properties or those in poorer locations are money pits. I have a triplex in a very modest area and do very well. However, you are right, you or your team need to be able to understand and connect on a basic level with those individuals and the neighborhood. Otherwise, it will feel overwhelming, you will lose interest and there will be a disconnect....In general, REI is high risk. That includes the people and situations we are placed in. The notion of a "good neighborhood" is a bit of a joke in a big city because crime, congestion etc. is everywhere. I find that if you vet the proper section 8 tenant, they are no worse than a regular paying tenant.
Totally agree. Private pay Tenants showed Landlords just how volatile and risky of a position they can put you in during the Pandemic. Many Landlords are rethinking Sec 8
Cross collateralization..... thank you for the terminology I did a 1031 exchange in 2020 from one door to seven doors and now I've been trying to find a way to leverage the appreciation and increase in rent. BTW my mortgages are less than 3 1/2 on all rental properties. 😃
Love when you all do episodes on individual real estate investors who have built their portfolio with a long term rental cash flow focus . I respect that David is more into active businesses ,w-2 jobs , and short term rentals but those types of content aren’t what I prefer from bigger pockets . It’s even better when they don’t raise capital . This episode is the type of content that I like and hopefully there will be more of it in the future . Maybe there could be another subsidiary show that focuses on cash flow or something like that .
Thank God Henry is here. He is AMAZING at translation & simplification. Henry also shares solid information while the other guy rants, makes things sound more complicated, and withholds workarounds.
This has been one of, if not, the most inspiring, informative, and relatable podcast episodes I have ever watched. I will definitely be watching multiple times!!
I advise you to invest in stocks to balance out your real estate, Even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. This is not financial advice, but buy now because cash is definitely not king right now!
You are correct! The current market may present opportunities to maximize profit, but you must be a professional practitioner to carry out such successful transactions.
Most excellent! My friend sent me this podcast yesterday and I set up a meeting with him, my ex husband (we still own a house together) and myself to discuss a partnership. I'm making plans to be on your show in a few years. 🙌😁
I worked for school for 3 years making 28,500 a year this year they didn't renew my contract plus my father died in June. This story reminds me of me. Except I have college debt and I'm 40
6:00 "$20k or $30k per door" - Oh gosh, you just made me realize how out there Vancouver is. Try $1-2m per door, lol. But we did just have some back to back +50% years in the area...
What market are you in? lol. I need some rentals and fix and flips, lol. Great show, keep it going Brother. Love how you said you have to get out of your comfort zone and go talk to the bank about seasoning. Your wife was also an inspiration to get you all started. Cheers!
Google is going to own the Ai revolution too it owns the transformer architecture and that ChatGPT and most of this AI companies use let that sink in. Got google stocks at 89 this year when everyone was buying MSFT
In regards to his method, wouldn’t that make his monthly mortgage payments spike through the roof? Wouldn’t it be significantly higher than if he had just put down a 20% down payment instead so he can get a higher cash flow?
How i understand it he doesnt pay extra mortgage when he uses his existing property as collateral. Only loss is he is going to lose both of his properties if he cant pay mortgage on the property he bought. Its a good deal for bank if anything goes wrong
@@silverx5733 So basically there isn't a second mortgage on the second property in question, but instead, there's only one mortgage, which is the existing mortgage. He gets to collect ALL of the cash flow and the only draw back is if he doesn't pay, then he loses both properties? If he knows what he's doing alongside careful planning, this is an absolutely incredible stratedgy! This is blowing my mind, did I get your explanation correct? Cause I'm still kind of confused.
The Market have been suffering over the past month, with all the three indexes recording losses in recent weeks. My $400,000 portfolio is down by approximately 20%, any recommendations to scale up my returns before retirement will be highly appreciated.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary expertise to pull off such trades effectively carry them out.
Yes, this is the same scenario that happened to Dave Ramsey. The cards are stacked precariously and if there is a little bump, the banks can and may call all notes due. The concept is good. But just be cautious.
This is a Very Smart Brother. Men Don’t understand the importance of a Great Wife. And women think if they get a phat butt it will attract the right man. He and his wife Elevate each other
Love to hear the respect he has for his wife’s input. They will go far together.
She seems like she has some great input. Hard not to listen. ❤
A wise man knows he needs a wise wife so they can build and grow their empire together.
My man made it straight out of the hood. Well done.
I think a lot of individuals misunderstood the strategy. It's explained in 28:00. He uses equity of one home to pay another. Then, he quickly pays off the loan(s). Then repeats. He also focuses on homes where they are purchased cheap but appreciate quickly from renovations. This not only removes debt concerns but it helps mitigate risk. He isn't sitting on several loans all at once.
I'm one of those people. Ok, so if you use equity from one home to pay another. You have to either A: take out a 2nd mortgage/HELOC on it, B: refinance and take the cash out or C: sell it. The only of those options in which he's de-levereging is C. Are you saying the strategy is to use existing equity(in mortgaged homes) to get new homes, while using the profit from sales of old homes to pay down the existing mortgages?
@@ryansatchell2302yeah im kinda confused too. But i think at the beginning he was not getting heloc but using equity in his existing property as a Collateral as a downpayment instead of another loan. Therefore i think he doesn’t have to pay another mortgage but if something goes wrong bank gonna take both of his properties. So its good deal for bank. David cemented on that in the video. I do t have a timestamp but its there.
@@silverx5733 Ok yea that makes sense. Seems pretty risky since the bank essentially has access to all of your assets. I mean people go through the trouble of setting up different LLC's for each property JUST to avoid cross collateralization. If his portfolio were to go above say ~15% defualt rate, the entire portfolio would be in jeapordy.
@@ryansatchell2302 Yes; however, the key is the cost of the home i.e., "great deals". He mentions the homes in his area cost $25k, not $250k/$300k. Because of this, he is able to pay off the homes pretty quickly. Realistically, there's also rehab costs. Therefore, using this method on +5 homes simultaneously is very dangerous. But if you use this on two homes, pay them both off, then use house #2 to buy house #3, all previous homes remain untouched. If something bad happens, you lose two homes worth +$25k each. The "De-leveraging" is paying it completely off where you just pay taxes, insurance, and water for rest of your ownership of it.
@@ryansatchell2302 That's correct, what he is doing is extremely risky especially when you are just starting out. Once you get to the point where your rental income can pay off the loans very quickly it becomes a lot less risky unless you continue to just stack and stack your debt-equity. For example, he said he paid 15k cash for his personal residence, and cash for the 2nd property which I don't recall him saying the price of. The 3rd property he used the equity of those properties to close on. Majority of banks will only let you pull ~70% of your homes equity for a loan, so assuming both his first properties value of 15k he would get up to 21k worth of equity in cash.
To keep the example simple, purchases the 3rd property for 15k as well, 20% down payment would be 3k. He now has 18k worth of equity to use to renovate the property. He uses 10k of that equity so he has 13k total into the 3rd property but now that it's fixed up the property appraises for 40k and rents for 300/month. With that new appraisal value his equity in the property jumps from 3k(down payment) to 28k because of the difference between his purchase price of 15k and the new value of the home.
With that purchase which cost him 13k worth of equity, he's now got 70% equity in a property that's worth 40k. If he were to pull as much equity as the bank allowed him back out of that property that would be 19.6k giving him a net profit of 6.6k as well as adding 300/month to his rental income. He can continue to use this strategy to increase his monthly cashflow and equity as long as he can keep finding good deals.
So basically tldr buy properties cash then use their equity to buy more property that's undervalued and can be improved. Then cash-out refi the new property, pay off the loans on the first 2 properties until you find another good deal so you're only sitting on one mortgage on the 3rd property. When you do find that 4th property you can use the equity from the first 2 properties again. Rinse and repeat.
This was an inspiring story by Lamon! Love “if my wife and I with less than 30k/yr each can do it so can anyone else”. Thanks for having Lamon on the show.
Love hearing from people that built something from the ground up without rich family/friends. He gifted us so much helpful information. Great show
Not all C-class properties or those in poorer locations are money pits. I have a triplex in a very modest area and do very well. However, you are right, you or your team need to be able to understand and connect on a basic level with those individuals and the neighborhood. Otherwise, it will feel overwhelming, you will lose interest and there will be a disconnect....In general, REI is high risk. That includes the people and situations we are placed in. The notion of a "good neighborhood" is a bit of a joke in a big city because crime, congestion etc. is everywhere. I find that if you vet the proper section 8 tenant, they are no worse than a regular paying tenant.
Excellent point.
Agree. I have a SFH investment property in a C class neighborhood. I love it!
I’d say most people no matter the income or area just want a clean nice place, with a respectful landlord that is on top of things.
Great Point. How did you find your triplex? Off market or on market?
Totally agree. Private pay Tenants showed Landlords just how volatile and risky of a position they can put you in during the Pandemic. Many Landlords are rethinking Sec 8
Cross collateralization..... thank you for the terminology I did a 1031 exchange in 2020 from one door to seven doors and now I've been trying to find a way to leverage the appreciation and increase in rent. BTW my mortgages are less than 3 1/2 on all rental properties. 😃
Love when you all do episodes on individual real estate investors who have built their portfolio with a long term rental cash flow focus .
I respect that David is more into active businesses ,w-2 jobs , and short term rentals but those types of content aren’t what I prefer from bigger pockets . It’s even better when they don’t raise capital .
This episode is the type of content that I like and hopefully there will be more of it in the future . Maybe there could be another subsidiary show that focuses on cash flow or something like that .
Thank God Henry is here. He is AMAZING at translation & simplification. Henry also shares solid information while the other guy rants, makes things sound more complicated, and withholds workarounds.
Thanks for sharing your inspiring story Lamon. Excellent show guys! Have him back on the show in the future.
This is a great strategy! Love the fact that they both have inputs that make this strategy solid. Much respect.
I have been listening to BP for a long time and this episode was the amazing. Your strategy is amazing. I have not really heard it put this way. 🤑🤑🤑
Very inspirational! Thank you for sharing and keep up the great work!
Im honestly so nervous about getting started but listening to this guy is good.
What a great, inspiring husband/wife team. That's so great! No excuses, just hustle!
I love my C class properties! If you screen your tenants right it's not that bad.
Brother sounds like master P, he is destined for success! Jokes aside, hustle on!
Did you need to income verify/qualify with the bank or did they strictly lend the money based on the equity in your home?
Congratulations Mr. Lamon Woods!!!
All the best to you. God bless you and your wife.
This is also beautiful because small markets are great for affordability
This has been one of, if not, the most inspiring, informative, and relatable podcast episodes I have ever watched. I will definitely be watching multiple times!!
Man this was very inspirational and for my man to be from the boot! All praise & love!
I advise you to invest in stocks to balance out your real estate, Even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. This is not financial advice, but buy now because cash is definitely not king right now!
You are correct! The current market may present opportunities to maximize profit, but you must be a professional practitioner to carry out such successful transactions.
David, you look great ! TY for this channel, so grateful for the inspiration. ❤🙏🙂
Great listen! Having your spouse on board is huge
Most excellent! My friend sent me this podcast yesterday and I set up a meeting with him, my ex husband (we still own a house together) and myself to discuss a partnership. I'm making plans to be on your show in a few years. 🙌😁
I worked for school for 3 years making 28,500 a year this year they didn't renew my contract plus my father died in June. This story reminds me of me. Except I have college debt and I'm 40
Great organic show!
Congrats Lamon!
God bless you on your journey and I hope your children are taking notes!!!
National hero you are Lamon. Keep up the hustle.
6:00 "$20k or $30k per door" - Oh gosh, you just made me realize how out there Vancouver is. Try $1-2m per door, lol. But we did just have some back to back +50% years in the area...
This is an excellent episode!! Lamon is another inspiration for sure!!
Glad to get into a new one quickly.
I wish they gave the guest more time to speak. They keep cutting in and giving there opinion.
So nobody is gonna talk about how he bought a house for $6k?
I think it was in 2014 and in the hood
Was thinking the exact same thing
There are houses in Pennsylvania selling for $3500. There's life outside the bubble.
Very inspiring and awesome account of how to get it done
Love Lamon! No excuses! Faith and figure it out!
Yes!!! Awesome comment.
Awesome episode and inspiring I'm ready!
Very inspiring, thank you!!!
Awesome show
Good video. How can he use the equity in the properties without refinancing the loan to buy other properties?
Can this really be done in this current market?? Hard to believe.
Absolutely!
You guys are helping me sooo much!!!!
41k views .... deserves 1 million
Love this story. Very inspiring
Take out debt, to pay off an old house, so you can use the cashflow, to pay off the new debt? Lol gotcha...
He is the American dream. Very happy for him.❤
Im interested in where he's investing
What is a seasoning period can someone elaborate?
Is the process described called a HELOC? If not what the difference?
Great episode great story
Ok but what is his net?
I would like too see the properties he has just to see what it’s like there.
When the titles say 70k month, is that pre mortgage payment or after mortgage payments?
Love the story
👍👍👍Love this guy's grit ❤
15 thousand whered did you buy a house? 15 thousand is taxes in my area.
Great episode
What market are you in? lol. I need some rentals and fix and flips, lol. Great show, keep it going Brother. Love how you said you have to get out of your comfort zone and go talk to the bank about seasoning. Your wife was also an inspiration to get you all started. Cheers!
Yes yes yes!
I love this guy! Living the dream!
Great show!!! Love this 😊
What market is he in lol share the sauce
Louisiana
@@nikoa7936 thank you 😊
Google is going to own the Ai revolution too it owns the transformer architecture and that ChatGPT and most of this AI companies use let that sink in. Got google stocks at 89 this year when everyone was buying MSFT
40:00
I have some cash saved up and stuff like that
😂 He might use filler words, but he definitely knows what he’s talking about.
Brilliant.
In regards to his method, wouldn’t that make his monthly mortgage payments spike through the roof? Wouldn’t it be significantly higher than if he had just put down a 20% down payment instead so he can get a higher cash flow?
How i understand it he doesnt pay extra mortgage when he uses his existing property as collateral. Only loss is he is going to lose both of his properties if he cant pay mortgage on the property he bought. Its a good deal for bank if anything goes wrong
@@silverx5733 So basically there isn't a second mortgage on the second property in question, but instead, there's only one mortgage, which is the existing mortgage. He gets to collect ALL of the cash flow and the only draw back is if he doesn't pay, then he loses both properties? If he knows what he's doing alongside careful planning, this is an absolutely incredible stratedgy! This is blowing my mind, did I get your explanation correct? Cause I'm still kind of confused.
What market is this guy investing!
The Market have been suffering over the past month, with all the three indexes recording losses in recent weeks. My $400,000 portfolio is down by approximately 20%, any recommendations to scale up my returns before retirement will be highly appreciated.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary expertise to pull off such trades effectively carry them out.
so, if one unit defaults and goes through foreclosure, you will lose all your units since they are collateral to each other.
Don’t let it default , and also it’s a verrry long time before a foreclosure
Sometimes you have to bet on yourself & just make the numbers make sense.
No. They explain it at 28:20. He pays off the loans quickly ("I'm paying 1-2 houses off at all times"). He doesn't let the loans sit there for years.
Yes, this is the same scenario that happened to Dave Ramsey. The cards are stacked precariously and if there is a little bump, the banks can and may call all notes due. The concept is good. But just be cautious.
What market is he in?
Are they saying “my market” so that others don’t buy there and drive up the price?
Dig a little. You can find it.
Do you guys mentor? And If so how much is that? Because some of
The groups out here want your first born!
It’s like knowing a human Hug Lol 👍🏾
This is a Very Smart Brother. Men Don’t understand the importance of a Great Wife. And women think if they get a phat butt it will attract the right man. He and his wife Elevate each other
Where does this guy live to get homes so cheap?
4al
This guy sounds like Dave Ramsey, right before he went bankrupt. Be careful dude.
You talk too much and say too little.
W stream
First
1st
Thank you for this episode! It was great. Can you please share Lamons insta handle? I can’t seem to find it
How in the hell do you get that much money combined from a tax return, damn!!!
I’ve been following this guy on IG for years now, definitely got some motivation from this guy.
Dope what’s his insta handle
@@kaylawilliams1859 @1_800hustla
1_800hustla