How to Maximize Your Rental Income on a Single Property (Rookie Reply)
39:48 Share

Let's get your questions answer.

I'm actually care and i'm here with tony jay Robinson and this is the .

podcast to help you kick start your real city investing journey and the day we're going back into the bigger pockets forms to get your questions answer, okay, the forms of the absolute best place to quickly get all of your release investing questions answered by experts like me, ashly and so many others. But today, we're going to discuss how to determine if you should rent or sell a property.

We're going to talk about a realistic cash on cash return in twenty, twenty four and beyond. And finally, we will talk about what's to keep in mind if you're considering a hey, luck now before we jump in and want to give a big, huge thank you to corporate direct. This episode is sponsored by corporate direct, where you can protect your properties within L.

L. C. And let corporate direct take care of all the paperwork, go to bigger pockets that com slash direct for a free fifty minute consultation. And to get one hundred books off, if you mention the real sir podcast, let's jump up to the show.

okay. So our first question today is from the bigger pockets ts forms. And here's the question. I need some advice on whether to sell or hold onto a property that I purchased in twenty twenty to provide more contacts.

My spouse and I purchased our first property in california in twenty twenty for five hundred thousand, and that has currently appreciated to seven hundred thousand. We did live in the property for a little over two years, but due to family reasons, we had to relocate to canada in early twenty twenty three and have been renting out the property since then. We did hire your property manager, but even after there two hundred dollar fees per a month, the property is cash flow positive, around five hundred dollars.

If we consider a mortgage place H A plus property tax. The time to renew the currently with our tenants is around the corner. And I must mention that my current tenants are very stable and have never missed any payments so far. And therefore, I want to provide them with adequate time since we'll not be doing the least if we are selling the property since as per our understanding, if we have used the property as our primary residence two over the last five years, which we have from november twenty twenty to january twenty twenty three, then we should be eligible to get capital tax exemption.

We sell the property before november twenty five, but if we decide to renew the one year least the property management company only renewed for one year, then we will miss this opportunity forever since we currently have no plans to return back to california, at least not in the immediate timelines. And I have around thirty percent equity in the property, therefore, seeking advice, whether that makes more financial sense to not renew the lease and sell the property is the capital tax exemption. Still need to figure out the implication of selling the home with canadian taxes or hold on to the property and build our equity, especially since IT is cash positive, we have a stable tenant.

Well, tony, I think the first thing is you can talk on the canadian taxes because you are from ontario. Ca, right? I have to tell the story.

What I was the first time to uni ever met. We are going to denver and we had both send in our flights to get reivers. And I saw a tony's flight and I was like, he's coming from ontario, canada.

Like, that's a weird. Why is you going to be in canada, ontario, california? Ontario, california.

However, IT is named. Our founders came from ontario, canada, which is why we are ontario, california, the origin inal homes sectors. But A A lot of impact on this question, I think before we get into IT as maybe we just kind of break down some of the things that he talked about in this question.

So the first is like that, the tax exemption. Um so typically when you sell a piece of real estate, especially lack an investment property, your capital gains taxes on on the sale or as if you get a big profit when you self but you ve got a big tax ability of the year. So a lot of this question kind of hinges on trying to avoid that capital gains tax.

But in order to do that, you have to have lived in in as a primary residence for the or two out of the last five years. So she's kind of if SHE really extends this least, then you won't have been able to qualify for that. You had to last five because it's it's it'll be one. And how of last five which won't allow her to to qualify for IT? So and you want to the foundation with that first so so listeners can really follow along with .

what the chAllenges here. So one big piece of this is to that you're feel like you're missing an opportunity to tap into the equity of the property. But another option is, is that you could always go and refinance to get that thirty percent equity.

The dilemma I do see here is that you purchase IT in twenty twenty, you could have a Better interesting than what you would get now if you went and refinance the property. But I just want to lay that out is a possible scenario to get to tap into equity is by doing them, you also could do the ten thirty one exchange on the property. two.

So I think there's some different options that I don't want anyone thinking like I have to sell my property in order to to get the max of value from IT. You're not going to lose out. There's other ways to tap into the equity. It's really just figuring out what is the best path for you to do that.

Yeah I just you remember my mind actually on on the ten thirty you want exchange like a lot of her dilema is trying to avoid this big taxable event. But if you use what's call ten thirty one exchange invert for our viewers and listeners, you aren't familiar with that based that there is a section of the IOS tax hoods, section ten thirty one, which allows for like kind exchanges where you can differ the capital gains tax if you exchange this asset for another like kind asset. So basically, the person who posted this question cancel this property, california, whether be five years from now or twenty years from now.

And instead of paying taxes on the game, they can take that entire profit and roll IT into another property, right? They they can defer those taxes into they actually sell and just liquidate for the full profit. So there's a lot of people who quote and quote, swap to your job where you just keep swapping your properties for bigger properties and you never actually to pay tax on all you're alive because you just keep deferred IT into the next building.

So we've done one, ten, thirty one exchange um and there was an easy way for us to take the equity. We had an property and we were actually able to turn that into two different properties from the equity that we had built up. So I personally inform in the situation you got A A casual asset vastly or aggressively appreciating market like formia. So you get casual and appreciation and a super easy to sounds like you like the property manager, if it's me and probably not selling this property.

yeah.

So I think you're two things to consider is how important is IT that you get this cash now? Do you meet this cash now to tap into the equity? Or can you hold keep the cash, invest that equity invested into this property still? And then the next thing to look at is do you want to be done with rental properties? Because if you do the ten, thirty one exchange, you're going to have to buy a light kind property, which is most likely going to be some kind of rental property.

So that would be I see the big things to think about right there as to what are your lifestyle goals, your immediate goals that you need right now, and what are your goals down the roads. So say, a year from now, this resident, this tenant, doesn't decide to renew and you want to sell the property year from now because you don't have another great tenant and play us like this one was for you. Well, do you want to go bite another property that you would you know have as an investment as a rental property again to um so I think those are two big things about when do you actually need the cash and what are the other opportunities that you can do with that cash? And is that going to be a Better return than you're making right now? But I think, tony, that are perfectly you have a cash flowing property that's appreciating it's most likely going to continue to appreciate.

You're most likely going to get more cash low because you're probably on a thirty year fixed rate mortgages and you're going to have properly in property taxes and insurance increase, but you're most likely probably going to be able to increase the rent above beyond that where your cash will will actually increase. That is one of bengal lesson that i've learned as a really state ambuLance as to watching my cash flow inquires because my mortgage payment has stayed the same, but I am continuously raising rents to keep up with market runs in on a property I bought you know, five, six, seven years ago. My cash flow was so much more now because of just time in being able to raise around in different areas to and that definitely has become such a benefit of being a landlord and investing in rentals. Yeah.

I can agree more. I said I feel like this person's in a really good spot. And again, I feel like cash, low appreciation, good management, that's like what everyone hopes for. Sounds like he had the whole trendy there. So i'm probably holding onto the property .

before we jump into our second question. workers. We want to thank you so much for being here and listening to the podcast.

As you may know, we are every episode of this podcast on youtube as well as original content. Like my new series, Ricky resource. We want to hit one hundred thousand subscribers, and we need your help. You aren't already make sure you are subscribed to our youtube channel by going to youtube 点 com flash at relate rooky want to invest .

in real state but don't have the time or know the best local markets。 Rent to retirement has you covered and the current to deal, they've helped thousands of investors just like you buy, turn key homes across the best U. S.

markets. Best of all, they do all the heavy looking for you with over two hundred and fifty five or reviews on bigger pockets. Rent to retirement experts help you build strategies to retire early.

The real thing right now, renter retirement offer some amazing and centres on turkey, new construction properties like up to thirty thousand dollars off of new bill Prices, zero percent down loan options to replace nine, nine percent interest rates. So guys, domus out, these deals won't last. Text R E I to three, three, seven, seven, seven, or visit bigger pockets outcome, slash retirements, start investing in top casual Marks today.

Hey, henri washington, hear from the on the market pod ever get frustrated while harding for off market properties? Well, heare not alone. Just as alex, a fellow real estate investor who was in the same boat struggling to find hidden games, they need discovered deal machine. Now, alex effortless lesly locate off market. James, leveraging deal machines, free, unlimited contact data powered by the robust ata is used by nine one one and the automates the campaign so you ready to revolutionize your real state game like alex, visit bigger pocket stock, comes less deal machine, sign up for free and start transforming your property hunting. Today.

if you're in the landlord game, you know the importance of solid tenant screening. That's where rent ready steps in. Now rent rent ready is got an important new feature, proof of income verification and get this with plaid certified reports.

You'll see every everything from income summaries to total earnings by month. So say goodbye to those gotchee moments and hello to confidence in renting with rent ready. Rent ready is included in your pro membership.

At bigger part is now if you're not a pro, they're offering a six month plan for just one w can't beat that. So visit rent ready dot com. That's R E N T R E D I dot com and use the B P investor. That's B P, like bigger pockets investor to get six months of rent ready for one dollar.

Okay, everyone, welcome back, tony. What's our next question today?

All right. Our next question says i'm trying to approximate how much really say I need to achieve my annual cash flow goals. And IT boils down really to cash, cash returns. Frankly, i'm trying to buy as little little as possible to meet my cash world goals due to low liquidity plus current market conditions, and i'll put the rest of my portfolio in the stock market.

On the bike poke's youtube channel, there is a nice friendly debate of stocks versus real state and real state winds in terms of return on on investment when a while leveraged per the podcast, I believe that was suggested that a first year cash on cash return, a fifteen percent to twenty percent, is achievable when, while leveraged might be tough to achieve positive leverage with today's interest rates, any possible housing bubble debated. The highest first year cash on cash return i've ever heard of is thirty nine percent at a self storage facility where there is sixty eight thousand dollars in the Operating income, twenty thousand hours in interest in principle, and the thirty nine thousand dollars in cash, all with one hundred thousand dollars payment on a four hundred and seven thousand dollar property. This is purchased in late twenty twenty.

I'm curious how fellow real state investors have fared in terms of one year cash on cash returns and any opinions of the current market conditions. So a lot of to impact you as well. But IT sounds like the there's really a couple questions to you, right? So his first question is how can I really maximize my return with the fewest number of properties possible? That's a one question.

And then the second part of this question is what is an actual good cash on cash return for this market? So maybe let's focus on the first part of that question of like how can he really accelerate um the the cash low with the least number of properties. And there's a few different ways to kind of skin that cat.

I think what comes to my from me first actually is like a lot of what I think depends on how aggressive this this person wants to get, right? I always go back to when we interviewed create her up on the rookie podcast because I think he was a phenomenal example of someone who literally went all in to try to maximize their their return per property. So if you guys go back and listen to the episode, greg, he bought a big, I think was like a five bedroom house.

As a recently graduated Young professional from college didn't five bedroom, but got a bigger five bedroom house. He slept on the couch in the living room, and then he wanted out all five bedrooms to other people. So you ve got the super low downpayment debt, right? The super attractive debt.

He's really maximizing the cash. Alo, by renting out all five rooms. And he just repeated that process. And within just a few property, he was able to get to a point where he had a good chunk of cash loo coming in. So I think a lot of IT depends on how aggressive this persons willing to get. So aside from how second actually what else what other strategies might this person employed to really juice the cash low from the fewest number .

of rental properties? Yeah actually I was just listening to James stanard on Baker pockets on the market podcast and he was talking about flipping and how he requires um he won't do a flip unless he is getting a thirty five percent cash on cash return over six months. So that is like his base metric for when he's analyzing a flip if he is not getting whatever capital he's investing in.

And I believe IT was he's getting uh hard money of eighty five percent of the total cost of the flip. So that's purchase Price in that the the rehab costs too. He is getting funding for eighty five percent.

So he's putting fifteen percent capital of front him or his partners, whatever. But with that fifteen percent, he is requiring that he's getting thirty five percent cash on cash return when he sells up loop what he's making on the profit of IT. So I think that is a super great magic. He's also flipping in a higher end area of seattle. Um hey.

And so I think understanding your market and what's achievable in your market, uh Jimmy is also been doing this for a very long time and has done thousand up flips and really, really knows how to get that little extra up percentage by analyzing um and estimating his hub like down to you know the uniquity. But I thought that was really interesting that he shared that. So I think definitely flipping could be another metric.

Um I actually invested capital into a flip and we got over a hundred percent cash on cash return from the money I investing into that loop. But that's not going to happen every single time. Of course not. But I definitely think flippin could be an avenue of getting a high cash on cash return. The thing with, uh, calculating cash and cash return for rental properties is that your you're not taking into account the equity and the mortgage paid down that's being built up in the appreciation in this property to you're just looking at cash flow in the capital you left in the property.

Yeah, I think flipping another great strategy and we probably don't talk about flipping enough in terms of cash on cash return. I think most people look at flipping just in terms of how much know what profit did I have the thing into the deal. But yeah, I love Jimmy's approach to look at from a kasha casual term perspective.

Um I think another unique strategy and and we've interviewed and folks we see in the podcast and this is well, like the now' s were interviewed recently where they would buy kind of similar to the house ACC, but they were buying somewhat larger properties and then rehab and convert them into even larger properties where they could print by the room. And that did phenomenon ally well for them, and they were able to get, you know, four, five x, what the usual long term rents are by doing the supermassive, by the room strategy. So I think finding ways to believe maximize every square into the space, or sometimes I even adding more space is a great strategy to to jury more additional revenue for for your properties.

I think the one last thing that I would say from like A A strategy perspective, obviously short comments I think are great because you're onna get Better casual than traditional long term tals. But I do think some of the kind of small commercial probably doesn't get enough love. I either like in this question, he talked about selves to watch facilities.

We just bought our first small bootee hotel h the returns about our phenomenal comparison to what we could have got, how we deploy that into a single family home. So I think there's a lot of new investors who who kind of our guns y for the small commercial. But I do think there's really a sweet spot right now that asset class specifically to get really good deals that are undervalued, where you can do some value at and reducer returns as well.

Yeah, tone, what was the Price point of your motel to that you buy? IT was like a hundred thousand.

IT was just another million.

IT was nine fifty. okay. And then what what some of the Price points of the single family homes you bought in the smoking mountain?

I'll give you a perfect example, right? The the first cabinet that we bought, we bought for five ninety today is probably worth close to million box, maybe little less. But that cabin, that one single family home is valued the same as what we bought a thirteen room hotel, four. And the revenue potential on the hotel is at least four x what that single family home is. So you can see how when you find the right commercial deal, same exact Price, but so much more upset when you go commercial.

That's the point I wanted to drive in that like sometimes thinking of like a motel or uh, commercial property of thinking higher Price point. But that's not always the case. I right where I am right now at the lake, they there's this motel for sale and it's completely run dumb, but it's like listed like two hundred and forty nine thousand or something like that and it's just like there's lake houses that are you know two million around here.

But yet there is this. I don't know how many rooms are there, like twelve maybe or something like that. If you know, you'd have to obviously bring and capital to fix that up and things like that. But it's don't get into that mindset that commercial or motels or campgrounds or anything like that are less affordable than going and buying a single family home or a small mobile family.

Did you say that there is a motel in your town is listed for two hundred and forty thousand bucks on the lake?

It's not on the lake. It's on the other side of the street of the lake.

What what have you not told me about this deal? What's the name of this lake? What's the name of the lake? It's probably some crazy .

lake name is talk league. We had a guest and adam who did buy a motel on the lake and turn that into a blue que motel. So i'll have to find Adams show number, what show he was on.

But he bought a motel fixed IT all up. He did seller financing and there was a single family home with that. There was like um a whole bunch of ducks too with slips. And then yeah so I actually went before I bought my lake house I want in, stayed at his motel at this little petie motel that he was put together there. And I was super nice and I met him in his wife and person and um no IT was really cool and less I heard I think he's had said they were trying to buy a mariner to on the lake but yeah also find this especial number because there was a really good on.

no, actually have to find the name of that hotel is for self down. Send that to me, right? I can go so I can go get .

and offer IT. There was another one that actually just sold like that was a pretty well known like more like two story motel and IT had like a pupa cse and step like that. And when I saw how munch is so far, I couldn't believe those like that cheap that it's sold for.

And we actually went there a month or two ago to actually do the pop up course. And like, there is nobody around, like IT was a ghost town. IT was so weird.

The door to like the shed where you like chicken to play pop pot was like unlocked, but nobody was there. Like, is this like self, sir? Do we just like our ourselves, do a ball in a day and are like, I don't all let's just leaving, we ended up leaving and going somewhere else. But yeah.

I think we covered maybe a few different opportunities in terms of juice in the cash on cash return. But that the second part of that question is what what is a good cash on cash return to shoot for in year one? What what are you thought .

of managed a rental property? I'm looking ads between fifteen eighteen percent cash on cash return for a rental in my market. I'm happy with that. Um i've also used to always have to be over twenty percent. A couple years ago, I was very different for me, but now I care more about um appreciation and mortgage.

Pay down an equity that I have in my property is so i'd rather leave some money into the deal and be not as leverage on a property to um to have that equity baked in. So I may be a little bit different, but that's where i'm looking at, right, is between fifteen and eighteen percent cash on cash return for a rental property. That's also going to give me appreciation.

And I think we are to touch like the flipping and what that looks like a short term rent. I mean, twenty percent is a good like floor, right? And you know I think we're still seen in deals maybe north thirty percent, much like actually a few years ago, we would only look a deal to do doing at least thirty percent um you know obvious ly as and strates of change.

We've had to pull that number down just a tab bit. Um yeah, I think that's that's a fair number in the shorter mental space. But honestly, I think a lot of it's going to come down to you as an individual investor in which your risk tolerance is because maybe you could go out and get a fifty percent cash on cash return.

But as I going to force you into a war zone, maybe right where your tenants maybe weren't taking the best care of of your property and there's other issues that kind of come along. So I think a lot of IT is kind of come down to your your rist taller and serve how risk of a project is IT. Are you going to do a new construction for the first time? You've never done IT before or maybe the returns or phenomenal, but you're going to sit waiting for permits for twelve months before even get the Green light to build anything.

So there's a lot of new ones. I think that goes into cash on cash returns, but general rule of them as somewhere in the double digits. To start with this probably good starting point.

I just looked up Adams h episode where he talks about the metal on the leak that he purchaser in three hundred and seventy five.

If you've been around bigger pockets for a while, you know, we throw a huge black friday bookcase. L every year. It's literally the best time of year to get our books and all the bonus content.

We've got more than sixty books now and to celebrate the enormity of the catalogue, every title will be discounted up to sixty percent off. Basically, nothing is not on sale, and these are the best deals you get on our store all year. The cell is happening starting today. A bigger pockets that com slash black friday through december second.

Our current interest rates making you depressed about casual. What if they didn't have to be that way? Resited retirement has two point nine nine percent celer financing available on turn key properties.

You heard that, right? That's a sellar financed two point nine nine percent interest rate, where the average catchall is over nine hundred dollars per month. They also have options where you can put as lowest five percent down on multiple investment properties with no P, M, I.

Rents to retirement as the nations, a leading turkey investment company that understands what IT takes to be successful in today's dynamic state market, their reputation speaks for itself with more five star reviews than any other company on the bigger pockets website. Resited retirement offers fully turkey properties that are newly built or renovated at least and managed, allowing you to invest with confidence in the markets, offer the best returns to learn more, visit rent to retirements. Dotcom, that's T O retirement dot com or text R E I to three, three, seven, seven, seven. Again, text R E I to three, three, seven, seven, seven.

Hey, Henry washed to hear from the on the market pod ever feels stuck while searching for off market deals, will let me introduce you to sera, a savy real state investor who turned her fortunes around with your machine. sr. Now taps into free, unlimited contact powered by the same database used by ninety percent of U.

S, color R, D systems SHE easily sends automated milk campaigns and thanks to the machines, is new. Private investigator can even track down those sive corporate leaves. Powerhouse keeps steps ahead of the market, one to invest like sera had, the bigger pockets that comes slash deal machine and senate for free start turning hidden opportunities into your investment success with just a few collects.

Ricky is i'm telling you right now, it's not everyday you find a game changer like rent ready. They're not stopping with just tiny screen. No, they've now rolled out proof of income verification so that really ready handle the heavy lifting with automatic checks on financial ability and earnings plus with plaid certified reports.

You'll have all the info you need or write at your fingertips when ready is included in your pro membership at pig or poxy. But if you're not a pro, they're offering the six months plan for only one. How great of a deal is that? So visit weren't ready. Dot com, that's R E N T R E D I dot com and use the code A B P investor, that's A B P like bigger pockets investor to get six months of a rent ready for only one dollar.

Okay, welcome back. Our last question is from the bigger pockets forms. And the question is context is that we have a couple other single family rentals, and we're currently considering getting a hillock from one of them to fund the downpayment to a commercial multifamily listing that's above four units.

Would this be a bad idea depending on our other financial standings? We currently have amazing and come coming in from multiple rentals and our businesses, but the hillock is within consideration because capital is dry incidentally, during this time due to other investment pursuits going on for us, we can absolutely make the interest payments. Would be fine if they shot up from, say, ten percent of fifteen percent.

What am I missing? Is there any reason of vision into this? Or is this a Normal day occurrence for people to utilize? He locks for fast mir properties when they have the means to cover any worst case scarious s related to the loan.

You a good, he lack a home equity line of credit. So IT looks like they're trying to get a he lock on the other investment properties. Is that how you're reading this too?

Yeah sounds like they have got some equity and their single family homes that they want to use to buy the small commercial property.

So they want to and add on this before you can definitely do this, check small local banks where they will give you a line of credit on an investment property, doesn't have to be your primary residence. And then you can, so they wanna take this money, pull the money off of the line of credit, and use IT as the downpayment. So I don't do this.

I usually use a line of credit to fund the purchase Price of a deal that i'm going to go refinance all of IT and pay the he like back or I funded for the rehab. Then when I gone to refinance, I pay IT back. So in this situation, they're using IT as a dun payment.

So they're are mild, most likely not going to go and refinance and pull the money back out of the property to pay the line of credit. So they are going to say that they are fine with making the payments on the wine of credit. They are gone, maybe take money from their other investments, whatever IT is to pay that off.

So what the first thing I would look at is analyzed the deal and make sure you're including those payments to the wine of credit. And what is your cash flows after that? The deal still makes sense based on that because you are you do want to run the numbers to see what the deal actually does for you. Um so understand that you need to add the mortgage on the property plus also the hillock payments said you're going to be making to put that back. Actually.

one thing I want to draw down on you said that you usually use IT and kind of like a short term instance. why? Why is that? Why is that kind of .

prefer approach? Because the interest rate is usually higher than if I was going to go and get long term debt like a fifteen, twenty, thirty year fixed rate mark on IT plus is variable as as they indicated that they're OK with the interest rate swing from ten percent to fifteen percent. They still can cover that, which is go right, that they are already understanding that could happen and considering that.

So that's one thing I don't like about is that is variable also some line of credit only for a certain amount of time where at you know the end of the term, say five years, the bank can go ahead and either call the note and say, okay, you have fifty thousand dollars that you taken out. We are now going to. And underline a credit.

And we're going to amOrtize though that fifty thousand that's lapsed over the next fifteen years and you're going to make payments back to us based on that amatis ation schedule. So there's a couple, and that definitely depends on what type of line of credit you get things like that. But um I like just using IT for short term purposes and then getting a Better interest rate for something that's more a long term.

We've never used the he lock before. Usually we're doing rehabs. It's private money that we've typically use. So we haven't pull the heloc ks specially. Remember, you can even educate me a bit here, ash. But I guess what what are some of the questions of this person did want to move for with the heloc like you talk about like IT, what happens at the end of the term that something that maybe people don't don't take into account? What are some mother maybe gotch's that this person may not be thinking about as a related to pulling a heat lock and using IT as a dawn payment?

Yeah if there's a new requirement. So like sometimes I run into the circumstances where the bank will want me to keep my checking account for the business at that thing, they want my deposits. So that could be a requirement. They could ask to have your financials every single year.

So at this one bank every year i'm smith, my personal financial statement, my tax return and you know my partners tax returns, my business tax returns to this bank um another thing to look out for is due how do you get the money off of the line of credit? So in one circumstances, at one bank I am filling out a form and I email email them the forum and they deposit IT into whatever account I want. Another bank, there is no form.

I have to call or email one of the loan officers and request for them to do IT. Um so uh in other circumstances, i've seen people just have a checkbook where they can just write a check and the money comes off the line of credit. So I think understanding what that process is. So for example, um if you have the checkbook we could be at and i've literally seen this so far where a guy had his checks ook from his line of credit and i've seen another guide with his cell directed I R A checkbook.

Be at meet up and we like i'm ready to write checks who once you to invest them like super cake, I don't do that guys about i've seen but like if you got a check book, like you could not write the check whenever, where, if I wanted pull money off my line of credit and I have to submit this form to the bank. I have to email the loan officer. I'm limited to banking hours to be able to do that too. So I think understanding how you can get your money off um the requirements for maintaining and establishing the line of credit, understanding that to and if there are requirements to renew your line of credit, what that looks like.

And they touched a little bit in the question too. But I think just the the variability of the actual interest rate, let me ask actually, do you for the line credit that you have, is there is there a cap on the radar can not move without any limit?

I understand have no idea. It's never gone higher than ten percent, but it's one of them started. I've time to think of what year I took IT out, maybe two thousand seventeen or eighteen.

And I was at four point seven five percent, and it's worked its way up to ten percent. I think right now, I just gotta notice that it's down to like nine point two five or something like that right now. But I think that that that you know, a big swing, I mean, that is made yeah made a huge difference.

And you know if you'd pulled out money that version now as to what the interest payment would be every single month, then that's one thing nice to know too is but if you're just making interest experiments or like how I kind of a give the example that if they call your one, they could advertize IT. We're now you're paying principal and interest. That actually happened to one of my business partners.

He took out a line of credit and they actually converted IT, I think goes after two years convert IT IT inside. You can't pull any more money off. We're converting IT to a fifteen year term one.

Now he makes those payments on IT, but I don't know. I can remember what his interest rate as, but that would be something to think about to is okay. They do convert IT to a long term alone. How do they establish what my interest status at that time to?

And I think like with most things getting a talking to a future from people as you shop for this, he like could probably be important as well. Like i've given the example before that the the Morgan industry is kind of like the ice cream industry, like they're all selling the same thing, but the flavor is very so much putting on who you go to and who you talk with. And while everyone may offer a he lock the way in which they actually delivered, that the nuance of how you interact with that he lock will be very, very different. So talk to the local banks, talk to to brokers, talk to whoever you can, and trying to least a few options before you sign on the data line that first you luck and .

keep asking until you're told us because there are a lot of banks who will say no to doing a line credit on your investment property. But I have two banks just in my small role area that I live that have done IT. So keep asking around until you find someone that will do IT great.

Well, that is all of our questions today on rooky reply. Thank you so much for joining us. If you want to be part of the bigger pockets community, you can go to bigger pockets at com slash forms.

You can also sign up for a free membership, or you can become a pro member. I'm h and he's tony. Thank you so much for listening or watching on youtube real seat worki.