Revolutionary Strategies to Fund More Properties

Presenter:

What's up, everybody? Welcome back to another episode of Loop It In, the DoorLoop Podcast, where we pick the brains of experts in property management, real estate and investing. Tech, we cover it.

Marketing, that too. So whether you want actionable tips or the insider scoop from top performers in their industries, this is one show you won't want to miss. Be sure to subscribe so you won't miss out on any future episode.

David:

Hey, everyone. This is Dave Bitton, co-founder and CMO of DoorLoop, and I will be your host for today's show. If you're tuning into our audio-only podcast, you can also watch the video version on our website at DoorLoop.com/podcast or DoorLoop.com/webinars, as we will be screen sharing today. We're going to be joined by Antonio Cucciniello. He is a real estate and content creator, who helps beginner real estate investors buy their first rental property or their second, third, fourth, et cetera, by helping them with a step-by-step process that he has personally built and battle-tested over the years.

You can find his content on Instagram, TikTok and YouTube and Facebook with his handle @investarters. It's I-N-V-E starters, investarters. He also offers a ton, a ton, really a ton of free and super valuable content like his beginner guides, playbooks, physical books on Amazon and also a personalized investment plan for you and much, much more. We're going to do a deep dive today on nearly every single option on how you can get cash and money quickly to buy more properties faster and on a repeatable basis.

I can almost guarantee there will be numerous ideas here that most people never thought of, and you'll be completely blown away by how many creative ways there are to raise money fast. Without further ado, Antonio, thank you again for joining us.

Antonio:

Thanks for having me, David.

David:

Tell everyone a bit about yourself and your overall journey in real estate.

Antonio:

Yeah. I'm a real estate investor and content creator. I primarily buy small, multifamily homes in a few different states around the country. I kind of screwed myself by splitting myself up too thin, but I learned a lot along the way. As I started off, I started making content about it because when I started, I was overwhelmed, I was scared, I didn't know what to do. I didn't know where to start.

I saw that other people online were dealing with the same thing, and so I just started teaching people as I was learning and turned out that other people have the same problem. Now November 19th was four years for me buying my first property, so we're four years into this, learned a lot and we're still learning every day. Keep growing and trying to grow the portfolio.

David:

Amazing. How did you learn how to do it? Is it just on-the-job training or were you following other people, take a course or anything like that?

Antonio:

Yeah. I'm not an on-the-job training kind of guy. I'm a try to learn as much as I can ahead of time.

David:

Yeah.

Antonio:

You can't see behind me but there's a bunch of books. I just read every real estate book I could get my hands on, but each one made me feel more motivated immediately after reading it. But I never felt like I had the actual steps or the actual thing I needed to do.

It let me feel great, but I was like, "Well, I don't actually know what to do. Let me read another book and maybe I'll solve it. Or let me watch another YouTube video, or let me listen to another podcast."

David:

Yeah, yeah.

Antonio:

If you're listening to this podcast and thinking the same thing, don't. Don't do that.

David:

Yeah, yeah, yeah. That's awesome. It's nice that you're also giving back to people. Why did you start investing in real estate? Was this like a passion you always wanted to do? What were you doing before?

Antonio:

Yeah, it definitely wasn't a passion. I remember growing up very vaguely that everyone around me had a lot of money, or if they had a lot of money, they had bought property. It definitely didn't have a lot of people around it, but they had properties so that was like the thing. That was always in the back of my head. My dad was a contractor, so he would always say like, "Oh, I'm putting you through school so you can make money. This way, we can buy properties and flip them together."

Funny thing is, that part hasn't really happened yet but we did end up going into business together, so that was there in the back of my head. I got my first job as a software engineer in Princeton, New Jersey. The first day, I was like three hours into it, I was like, "Oh, God. This is what I'm going to do for the rest of my life?" I went home that day, I was texting my friend, and he was like, "You know there's this other thing called entrepreneurship, right?" I had gone my entire life never even hearing the term, 22 at that point.

David:

Yeah.

Antonio:

It turns out my dad's an entrepreneur, my uncle's an entrepreneur, has a barber shop. My other uncle's an entrepreneur, has a trucking business. My other uncle's an entrepreneur.

David:

It's in the blood.

Antonio:

Yeah. It's in the Italian blood. I don't know what to say.

David:

Yeah.

Antonio:

But they all told me to go to school to become an engineer, a lawyer or a doctor. Those are my options. At that point and time, I was like, "All right. I get to figure out something else to do." That's where I started learning about different side hustles or different ways to make money, and real estate obviously was there but that wasn't enough.

I waited four years from that moment till I bought my first property because I was just too scared. I had to read all the books and make sure I felt confident about it.

David:

Were you an engineer for four more years?

Antonio:

Yeah. I was a software engineer. There was about a year period in between there where I quit my job to one, start an Amazon FBA business and that failed.

At the same time, I was learning a different skillset of software engineering, so I switched from like I was doing biometric work like eye scans and that kind of thing. Then I switched to web development, specifically like Google Assistant and Alexa Actions.

David:

Cool.

Antonio:

I did that and then I was doing that until probably was my 28th birthday, just around there. I'm 30 now so it's been about two and a half years since I left my full-time job doing content creation now.

David:

Wow, so you left during COVID?

Antonio:

Yeah. I probably should have stayed longer because I hope no one from work watches this podcast, but to be honest, I really wasn't doing anything.

David:

Yeah.

Antonio:

They were paying me and I wasn't coding. I don't like feeling good about taking money from people, regardless of how big of a corporation it might be. I was like, "This is sweet. I'm making a really good salary in New York City." I was working remote out of Texas at that point.

David:

Oh, wow.

Antonio:

Yeah.

David:

A New York software engineer salary. Yep, that's nice.

Antonio:

Fully remote, I was barely doing any work. Just showing up to a couple meetings, but yes.

David:

That's how you started investing because you were making decent money for a few years so you saved up to buy your first property?

Antonio:

Exactly. I saved up to buy my first property but I also went in on with partners, which I'll talk about in my presentation here.

David:

Okay, okay.

Antonio:

Yeah.

David:

Your dad was an entrepreneur and he wanted to flip houses with you in real estate. Is your dad a real estate investor?

Antonio:

My dad and now I'm bringing my entire family into the business, but the first property I bought started with my brother and my dad as partners. Last second, I was just going about it on my own, like 10 days before closing I was going to close with an FHA loan and they were like, "Can we be a part of this?" I switched from FHA to 25% down and I was able to get out of that.

David:

Wow, wow. But your dad was an investor before? It wasn't his first deal?

Antonio:

No. He had bought a property in Staten Island in the '90s, and he had a duplex. He was house hacking but he didn't know he was house hacking. No one ever called it house hacking at that point. He had a bad tenant so he was like, "I'm never doing this again."

Then 15 years later, he bought some land in Florida with a partner, and they were going to just hold the land and flip the land. Now, I'm a part owner in that land because I bought the partner's share out, but that was the extent of my dad's real estate experience. It wasn't like he was a flipper.

David:

Okay.

Antonio:

He didn't know anything. I had to learn the stuff and then I'm doing it. That's basically the point.

David:

Okay, okay. Awesome. Okay. All right, so let's jump into your presentation that you prepared. For those tuning in with the audio-only version or podcast version, we're going to try to do our best to tell you what you're seeing on the screen.

If you do want to watch the video version, once again, you can go to DoorLoop.com/podcast and watch the video version, or DoorLoop.com/webinars, it will be on both of those. Yeah, let's get into it. Go ahead.

Antonio:

Yeah. David told me a little bit about you guys, that you guys might be already rental property owners, might have your first one or first couple. All of my content, if you're familiar with it, is all about helping you go from zero to one.

I don't really make a lot of content about buying your second, third, fourth, fifth or whatever it is, but I made this just for you guys so here you go.

David:

Awesome.

Antonio:

Financing your second, third or next rental property. When I started out, as David said, I saved up a bunch of money. I saved $30,000 for my first down payment. I spent all my money on that investment and at that point, I was hooked. I was like, "I want to do this again but I have no money."

You resonate with that where you had a job, you saved up for a bunch of years, you bought your property, and now you got nothing left in the bank except a little bit of extra cashflow now. Then this is exactly who this presentation's for.

My goal is to give you a couple methods that you can use to buy your next rental property. This way, you don't have to save for five more years to get your next one. All right?

David:

Awesome.

Antonio:

A little bit about me. My goal is to retire my dad first, because my dad, on the right obviously, he's got arthritis in his shoulders, his hips and his knees. He came from Italy. Both of my parents are immigrants from Italy.

They came here and sacrificed a lot to put me and my brother and my sister, also on screen, to put us through a private school and have a life in a good area in New Jersey. My objective now is to try to retire them. This way, he cannot be in pain every single day. So my dad first, then my mom and then I'm trying to build the portfolio out for the rest of my family.

David:

That's amazing. By the way, your dad sounds like my dad. Also, immigrated to America, he came from Israel. I feel like all of our parents like that have the same story, "I came to America with $20 in my pocket." Isn't that the same exact story?

Antonio:

Yeah, yeah. Exactly. "I came here with nothing and what are you doing?" Okay, thank you.

David:

They all only had $20 in their pocket. I don't know how.

Antonio:

I think that's what they do when you come across Ellis Island or wherever you came in, they're like, "You have more than $20? All right, that's it. Give me that."

David:

Yeah, yeah, yeah.

Antonio:

I used all my money on my first property, like I said, and so I had to figure out a way to keep going. I was reading the book, Raising Private Capital by Matt Faircloth, as you can see on screen. It talked about deal providers and cash providers, people who brought cash and were passive but then people who brought the deals. I was like, "Okay. I understand the math now behind this thing. I'm not the most experienced, but I understand the math. I can provide the deal and have someone else bring the cash."

Because I don't know anyone else in my life that knew about real estate, other than me really. In that book, it talks about all of these different ways you could do it. I didn't know anyone that had cash but I knew someone who owned their house, and that was my dad. He had bought his house and his pride and joy was that he was debt-free on the house. I was like, "Look, you can keep this house debt-free and you can keep working the rest of your life, or we can touch that debt and use that to buy a couple properties and I'll pay it off." Okay?

David:

Yeah.

Antonio:

He was like very hesitant and my mom is still against it till this day but we did it. I co-signed on the loan with my dad, we pulled 300K out. I was like, "Great. Now I'm going to be able to use this to do a couple of properties where I'm going to BRRRR."

David:

Did you do this during COVID when the rates were super low?

Antonio:

Yes, we locked this rate in in May 2020.

David:

Wow, nice.

Antonio:

But the deals I had, I had made offers in April and March of 2020, so I needed the money for those deals with this one. Because of COVID, it took a while to close anyway.

David:

It's funny when you say that because a lot of people have paid off their mortgages and their homes. For them, it's more of a mental peace more than a logical decision. It's like an emotional decision versus logical.

I'm kind of curious how you convinced them because I know a lot of people that have like, "I don't care. I know I can make more money. Yeah, I could take out a 3% loan and make 8% of the money, but I want the peace of mind." How did you get around that?

Antonio:

It was the fact that they saw the money coming in the account from our first property. It was like they've never had that experience before where money comes to you without trading ours.

David:

Right.

Antonio:

That was the huge breakthrough for them. I think if I tried to do it before my first property, they would've been like, "That's way too risky. I don't see any of this." They're very skeptical and so I need proof to give them to take them to the next level.

It's always like I have the vision of where we need to go and their vision's down here. I'm like, "Okay. Well, I need some proof to get you from here to here, and then some more proof to get you from here to here."

David:

Yeah, yeah. It's funny you mention that because we spoke about Rich Dad Poor Dad earlier offline, and that's what he says. You can work for yourself, you can have your business but you're still working.

But the best thing you could do is passive income where you don't do anything and money just comes into the bank account. I think when people get a taste of that, like your family did and you did, you just want to keep growing it as much as possible.

Antonio:

It's kind of addicting, I'm not going to lie. At least, I think it's a healthy thing to get addicted to versus some other things.

David:

Yeah. Exactly, exactly. All right, cool.

Antonio:

Okay. We just pulled out the cash and we bought these two properties. Because it was during COVID and everyone else was scared, I ended up getting these both like 25K below ask. They're $140,000 properties. I'm not buying anything super expensive here, but now today, they're worth $225,000, $250,000 each. That's just pure luck, the fact that I bought them during that time when everyone else was scared.

I remember like that moment. I'm looking at the TV and the TV's like talking about the world ending. I'm on the phone with my real estate agent and he's like, "Yeah, those other offers backed out. They want yours as a backup." I was like, "Well, I remember that if there's blood in the streets, you buy." That was the only thing that convinced me to keep going.

David:

Is that Warren Buffett?

Antonio:

I think so. I think so. I just remember hearing it somewhere.

David:

His was, "When others are fearful, you be greedy." People are scared, you can be greedy. Then there's also that rapper, what is it? "Scared money don't make money."

Antonio:

Yeah, exactly. Well, this was definitely scared money, I'll tell you that much.

David:

Yeah.

Antonio:

Then we ended up refinancing those and I had the opportunity to pay off the loan, but my dad actually had COVID at that time. This was 2021 and he couldn't walk because COVID hit him really bad. I call him while he had COVID and I was like, "Look, we can refinance these properties and I can pay off your loan and you could be debt-free, but we're going to be stuck until we save some more money or I can keep doing this."

I think it was the fact that he realized like, "I'm turning 60 next year at the time and I can't keep doing this the rest of my life. I don't have a retirement account. I have no other option." That he was able to do this. Now we took that, we bought a few more. This is another property that we bought in Ohio now. That was just one example of how I'm using not "other people's money," but other ways to get money that wasn't from savings.

I've listed out a few here, some of which I've done. Other ones, I've touched and learned about so I wanted to talk to you guys about them. This way, you guys could have some options in your toolbox.

David:

Let's spell it out for people just tuning in, so what's on the screen right now? You have hard money loans. What's the DSCR?

Antonio:

I have a slide for each one.

David:

Okay, okay.

Antonio:

I'll talk about them a little bit more, but the options that I'm going to go over are hard money loans, debt-service coverage ratio loans, home equity lines of credit, cash-out refinances, lines of credit, business lines of credit and Roth IRA or 401(k) funds.

David:

Interesting, It's so funny. Another thing that I've realized about immigrant parents is that none of them have retirement accounts. At least for my parents, my did didn't trust the government. It's the same.

Antonio:

They just leave cash in their house somewhere.

David:

Under the mattress.

Antonio:

I'm like, "This is the least best thing you could do possible."

David:

Yeah, yeah, yeah. Then you also mentioned earlier BRRRR. Do you have a slide for that? If not, can you explain to people what BRRRR is?

Antonio:

Yeah, I'll talk about BRRRR real quick. BRRRR, it stands for Buy, Rehab, Rent, Refinance, Repeat. The strategy is you buy a property that needs some work, that you typically get hopefully below market value. In this scenario over here, the one on the left I bought for $141,000. Now, because COVID caused massive appreciation, we only did about $10,000 worth of work on this one. Then we're in $141,500 plus $10,000.

That's $151,500. We were able then to take a loan out afterwards to pull the cash out that we had in the property using a refinance after it was already rented, to get the equity that we had back. At that point, the property was worth $215,000, I believe. I think we took out 75% of $215,000, which I'm just pulling on my calculator here. That's $161,250.

Our cost was $151,500 and we got $161,250 out, so I could have used that to pay off the portion of the loan I took out with my parents, but instead, I kept that to use to buy more property.

David:

Yep, yep. Got it.

Antonio:

Now this strategy, we use this same bit of capital over and over again without having to keep saving for a new down payment. It allows you to scale a lot quicker.

Because instead of saving for four years to get a down payment and buy one property, you can buy a property every six months and do this process over and over again, depending on the banks that you use.

David:

Amazing. Okay, then you also mentioned that this property or one of them was in Ohio. Why did you go outside of your comfort zone, local area of New York, Staten Island, New Jersey to Ohio?

Antonio:

Yeah. This one was in Ohio right here. It came to the point where in 2021, I had analyzed every single multifamily that came on the market in the town that I was investing in. I was like, "Man, I hear about all these other towns across the country that are a lot cheaper. I should just check them out." I was moving to Texas and so I had to drive my car from New Jersey to Texas anyway, and I was like, "Well, this would be a cool content series where I visit all of these markets."

I visited nine different markets that I first did the analysis for, which I talk about on my videos and stuff, looking at different data points. Then I met with real estate agents, I saw properties, I ended up putting in five offers, I think. I got three accepted in three different markets.

David:

Wow.

Antonio:

The one in Memphis, I ended up backing out of because rehab budget came in too high. This one I bought for $102,500, it's a triplex that rents for $1,750. Market rent is really $2,225.

David:

Yeah, yeah.

Antonio:

Then I bought another one in Little Rock, which is a duplex I got for $56,000. The prices were so low and the deals were good, that I was like, "I should probably do something about this and buy these."

David:

Wow, wow. Amazing. You said that you share your journey in videos. You're talking about your Instagram?

Antonio:

Instagram, TikTok. At that point, it was mostly TikTok but now I do Instagram, TikTok, YouTube, everything.

David:

Can you give everyone the links real quick? I know we're going to cover it at the end, but just now in case they want to jump off and go there?

Antonio:

Yeah. My handles are @investarters, I-N-V-E-S-T-A-R-T-E-R-S. It's meant to be invest and starters but the S-T overlaps. I'm working on a new name. If you can't get it, don't worry. 50% of people get it right away and 50% of people are like, "Invest Starters?" I'm like, "No, no."

David:

Invest Starters. Okay, love it. You weren't afraid of buying properties in different states? Looking back today, you don't have to go there? You don't have to visit? You're perfectly fine managing it from abroad?

Antonio:

Yeah. Actually, this property I never saw in person.

David:

Wow.

Antonio:

All the other properties I bought now, the only one I saw in person that I ended up closing on on that trip was the one in Little Rock. Otherwise, I have three properties in Ohio that I've never seen before. Yeah.

David:

Are you self-managing or hired a property management company?

Antonio:

I have property management companies to manage it.

David:

Okay, okay. Yeah, go ahead.

Antonio:

Yeah. I do this passive. This way, I don't have any headaches.

David:

Amazing.

Antonio:

Yeah.

David:

You highly recommend that?

Antonio:

I highly recommend that if you're going to manage yourself, you still got to have someone on the ground there. Some people tried to do that to save some money, but even if you're going to save a couple dollars a month, in my head, the couple dollars a month is worth the peace of mind.

You might not have the most optimally run property because you're not managing it, but for the peace of mind for $200 a month, I'll trade that any day of the week.

David:

Yeah, and then you can also scale. You'll have more time to focus on growing the actual portfolio.

Antonio:

Exactly. My job is to get more assets, not to become a therapist.

David:

Awesome. All right, great. Let's go.

Antonio:

Okay. Let's go into the financing methods. The first one, so I guess I didn't even have this one on the last slide, but partnerships. Partnerships are when you work together with someone else to buy a property. That's as simple as it is. You would want to use them because you're missing what I call one of the resources in real estate. I call this five in resources. It's the ability to get financing, meaning can I get a mortgage? Cash, do I have money for the down payment or to buy the house cash? Do I have time to analyze deals, manage the asset, that kind of thing?

Experience, have I done this before? And knowledge. If you have experience, knowledge and time, then you're going to be looking for someone who has cash and ability to get financing. The more resources you have, the more you can do without partners. But we're talking about a scenario where you're looking for cash or maybe you're looking for a financing partner. If that's you, then you need to come into the table with your experience, your time and your knowledge. Yeah, exactly. I've had some issues with partnerships in the past.

My Amazon FBA business that I talked about was with my best friend and he didn't respond to me for three months, but I didn't let that hold me back. You can have different personality conflicts between two people. One person wants something done a different way, and other people want something done a different way. The way I look at it, the best partnerships are where when one person runs the show and the other person is the capital partner, and is passive and trusts you to do the thing. Because a lot of times, you'll end up in scenarios where two people are competing for the same thing.

David:

Yep. I found the same thing also like I'm assuming what happened with you. It's like, "Hey, we're supposed to be equal partners and doing equal work, but I'm doing more work and you're not." Or their doing more work all of a sudden and you're not, so do you end up losing that best friend?

Antonio:

Yeah, yeah. Well, besides that, he ended up living with me after the Amazon business thing and then broke his lease six months into the lease.

Then withheld the rent that he was supposed to pay because he didn't charge us for the utilities and he was like, "You guys got to pay me for the utilities first." I was like, "Dude, come on." Anyway.

David:

Yeah, yeah, yeah. This is a key lesson here, don't do business with friends?

Antonio:

No. I'm not opposed to doing business with friends, but now what I'm opposed to doing, is not doing business with very clear expectations in advance. In fact, I'm doing business with friends right now but it's working out better, because one person has specific roles and the other person has specific roles, and so that's what I'm going to recommend.

If you do this, you have a very clear operating agreement on how you guys are going to work together. I'm going to do these three things and you're going to do these three things, or I'm going to do everything and you're just going to bring me cash, whatever the scenario is.

David:

Yeah, yeah. How about family, same?

Antonio:

Yeah. Family's who I'm primarily partnered with right now so same thing. There's just got to be a leader, someone who takes the charge. That's what I'm learning, I'm still new in it.

Yeah. There's got to be someone who takes the charge, who has the vision of where it's going to go. You need people who are willing to adapt to that vision and move forward to it because they trust where you're going with it.

David:

Yeah, yeah, yeah. Okay, awesome.

Antonio:

Yeah. A couple of cons, like I said, is that you're going to need to compromise on everything. If you're making decisions with a partner, and you need to run things by them, you're going to be slower at making decisions. You're splitting profits so you're not going to make as much as you'd like to. Your taxes are going to be a little more complicated than they would have been. You're going to be legally responsible if that person doesn't do what they're supposed to do, you're going to have to pick up the slack.

As long as you're aware of these cons and you can minimize the downside of them, then partnerships are a great tool to keep going. There's a few options for where you can get the cash in a partnership. The typical way is just someone has money in their bank account, but a few other ways, like I hinted at earlier, was having equity in their house. Or people who have high-paying jobs and can start putting some money away to the side right off the bat. Or people who have cash in investments, whether it's retirement accounts, a self-directed IRA, or they got stocks and bonds that they could borrow against.

David:

Yep, yep. When you say stocks or bonds, you could use margin basically.

Antonio:

Yeah, exactly.

David:

Okay.

Antonio:

There's four partnership types that I see. First is basically when someone comes with all the cash and you do all the work, and you buy the property outright with cash.

David:

Yep.

Antonio:

Second option is someone comes with a down payment and likely their ability to get a loan and you come and do all the work. It's a 50/50 split. You guys are both on the mortgage ideally, and you have an LLC for that. You would have an LLC for the first one as well. A private lending partnership, which is not necessarily a partnership, but one person lends the money as if they're the bank to buy a property cash or to buy it as if they're a lender, and you still come with a little bit of the down payment.

Then a credit partnership. This is when someone helps you get your ability to get a loan. For example, for me, last year my brother and I, I was applying for an FHA loan. I never ended up closing on anything but I was applying for an FHA loan but I couldn't do it because I have business income not W-2 income. My brother was going to partner with me by co-signing to allow me to get an FHA, which I wouldn't have been able to do without him.

David:

Got it. Okay, got it.

Antonio:

But he didn't come with any money or anything like that.

David:

Awesome.

Antonio:

So that's partnerships. Next up are hard money loans. Again, we talked about the BRRRR strategy, but basically, the hard money loans are a great way to get into a property and not a great way to keep this loan for forever. They are short-term, high-interest rate loans. The last one I closed on was a 12.1%. Okay, so they're higher, but they allow you to typically come in with a lower down payment.

Now, the down payment you put depends on the property, the after-repair value, meaning how much it will be worth once it's fixed up, the rehab budget and your experience, and your credit score as well. Ideally, these are great because they allow you to close quick. They give you funds for the rehab that you can then pull back out after you paid contractors.

They'll actually analyze the property for you, so they're like a secondary person that's analyzing the property to say, "Yeah, we can lend on this."

David:

Nice.

Antonio:

Now, I wouldn't base off of their lending 100% but it's a nice double-check.

David:

Yeah.

Antonio:

And you don't need a job for this. If you lost your job or you have DTI issues because you got the first property or the second property, do not worry. You can use it this way. Cons are-

David:

What's a DTI issue? What does DTI stand for?

Antonio:

Yeah. DTI stands for debt-to-income ratio.

David:

Oh, okay. Okay.

Antonio:

The ratio of your income to your debts. If you have mortgages and other properties, that will raise your debts too high that you might not be able to get a conventional like Fannie Mae, Freddie Mac based loan.

David:

Got it.

Antonio:

Because of the higher interest rate in the loans, if you make a mistake, then you're going to have higher interest rates that are going to cost you more money. It's a more costly mistake if you don't know what you're doing.

David:

Yep, got it.

Antonio:

Yep.

David:

Okay, cool.

Antonio:

Next up are DSCR loans or debt-service coverage ratio loans. These are loans for rental properties that again don't require proof of income. They allow you to buy under an LLC. This is typically what I use to refinance out of the hard money loan in a BRRRR scenario, so that's what I'm doing right now. Just finished the property's rehab and I'm going to refinance out of it. You don't need income, that's why it's great. It allows you to close under an LLC and they'll also analyze the property.

A typical DSCR loan is looking for a ratio of the rent divided by the PITIA, which is principal, interest, taxes, insurance and association fees. They're looking for a ratio of sometimes of 1.2, or some have no ratio and you just have to put a higher down payment. Some have 1.5 ratio. The higher the ratio means you have more rent, AKA more income, and lower cost. The better the ratio, the more chances they'll give you a loan.

David:

Got it.

Antonio:

Yep.

David:

Do you rank these in order of like, "Okay, I'm going to do this one first. I'm going to try to go after this one second. If I can't get this, I'll do this one third"?

Antonio:

It depends on the strategy. It's kind of like my typical route is hard money then DSCR.

David:

Really? Okay.

Antonio:

If I'm fixing up a property because it's just the easiest. I don't have to ask someone else for money. If I just have the down payment on the hard money loan and a couple of thousand dollars for rehab, then I'm good to go. The cons with the DSCR though, is that you're going to have slightly higher interest.

I just got quoted yesterday for a 8.85% on a 30-year fixed rate with a five-year prepayment penalty. DSCR loans, while they can go as low as 15%, which is great if you're not trying to spend a lot of money on the down payment. Some of them are going to be higher than 25%, so again, it depends on the deal.

David:

Where do you find hard money loans?

Antonio:

Yeah, I use Lima One Capital. In the past, I've used Finance of America in the past.

David:

Okay.

Antonio:

They also offer hard money loans as well.

David:

Okay, got it.

Antonio:

Yep. Next up are home equity lines of credit or cash-out refinances.

David:

This is what you did with your dad, by the way.

Antonio:

Yes, this is what I did with my dad. I did a cash-out refinance and right now, I'm working on HELOCs. I'll explain both of them and then give you when it's better to use one versus the other. HELOCs act like a credit card based on the equity you have in your house. This is a great option right now.

Why? Because if you have a mortgage and let's say you have 40% equity in your house, which means you have 60% of the house's value is in your loan but you got 40% that you actually own. You don't want to refinance your 3% interest rate and get an 8% interest rate. You want to keep that 3% on the existing debt that you have, and get the equity out of the house with only paying 8% or 9% on the equity that you can actually touch.

David:

Yep.

Antonio:

This is really great for people who own their own house and they live in it, or if you own a rental property under your name and you have a W-2 job. I might have met a lender yesterday that will offer one on a rental property based on rental income, but I will believe it when I see it given how many of them have told me no. They might not work for every property, so if you only have a rental property and it's not under your name, it might not be the scenario for you. But if you know someone who has a house and wants to invest with you, this could be a great partner.

Because I think like 30% of all houses are owned free and clear. If you took a HELOC out on the house and use that as your funds to get started, hey, that's a great starting capital route. Given that the median price is $415,000, even if you took out only $200,000, that's way more than most people ever start with in real estate. HELOCs are also great if you're not sure where you're going to invest it. If you don't have a deal right now but you want to have access to capital to touch, then HELOCs are great for the exact reason. Now, on the other hand, cash-out refinances, which I've do not plenty of times.

This basically means you change your rate on the property for a new rate, and you get all of the debt out that you probably could have gotten out for however much you want, so typically up to 80%. I know some have gone as 95%, but let's just say 80%. This was great in 2020 to early 2022 when rates were low because typically, if you have a higher rate. That first property I bought, I bought for $195,000. In April 2021, sorry, I refinanced that for $250,000, and my rate dropped from a 4.875% to, I think, a 3.65%. My payment, even though I got $75,000 extra equity out of the house, my monthly payment dropped because the rate dropped.

It's great for that exact scenario. Also, you can cash-out refinances under an LLC no problem using the DSCR. This is great if you know you need the capital to invest it, because as soon as you take out the loan, you have to start paying back the money.

David:

Right.

Antonio:

Cash-out refinances are typically fixed rates, and so that's great. Whereas HELOCs can variable based off of what the rates are today. If rates are planning on going up, your HELOC might cost you more in the future than it does now. However, if they're going down, it might cost you less.

David:

Got it. Got it. If the rate right now is 7%, your HELOC might be 7% plus one basis point or something like that?

Antonio:

Yeah.

David:

Or 100 basis points.

Antonio:

I think one of the HELOCs that I'm looking at right now, gave me like 8.39% or something like that.

David:

Yeah. Yeah, exactly. Okay.

Antonio:

Next up are unsecured lines of credit. Now HELOC is a secured line of credit because it uses an asset, like the house, as collateral. An unsecured line of credit means that there's no asset to back up the line of credit. I'm doing this right now. I have a friend, his name is Rodrigo, Rodrigo Hercules, he's helping me apply for credit cards that are 0% interest for 12, 13 months. The objective here is that you basically pull the credit card, the interest out.

You pull the value you have on the credit card out, and then you use that to buy a house cash. You fix it up and then you pay that off, just like you would a hard money loan, and then refinance. The best part is, is this is a 0% hard money loan. Now, if you keep the loan debt out for more than 13 months, then you're screwed because that goes up to 21%, 22%, 24% interest, which is double what the hard money loan would be.

David:

It's a credit card. How do you pull the money out of a credit card exactly?

Antonio:

I haven't pulled the money out yet. I'm in the phase of getting the credit cards, but I've gotten two credit cards right now for $75,000 total.

The way he's telling me is that basically you kind of do like a cash advance. You pay a very small fee that is part of the equity, and you use that to buy the house.

David:

Wow, that is cool. Okay.

Antonio:

Yeah.

David:

Creative.

Antonio:

Yeah, it is very creative. This is good for people who have good credit. I have decent credit so that helps a lot and you're looking to rehab properties with the funds that you get. A lot of these scenarios, if you rehab the properties to get out of a typical loan, to get out of a short-term loan, then you have a lot better time getting rental properties with these funds.

Because all you're doing is acquiring properties quickly using somebody's high-risk scenarios, and then you refinance out into a lower-risk 30-year loan that you then pay off over time with the rental income.

David:

So let me ask you, where do you see people get into trouble with taking out too many loans and lines of credit, and overextending and leveraging, and having so much debt, and then it all comes crashing down? Where is that line?

Antonio:

I'm relatively inexperienced when it comes to real estate, so I don't know exactly where the line is, but I'm pretty conservative. When I'm running my numbers ahead of time, I make sure that the ARV is lower than what I expected.

When I am taking out the debt, I'm maybe assuming a slightly higher interest rate than what I'm expecting. I build in a lot of these smaller contingencies.

David:

Buffers.

Antonio:

Yeah. This way, if one of them does go wrong, I still have a lot more buffer to survive off of, which causes me to say no to a lot of properties, but the ones that work, they work.

David:

Got it.

Antonio:

Because I typically have that. I know there's people here in Austin, who are "buying rental properties" that "cashflow", but the prices are too high.

If you're buying a $300,000 or $400,000 house that can only rent for $2,000, and you buy it on a 0% interest rate credit card and then you end up not being able to refinance that because prices are dropping, that's kind of where you get screwed.

David:

Now you're stuck basically with a 21% loan after year one, that's what you're saying.

Antonio:

Exactly, exactly.

David:

Or you lose the property.

Antonio:

That's absolutely terrible. Yeah, yeah.

David:

Yeah, yeah.

Antonio:

Yeah, exactly.

David:

Okay.

Antonio:

Well, actually you wouldn't lose the property but you would have to sell the property to pay off the loan because it's not secured by the property.

David:

Right, there's a lien on the property. Yep.

Antonio:

Yeah. That's a little bit about unsecured lines of credit. I think I'll hint on, I don't know if I have one on business lines of credit. I might have forgot that. Business lines of credit are ones that they actually give you a line of credit, like a real line of credit that you can use that again, are meant for business applications. The problem has been I've been trying to get these and I haven't gotten one yet, because my businesses are real estate entities, so you might need to use other entities that are not real estate entities.

If you have a business where you own a restaurant, that might be a better business to do it against. I'm not experienced in which ones are better, which ones are worse. My social media business is a marketing consulting company, and so they see that as less risky than a real estate business. Which to me makes absolutely no sense, because social media's been around for like 10 years and real estate's been around for 150 or forever. That's just how the banks view it.

I haven't had too much experience getting the business lines of credit but they're backed by your "business and your income, and your business's job of generating income."

David:

Got it. Got it. I'm waiting for you to start a software engineering consulting company.

Antonio:

You're waiting for me to start one?

David:

Yeah, yeah. Let's go, all your experience.

Antonio:

I need one for myself right now to build out what I want to build.

David:

Exactly. Yeah, a prop type one.

Antonio:

That's basically it, yeah.

David:

Yeah.

Antonio:

Okay. Then the last thing here is a 401(k), Roth IRAs, IRAs and self-directed IRAs. A 401(k), you have the option to take out what is known as, I believe, a hardship loan.

I don't have a 401(k) so I haven't had to do this, but you could take up to $50,000 or 50% of whatever you have, whichever is less. If you have $25,000, then you could take out $12,500. If you have $100,000, you could take out $50,000. If you have $150,000, you could only take out $50,000.

David:

Got it.

Antonio:

You need to pay this back in five years or you pay a 10% penalty in taxes. I have a friend who did this during COVID. When he couldn't get a loan, he took out some money from the 401(k), used it to buy a property, fixed it up, renovated it, got a loan on that and then used that debt to pay off the 401(k). That's basically the strategy. Again, all of these are best if combined with the BRRRR strategy in some way, shape or form.

IRAs, on the other hand, are retirement accounts. You can either move the funds you have in an IRA to a self-directed IRA or you can use up to $10,000 in your IRA for a primary residence, that needs to then get paid back within 120 days. The best part about this is that you can house hack. House hack is when you buy a property, you live in it and you rent out the other bedrooms or units to cover your mortgage. You can have a rental property that is your primary residence and use your funds from your IRA to cover that.

David:

Yep.

Antonio:

Very similar with a Roth IRA, you can do the same thing. The only difference in the Roth IRA and the IRA is how the Roth is taxed versus the regular IRA. Then a self-directed IRA is when you basically take your funds out and put it with a custodian, where you can then use those funds to buy an investment property and then you have investment properties in your IRA.

Similar to how you might have the S&P 500 in your IRA, you can actually buy the property within it, so you can lend money out in your IRA as well and use that to make some money. But all the money you make and the costs have to come in and out of the IRA. They don't come to your bank account for you to play with.

David:

Until you're 59 1/2 or whenever.

Antonio:

Yeah, something like that. Yeah.

David:

Okay. Okay, got it. Wow, that is so cool. I never honestly thought there was so many ways to get money. Usually, I think people just think of like, "Oh, I'll try to get a loan. Oh, it didn't work out. Okay, I can't buy properties." But you literally gave us, I don't know, 15, 20 ideas of how you can get money. It's incredible.

Antonio:

Yeah. There's more ways that I haven't done yet like seller financing and all these other ones, but I didn't want to talk about ways that I had no experience with whatsoever. Yeah, I had a slide for Q&A but other than that, we're good to go.

David:

Amazing. Wow, incredible. Thank you for this. This was awesome. I'm on your Instagram right now and you offer a ton of, I don't know, you have courses, you have a guide, you have a bunch of stuff. What are all the different things that you offer people to learn more?

Antonio:

Yeah. I have an ultimate beginner guide, which is like a 30-page guide that has my favorite websites that I use, I have a checklist on how to get started. If you need a place to find good agents, I have links for those. If you need a place for property management platforms, wink, wink, you go there. I have recommended tools and stuff like that. that is my beginner guide.

Then I have my playbook, my book, which you can find on Amazon. I'm showing it on screen if you're not watching. It's more of an action guide to get you going. It tells you do this, and then fill out this form or fill out this thing. So like use an example, calculate your savings rate and stuff like that. How to find different data points. I actually show you the URLs and that kind of thing. That's my book.

David:

What's the book called? Say it out loud for the people listening in.

Antonio:

Yeah. The Beginner Real Estate Investor Playbook: A Step-By-Step Guide to Buying Your First Investment Property. Because as I mentioned in the beginning, when I started out, there's a bunch of books that had a lot of motivation, but there weren't that a lot of books that had a lot of action. This is meant to be an action book. It's not meant to be a motivation book whatsoever, and I'm not the most experienced, right?

You could read another book about someone who has tons more experience and tell you all the stories in the world. This is not a stories' back, this is a book on, "Oh, I'm going to read this and then do this thing." That's the point of it.

David:

Amazing.

Antonio:

Then I basically have a service that is turning into a software platform of helping build a personalized investment plan for people. I get a lot of questions of where should I invest? What strategies should I be using? Can you connect me to agents? Can you connect me to a lender? I basically built out a plan that is tailored to you. You fill out a form. That is a service that I currently run.

You get a step-by-step plan of, "Okay. These are the strategies you're going to start with. These are the ones you're going to use to scale. This is the best city for you based on how much money you have to invest and different factors you're okay with. Here's a real estate agent in that city that's investor friendly. Here's some loan options that you should think about to use." This way, you can just take that and go run with it.

David:

Is that your investing course?

Antonio:

No, my course is a free course. If you want to take the information and go with it, you can go with that. That's free.

David:

Oh, wow. Amazing.

Antonio:

Yeah.

David:

How can everyone find all of these different offerings? Is there a website or just go to your Instagram and go from there?

Antonio:

Yeah. My link in my bio on Instagram or my link in my bio on TikTok. I can send you the link afterwards. Right now, it's like stan.store/investarters or something like that.

David:

Yeah. Here, I'm going to see if I can share my screen here. Entire screen, let's see how this looks. Let's go here. Can you see it?

Antonio:

I don't see it yet.

David:

Yep. Okay, maybe it's loading.

Antonio:

Could be.

David:

Oh, it's the permission issue on the Mac. Okay, never mind.

Antonio:

You have the restart.

David:

For everyone, they can go to Instagram.com/investarters, I-N-V-E-S-T-A-R-T-E-R-S, so I-N-V-E starters on Instagram. Then there's a link in the bio that it looks like it has everything here actually. Your beginner guide, your playbook, your investment plan. Ooh, apply here to invest with me. What is that?

Antonio:

I can't legally talk about it due to FCC laws.

David:

Wow. Okay, so it looks like people can submit a form and potentially become a partner with you. That is pretty cool. Okay, awesome.

Antonio:

We're coming out with a cool way for people to invest with us on the internet, which is going to be fun.

David:

Amazing, amazing. Okay, awesome. I wanted to ask you two last questions. You said that you outsource to a property management company. Then it's funny, I asked you earlier, do you use a software?

You actually told me you use DoorLoop, our software, which I had no idea before this call even. How do you like using it? Do you recommend software? How were you doing things before?

Antonio:

Yeah. I was using Cozy and then Cozy switched to Apartments.com and I wasn't really a fan of it. At that time, so these are for my properties in New Jersey. The property manager was a real estate agent, and so he became a property manager with my first property and then started has own property management company. As he started getting on more clients, he was like, "I need better software for this."

And so he started moving over to DoorLoop. DoorLoop I really love the UI, it's pretty clean. It makes it pretty easy for me to find different files, different exports like I use with my bookkeeping every month to export some of the income and outcome from the properties. Yeah, I have nothing bad to say about it at all.

David:

Awesome. Okay, amazing. Then I like to always end with the same question is if you could go back in time to when you just right before you were about to buy your first property, what would you have told yourself now? Don't do it, no.

Antonio:

If the numbers work, the numbers work.

David:

Wow, okay. Awesome, awesome. Amazing.

Antonio:

Yeah. I just needed someone with some guidance and some experience to tell me, "This is okay. You're going to make it. You're not going to die."

David:

Yeah, yeah, yeah. Or I guess you could always say like, "Hey, if you're very, very, very scared, don't put all your eggs in one basket. Don't put your life savings in the first deal. Try to find something more simple, small and more manageable so you don't lose your pants on your first deal, or you'll never do it again."

Antonio:

But that would have taken too long.

David:

Yeah, exactly.

Antonio:

I already waited four years at that point.

David:

Yeah, that's true. That's true. Okay, awesome. Anything, any final thoughts? Anything else to add?

Antonio:

No, that's it. This has been a lot of fun. Thanks for having me.

David:

Amazing, amazing. Same here, so stay on and we're going to continue chatting after. But for everyone else tuning in, thank you again for tuning in to another episode of the Loop It In Podcast and Webinar.

If you do want to watch others like this, you can go to DoorLoop.com/podcast or DoorLoop.com/webinars. That's it for now. We'll see you on the next one. Take care, everyone.

Presenter:

Thanks for listening all the way to the end. Don't forget to give us a good rating on whatever platform you're tuning in from, and we'll be back soon with another new episode. We hope to see you there. Until next time, this has been Loop It In.