2 Quick-ish Questions for the helpful pros :)

[kaebr]

Hello again,



I will first say how happy I am to have found this site, in my year+ of researching I have found 3 types of sources of information; people who claim to known(and may or may not really know) what they are talking and request a small fortune to share their knowledge; people who seem like they know nothing but want to share everything which never seems to add up; and finally this forum where it so far seems to be a great group of people who are not only willing to share their knowledge and experience, but also have integrity and stick to the most honest legal methods of dealing in REI. This is exactly what I have been looking for!





Ok, so I have two questions...



1) I have been reading a lot on double closings, Ill admit they seem too good to be true, but with so much out there on them I am starting to think there may be soemthing to them; I also still have a feeling they may be outright illegal, or just barely legal. So, my question is, does anyone here have any info on doing these if they are indeed legal? If they are illegal I am not interested, but if they can be done legally I could certanily benefit from pulling a few of these off here and there.



2) As it stands right now, I think I could go to the bank and get approved for mortgage on rental property with putting 20% down. But, once I do that I would think my credit availability would be pretty close to tapped out. And it could be years before I have enough equity build up in the rental property to take out enough equity to put another 20% down on my second rental property.



How do you manage to get from the 1st rental property into the second? Is there something I am missing, or is it just a matter of saving like a madman until you have 20% and grabbing a property, saving until you have 20% and grabbing a property, and doing this over and over. It seems going this route it would take a lifetime to build even a modest portfolio of rental properties.



Thank you kindly for any advice, it truly means the world to me.

 

[Alvaro Sanchez]

1) Yes, they are legal with proper documentation. Consult with your lawyer prior to entering into one as you are not to draft the document yourself. You focus on finding the deals and then have the lawyer create the documents.



2) To build a portfolio you need to able to raise capital or use others people money. However, you would need to show that you know what you are doing or show some kind of track record. I would suggest to start with your 1st one with your own money.



By the way, I am quite happy to be a member as I have learned a lot (and still learning from other members).

 

[Thomas Beyer]

Double closings are legal but very risky, and usually not suited to get an 80% mortgage to new higher price. You build equity by adding value to the asset, for example by improving it, raising rents or repositioning it. You build additional equity by leveraging other people's time or money, or both, fr example by borrowing money at 5% but investing it at 10-30%, or by paying people $12-$45/h but add value that exceeds that amount. This takes great skill, time, knowledge, persuasion and perseverance but is doable in many businesses including the real estate space.