• Protip: Profile posts are public! Use Conversations to message other members privately. Everyone can see the content of a profile post.

General Real estate advice forum

Joined
10 August 2006
Messages
761
Location
Ft. Lauderdale FL, Philly PA & Portugal
don't know why, but I'm inclined today to post some real estate investing advice for anyone that wants it, and encourage others to also share. My investment strategy is well represented by my favorite car..... the NSX, its fully depreciated, appreciating, low maintenance, made of durable materials, dependable, and performs the same or better than when it was bought. does not give allot of headaches. and above all, don't want to sell it to buy something else.

I should get this out of the way first, that after nearly 10 years on this forum... I'm not fishing for business here.
This forum has provided me with many years of entertainment and is known to have a brilliant member base, There's allot of very experienced and knowledgeable real estate investors on this forum that can also advise in different strategies. If you own various properties please give advice and, state your experience level, if you don't own multiple properties then feel free to ask questions.


Selling property questions: Agent vs FSBO
An agent will get more money than a private sale every time, usually enough to make up for most of the commission costs
Buyers do not like to meet current owners, psychologically prevents them for feeling like its their new home, same thing applies to cars.
Owners should never be home during showings.
Buyers that look for private sales are bargain shoppers, theirs a reason... FSBO'S get allot of attention, they are assumed to be cheaper..
the cheapest homes I buy are all FSBO'S.

Whom to not take investment advice from:
Realtor's that do not own their own multiple properties are not investors.
I flip properties too sometimes but, Flippers are not "investors". Flippers: flip inventory, just like car dealers. flipping advice is great as well and many people make a great living, do not mix flipping advise with real estate "investing" advice. investments you set up to pay you forever, unlike flipping
contractors are also not investors it is a completely different business.
if they don't hold properties and rent them they are not real estate investors.


Now onto my very unconventional real estate advice for today's typical hermit crab owners that like to find a new shell every 2-3 years :)

Buy as many investment properties as you can and never sell unless you have to.

There's nothing wrong with being a renter, anyone can choose to rent their personal residence in 2-3 year lease increments for two great reasons,
1- needs change, jobs change, opportunities change, kids grow and multiply, in laws and parents get old and move in and out, brothers and sisters become dependents.....
2- most people do not own homes for more than a few years at a time anyway and thus spend more money in buying and and selling costs than actual equity gained.
Selling properties is expensive... most people don't know that a property has to appreciate by 10% just for the owner to break even when they want to sell due to transfer costs and buying& selling costs... people think just because they have equity they made money but don't realize their just getting back what their putting in most of the time.

anyone who owns and has to move, should consider renting the house out, if it will cover the mortgage, and just buy a second home, once there is a lease in place on the existing home, anyone can finance the new home as a regular primary occupancy with normal down payments, they can continue to do that every couple of years as their needs change, the government allows anyone to have up to four mortgages in their personal name. Even if someone loses a couple hundred dollars a month, that's still good because its very likely they may be gaining thousands in debt reduction and tax benefits per year... so whats wrong with someone else paying off a couple hundred thousand dollar mortgage in your name at only a cost of a couple hundred dollars a month. Plus as rents increase with inflation that monthly loss will end within 2-3 years but the benefits will continue eventually leading to monthly profits. even the monthly loss for 1-2 years is still less than the cost of selling. everyone should stay familiar with the payoff schedule and call the accountant to look at the overall 5 year gains and benefits or loses and see keeping it may be a great investment over selling the home even if not immediate apparent

Never ever refinance cash out for spending money or to buy toys, if anyone does then they are wasting their retirement money.
Only refinance to buy more investment property or get a much lower rate.

When it comes to luxury homes they are way cheaper to rent than own.
ex: a 500k home financed will run 4k a month with taxes and insurance while it can be rented for 3k with no maintenance or updating
ex: a 1M home can be financed for 8k a month or it can be rented for 5k practically half.

Basically anyone can be a renter while still reaping all the benefits of home ownership by buying rental properties that will eventually pay-themselves off and provide a retirement income. Because people that buy homes only to sell them a few years later have absolutely no benefit and run the risk of having to sell in up and down economic changes due to job loss or an inability to pay. If a tennant loses their job or has heath issues its not that big of a they just wait a few months till lease end and move into a cheaper place, if that happens as an owner that person is likely screwed and the repossession will put them into years of financial mayhem.

there is never a wrong time to sell or buy as long as somone is buying properties that pay for themselves
Real estate never depreciates in the long run it only temporarily loses value which is irrelevant in the long run, if its not for sale, it has not lost value.
Things only have a "value" when they are bought or sold in between should be ignored, as long as it continues to perform as expected, it should retain the same "value" to the owner as when they bought it. Thus try to buy properties based on solid and strong performance. expensive homes are generally not good rental investments, the rents tank immediately in financial downturns. Middle class investments are predictably strong and do not dip much,thus most $1000-$2500 per unit rents never moved around much during the real estate bubble burst. Many rents actually increased since all of a sudden allot of previously affluent people joined the middle class rental pool. always try to buy/finance things that worst case scenario even if theirs a few bad years many can swing a couple hundred dollar loss per month each property. whats $1000-2000 a month loss to hold onto a retirement, its no different than being forced to save that money. it will count a tax deduction anyway not really costing as much as many think overall. and if somone watches the debt reduction and tax benefits its probably still making more money than its losing. be prepared and plan for the worst. hold on during tough times if someone survive the first market low, by the second time the market goes down they will have a ton of experience and equity in those old properties and be buying everything they can.
Closing statement: buy all the time, buy even more when its low. Sell high or sell low: if it's to buy even lower.

Lets look at the property bubble, people see values lower than they owe, and stop paying mortgages which causes prices to dip even lower, all they had to do was wait it out untill prices come back up rather than cause an epidemic, if you add up the overall costs of anyone who thought they where smart by giving up underwater debt to buy another house for cheaper they most likely spent more in costs of selling and buying than if they would have just stayed put and waited a few years, you can also add up the increased costs of interest afterwards with bad credit for many years. also add up the difficulty in finding high paying jobs due to bad credit screening. If someone cant afford to pay a mortgage on house they bought to live in, usually it can be rented for close to the mortgage amount to minimize the loss to a manageable amount until the economy or the owners situation changes and can move back into the house, preventing foreclosure.

I tell people this all the time: A rental property is almost like free money that someone else (tennant) is paying off an asset in your name eventually. Think of it as a reverse CD, its kind of like a 300k bank account that grandmother left in your name but she left in her will you have to go feed her cat and visit your nephew once a month for the next 10-15-20-30 years to eventually get the money.
therefore its almost irrelevant how much you pay for a investment property as long as it pays for itself because your not the one who will be paying for it any way.

Albert Einstein said "Inflation is the most powerful force in the universe"
what does that mean in real estate? many things.... when you finance the bank gives you a fixed amount, that debt becomes easier to pay as inflation rises. when you sign a mortgage that says you will pay double the original loan amount over the course of 30 years, you are not paying double in today's money, you will be paying that amount in 15-20-25 years after inflation makes the cost dwindle away.

Most people only look at the rental income net profit over their mortgage which is the smallest form of profit from properties: many think why should i buy a X00,000 house to only gain X00 a month and have to deal with a bunch of crap?
If you add up, inflation, appreciation, tax deductions, deflation of the debt and rental increases. they add up to many times more than the rental income.
a 500k investment property in 5 years has given you 92k in tax deductions, likely paid off another 50k in debt.... that's 142k gain already hopefully depending on where you are in market cycles appreciated another 50-100k (2-4% per year) and if you make 500 month year one and then 700 month year 2 and so on after 5 years you should have made 55k in rent profit over even a basic 75% mortgage. thus that's a 250-300k gain. pick and choose which ones of those happen depending on real estate cycles but at least 3 out of 4 are constant in any economy..

For anyone that wants to be a millionaire, even for the smallest and laziest basic investor I have two strategies:

Strategy 1: someone buy's/finance's a 100k single family rental every year, after 15 years they have purchased $1,500,000 in houses, they likely owe around 1M, and the houses are worth around 2M they collect around 10k a month in income so now they a millionaire..... wait another 15 years they owe 500k, their houses are worth 4M they collect 20k a month income, their worth 3.5M. if they died than their kids are now worth the 3.5M

Strategy 2: "the reverse millionaire" someone borrows $1.2M to buy a $1M rental building that loses $1000 a month after all mortgage and expenses.. sounds like a bad idea right? but is it?. So he keep's a normal middle class 40k a year job. Sounds like he's not getting rich....... he pays the $1000 a month out of pocket. after 1-2 years thanks to rental increases he no longer is losing money every month..... Fast forward 15 years. he lost $24k during first 2 years the property is now worth conservatively $1.750,000, he owes about $650K, he now has $1.1M in equity. It does not stop there... he has received 37k per year in tax deductions so he actually kept about 10k more per year in his pocket after taxes from his day job (150k over 15 years). after property started to break even in year 2 the rents continue to climb by year 6k year 3, 12k year 4, 18k year 5, 24k year 6, ect ect.... creating monthly profit eventually profiting around 550k over 15 years. by year 16 he's making 84k a year from monthly profits since he's still paying the mortage. wait another 15 years, he owes zero, the property is worth 3.5M he have no mortgage now so he likely profits $250k+ a year

either of those 2 strategies aren't too bad after all. Even if the results are only half those potential numbers that's still better off than 99% of the population. Either way after each deal and experience it gets easier, whether its 3rd 100k house at a time, or the 3rd 1M building with each experience you become a better buyer or manager.

Now after those basic understandings, there are multipliers to increase all these long or short term benefits,
Multiplier 1: Buying dilapidated houses or buildings and fix them up to start off with lower cost and more equity from day one
Multiplier 2: Buying in specific areas where property values in general are going up faster than usual
Multiplier 3: Buying in areas where you know about other developments that will increase property values.
Multiplier 4: Buying in low economic times
Multiplier 5: on larger scale developments the subject development can actually increase the values in the area around thus increasing overall value.
there are even more multipliers in commercial properties since somone can strategically attract higher end national tenants (anchor tenants) that attract higher rents from normal shops that benefit from the walk in traffic or overflow from the anchor tenants. (this is just a basic explanation)

The more of these multipliers someone can include in their strategies the more massive and unimaginable the profits can become.
I like to envision investments in 5 and 10 year increments even though I intend on keeping forever and passing onto my kids. usually if the 5 year potential profit predictions look good to me than that's all i need to know.

another word of caution there's allot of money to be made in super low priced area's (under 75k per house or under 50k per unit apartments), but be warned the profits are all monthly, and the long term values rarely increase, financing is hard to get, the labor and involvement is intensive, and the maintenance and replacement costs are generally higher than the worth of the homes. everyone i know that has grown in the super cheap per unit values has eventually traded up to more middle class price range type holdings that have more future value and and have replacement costs relative to their values and are less labor intensive.

where to invest: I like to say someone should imagine themselves in dyer circumstances, could they live where they invest? if not than they should not buy where thier not be willing to live, or they will be operating out of thier element and it will be tough, and they may not be able understand the elements that affect those areas and may make bad decisions.

Ethics: Very important... besides moral reasons.... I like to say its very easy to "make" money.... the real question is can u keep it? if someone is doing illegal things than its very likely they and their easy money will soon be parted by attorneys. I also think that the majority of the flashy Jones's in society are temporary millionaires, probably 3/4 of the people that are popping bottles and driving new Ferrari's are on the 2-5 year millionaire plan, meaning their doing something illegal and will soon be gone, or scenario 2 is they just made their first million and they think money will just keep flowing in.... I like to ask people I meet a question which is " how many self made millionaires do you know that have been millionaires for the past 20 years?" the answer is usually none, people come and go. If someone really wants to build wealth they should build it in a fashion that they can keep it and make it work for them, if someone creates a cash business to skimp on taxes than it will be virtually impossible to ever put that money to work for them. They will have to endlessly spend it on rims and bottles, Gucci and anything else shiny and of no future value..

Another phrase I like to say is "coma money" meaning if the owner falls into coma, how much do the investments make them? are they manageable? will they still be there when they fall out of a coma? if not than is it really an investment? investments should be set up to manage themselves should anything happen the investments should be safe and managed.
 
Last edited:
Great advice, some really good information in there. I'm usually the skeptical one that is quick to counterpoint, but I can't find much (if anything) I disagree with.
 
This sounds like a great plan and I think I'll give it a shot. The only thing you missed is that it doesn't require a 200,000 dollar piece of paper from a university before you get to make your first dollar which you then give 20% of that dollar back to the university for the next 20 or so years with the most powerful thing in the universe attached to it... Compound interest.

*Einstein said the most power force in the universe is compound interest.*
 
This sounds like a great plan and I think I'll give it a shot. The only thing you missed is that it doesn't require a 200,000 dollar piece of paper from a university before you get to make your first dollar which you then give 20% of that dollar back to the university for the next 20 or so years with the most powerful thing in the universe attached to it... Compound interest.


*Einstein said the most power force in the universe is compound interest.*

Yes of course well said!
I agree, people should put that debt to work for them as soon as possible.

I've told people this before, top universities can be insanely expensive today, If someone finances the 200k into real estate instead of a university they can acquire a property that brings in $3k a month gross, and $500 net, by year 5 its $3750 monthly gross and $1250 net, by year 10 its $4600/mth gross $2150 net, by year 15 its $6000/mth gross $2500 net.
That's 30k a year profit at year 15 and at least 150k in equity, compare that to the average 35 year old and the real estate guy is way ahead in net worth, especially since the average college graduate is still paying off school loans at 35.

That does not even include re-investing any of that money or doing more deals! someone could easily multiply those results in the same 15 years.

Of course there is no substitute for education though and I don't condone skipping school, thus why my advice to many kids is they may be better off going to an inexpensive university instead of a top university and investing the debt difference into real estate. Especially since a high percentage of kids end up not taking advantage or benefiting (for whatever reason) from the highest level education schools.

Very well said, great advice for anyone looking to jump into the real estate venture!

Thanks!

Great advice, some really good information in there. I'm usually the skeptical one that is quick to counterpoint, but I can't find much (if anything) I disagree with.

Thanks!


..............................







I just remembered a few more things for people to remember


Here's the best way I like to think about real estate overall....
In real estate someones future NET worth is whatever they owe in today's dollars, someone that owe's $5M in real estate that pays for itself today, will be worth $5M in future value when its paid off by other people. Therefore borrow for anything that pays for itself and let inflation, debt reduction and income work for you instead of against.

The price someone pays today can be irrelevant, and its OK to overpay a little for the best properties, since sure paying 550k when it only worth 500k today may be against everyone's natural principles but in 30 years when its worth $2M.. Someone can look back giggle and wouldn't care even if they paid 600k, in end they did not pay for it anyway. So in the long run investors should buy the most solid well built properties in the the most desirable areas they can afford to.

People should remember not to concentrate on rental income, its not the most profitable part of real estate, its just a means to and end.... which is to get other people to pay off YOUR asset

I used to invest in stick framed homes and apartment buildings when I started out in Philly because that's what allot of properties are made of up north, one of the reasons i moved to Florida to invest down here is because most buildings are concrete. in the long run if you can invest in concrete, its even longer lasting than sticks and bricks and has less window leaks ect. You can pass concrete onto many generations. its just as good as land.

And as often as possible invest in the "land value" of properties.... people must be aware of land value ... many times there are crummy buildings/properties that may only last 10 years before needing to be knocked down and they are being sold for land value already, buy it if you can find a way to bring in rents, even if to rent as a lot for a construction company or an outdoor landscaping store!... milk it for 15 years and then build a new highly profitable building once its half paid off and the area becomes even more valuable...


The monthly debt stays constant throughout the mortgage but the rents keep climbing and the debt keeps getting paid off, thus some of the best properties that people ask allot of money for and may be difficult to to profit from immediately, but over time 2-3 years the profits start climbing rapidly. This especially more true in more expensive commercial properties, you may have to pay 1M (Finance 750k) to bring in 8k gross and 6K net which hardly covers the monthly debt, but by year 5 your making 2K monthly profit and have paid off around 125k and the property should be worth 1,250,000 equaling around 375K equity profit... therefore the property that "did not make money" has made 75k per year in equity if averaged over past 5 years. Not to mention the additional 37k year tax deduction for depreciation lets you keep an extra 10k in your pocket from your day job every year that would be going to taxes. The results are endless. a property that makes no money profit day one can easily make average you 20% a year over time.

Understanding Cash on cash return is very important, in the scenario above the initial 250k cash investment returned 375K plus tax benefits and annual income i did not calculate in total, so over the 5 years was annual return was well over 35% per and still climbing. many times after a few years you can cash out your initial investment (to go but more properties) and then the cash on cash return becomes infinity since your still making profits in various ways and you have received your money out of the building but still own the building.

.....many many ways to invest in real estate.
 
Last edited:
Yes of course well said!
I agree, people should put that debt to work for them as soon as possible!

I've told people this before, top universities can be insanely expensive today, If someone finances the 200k into real estate instead of a university they can acquire a property that brings in $3k a month gross, and $500 net, by year 5 its $3750 monthly gross and $1250 net, by year 10 its $4600/mth gross $2150 net, by year 15 its $6000/mth gross $2500 net.
That's 30k a year profit at year 15 and at least 150k in equity, compare that to the average 35 year old and the real estate guy is way ahead in net worth, especially since the average college graduate is still paying off school loans at 35!

That does not even include re-investing any of that money or doing more deals! someone could easily multiply those results in the same 15 years.

Of course there is no substitute for education though and I don't condone skipping school, thus why my advice to many kids is they may be better off going to an inexpensive university instead of a top university and investing the debt difference into real estate. Especially since a high percentage of kids end up not taking advantage or benefiting (for whatever reason) from the highest level education schools.


What if I did a little research, found out roughly what it costs per semester to go to a certain college, then purchased a sweatshirt from that college.... found a property within the price range of the cost of that semester. I then could wear the sweatshirt for the duration of fixing up the property, get paint, silicone, cement, liquid nails etc all over the sweatshirt as I am putting in my sweat equity. Frame the shirts for each property, then hang them on the wall of my house. This would represent how the same amount of money instantly was transferred into income instead of debt.

Problem is they aren't handing out loans for people to be self sufficient. It's not easy to get a loan for real estate when you're 19 years old, however they'll hand out money for college like its candy on Halloween. Same deal with expensive autos. Walk in the dealer and sign some papers, you're driving away in a $90,000 escalade maybe across the country to never be seen again. Want 90 grand for a rental house that's stationary and can't be driven across the country? Here's a stack of paperwork three feet deep. Makes very little sense other than the escalade purchase churns the economy.
 
What if I did a little research, found out roughly what it costs per semester to go to a certain college, then purchased a sweatshirt from that college.... found a property within the price range of the cost of that semester. I then could wear the sweatshirt for the duration of fixing up the property, get paint, silicone, cement, liquid nails etc all over the sweatshirt as I am putting in my sweat equity. Frame the shirts for each property, then hang them on the wall of my house. This would represent how the same amount of money instantly was transferred into income instead of debt.

Problem is they aren't handing out loans for people to be self sufficient. It's not easy to get a loan for real estate when you're 19 years old, however they'll hand out money for college like its candy on Halloween. Same deal with expensive autos. Walk in the dealer and sign some papers, you're driving away in a $90,000 escalade maybe across the country to never be seen again. Want 90 grand for a rental house that's stationary and can't be driven across the country? Here's a stack of paperwork three feet deep. Makes very little sense other than the escalade purchase churns the economy.

lol... were on the same page.


For any one else reading along.... i'll explain:

Yup the US economy and opportunities and quality of life is so great because its breeds and promotes consumerism more than anywhere else.
We are encouraged to spend on items and assets that hold no value, restaurants, clothing, cars, phones, gas ect.
Its the consumers that power their own earning potential. By spending as much as possible of what they make every day.
Its well lubed and strong system and its what make America a great place to live.

I don't want to change it in any way, only want to consciously avoid keeping up with the Jones's by maintaining my personal consumerism under control.
The way to wealth is to find a way to us to coexist & profit from consumerism without being consumed by it.


...................................................

Some more thoughts

Three major things drive the economy
Education, cars & personal residence....... They are the "Golden Handcuffs" of the American economy,

1- Education loans:
encourage people to work in companies immediately to pay off loans and start paying taxes. and train everyone to either coexist and/or help run/improve the system itself.
2- Car loans:
encourage people to have to work to pay for the car and gas and automotive industry and get from real estate location to another real estate location. Which in turn justifies road, infrastructure and city jobs & taxes.

3- The most important: Personal residence real estate loans:
encourage people to work hard for the American dream, building new or remodeling existing homes, new kitchens and roofs and additions and ect, landscaping, community development and maintaining nice neighborhoods. Insurance companies, furniture, and city/state taxes and related jobs which in turn provide the local government and safety workers cops, firefighters, schools ect.

I tell people... without real estate values there is nothing, we become nomads without addresses... no one builds or improves properties, their are no offices nor buildings, no accountants, no schools no hospitals no indoor jobs no 30 year loans, no warehouses, no factories, no TV station buildings, no movie studios, no fancy airports, no fancy football stadiums. nothing... only thing would be tee-pees and log cabins and farms. Any economy starts with the taxation and value of land. Without the population being convinced in the value of having an address and home, their is no way for government to account for people and provide the local needs, Thus the most important part of any economy is that each person must not want to be a nomad, and be convinced to have a permanent physical address you are registered to pay your taxes so the government can properly allocate funds for that area. Thus convincing people to buy and invest in a personal residence is the key factor to any economy, without it their is complete chaos or nothing were cowboys... thus when their is turmoil in real estate values the economy falls apart, it is the most important fundamental part of any economy it all starts there. Thus also why inflation is must, without it no one finds it worthwhile to repair buildings, without it no one would build large vast complexes and institutional buildings, can anyone imagine a future without inflation where buildings are worth the same 30 years later? there would be no way to justify needed complete renovations in large buildings, they would just knock it down and rebuild, but would not build big to begin with because it would have no future value thus would just build a straw hut or tee-pee to provide minimum shelter. understanding this is key to understanding how real estate future values work. For anyone that does not believe this or is unwilling to accept this key part of a governments economic success may not not want invest in real estate. Simplified: Everything really hinges on construction/re-construction of properties and transportation from one property to another.

All this still applies to a renter, because someone else was still convinced enough in future value to invest to build or buy the building you live in.

Another thing I enjoy telling people is the key to economy is clearly printed on your on your drivers license....
Its your name and the address of the real estate location where you have been convinced to live, improve, and pay taxes at.
 
Last edited:
Wow this is great information. Thank you for sharing!

What is your take on hiring a property manager to collect rents, etc.?
 
Let's face the reality:

1. I have just glanced, but have not carefully read, at your stragedy that you posted. I have owed properties and so as Steveny. Let's face the reality......I know for sure that I have to deal with tenants, maintain the properties, evictions, getting sued by tenants and ect... I am pretty sure Steveny knows that too. Not everyone can be a landlord unless one can deal with those issues and headaches that I listed above.

2. Which banks will loan the monies when one has no collaterals? Even if he has a engineer degree , BS degree, or doctoral degree, but no monies in the bank. No banks will lend him the monies. So the ones has no college degrees or no jobs, forget it. It will not happen, unless one can borrow the monies from the parents, like Donald Trump who borrowed $1 million from his father in the 60's and started to his empire, but he also went to college and got a degree.

3. Remember 2008 housing collapse? People tried to buy and flipped.. there were a lot of people became rich by doing that and there also were a lot of people became poor and also lost their homes. If ones were lucky and got out before it was collapsed were the ones who got rich. It is all about timing like buying and selling stocks. As far as housing price will go up like pre-2008, I would have to say " it won't happen again". But I would predict that it would only go up as inflation rate or little bit more, but definitively will not like pre-2008.

Why? Pre-2008, banks could lend the monies to any one that he/she could show his/her income without verifying the true incomes, even a guy worked as a dishwasher could buy a house. This chaos caused demands are more than supplies ( Economic 101), price went up. Now banks are stricter now than before.

4. As Steveny stated compound interests, costs of maintenance and other costs, this would add up and you would only end up working for the banks to pay interest, not for yourself. Other questions, how much is your down payment 10%, 20% vs. 30% make a lot of difference in the returns? Are you a handyman and can you fix anything? Or will you have to hire a handyman to fix the problems?

I would rather take that $200K to go to Yale, Standford, Harvard or any Ivy Leagues to get my education and get out with a good job and start to build up from there. The worse situation, I still got the good job as a back up. No one will take my knowdledge away from me. One could lose all $200K ( it is like gambling) and without any education/degrees as a back up.

That is my 1 cent.
 
Last edited:
Ok ok Yeah I got a couple properties. My experiences have been the same but the outcomes have been much different than the docs. Landlording is not for everyone that's for sure but especially not the doc. The doc and I have shared many emails back and forth over the last few years. I looked and looked to find one email in particular and can't find it. I wish I could because I found a way to say to the doc, in a nice way, to get out of land-lording ASAP. It's not right for him. People see him coming from a mile away and take advantage of him very rapidly, even family members. He's too damn nice to be a landlord.

It takes a very particular type of personality to be a landlord. That's something I have learned through the years. People like myself who land lording is second nature to just think it'd be that easy for anyone else. To me it's as natural as breathing so I use to be unable see how it couldn't be that easy for someone else. You have to learn how to say NO, firmly. You HAVE to be a likeable asshole. You have to be ok with people maybe not liking you. If not you WILL be taken advantage of, not by one but by many. People who take advantage of others are a community. They communicate with each other. When they find a mark they rapidly share that information with each other after each one gets a bite of the marks pie. After that person is used up they move on to the next. And the person being taken advantage of doesn't even understand that they are in this web surrounded by people who are taking advantage of them in every aspect of what they are trying to do. It just seems normal to them. From the guy who's fixing their computer over the phone to the contractor that's charging twice what the roofs worth to the tenant suing you after they do something stupid.

Being that doctors choose a career that is all about helping other people they will often times fail at being a landlord. I've seen at least ten doctors I know fail at it. Doctors in general are great people but few are good at business, especially the doctors who are really good at medicine. The doctors who are really good at business often times are not good at medicine. This is solely from my own observations, and I also rent to many doctors and dentists.

Just the same, Im sure there are tenants who are being honest about why they'd like to miss a rent payment. When 9 out 10 reasons are lies the rule becomes, missed rent = lies. I'm sure there are exceptions to the rule BUT gambling on those exceptions is highly off limits. But again this is a quality of being a good landlord, being observant. Taking in everything around you and processing it, putting the pieces together that don't obviously fit together for everyone else. Making sure you use that information to not repeat the same mistakes twice. Past experiences can almost be used like a crystal ball for the future. I'd be a horrible Doctor that's for sure. The first time a patient sued me the rule would become, helping people = lawsuit which would end my career.
 
Last edited:
Please share your thoughts on the following:

- property management (costs, tenant care)
- maintenance costs
- tenant acquisition, retention, and turnover strategies
- evictions (can take years)
- average vacancy you're experiencing
- property taxes
- types of lease agreements
- renovations and improvements
- construction costs

on a more macro note... What are your thoughts on the increasing asset bubble in the economy.
 
Please share your thoughts on the following:

- property management (costs, tenant care)
- maintenance costs
- tenant acquisition, retention, and turnover strategies
- evictions (can take years)
- average vacancy you're experiencing
- property taxes
- types of lease agreements
- renovations and improvements
- construction costs

on a more macro note... What are your thoughts on the increasing asset bubble in the economy.


Are you asking in full sincerity and looking for solid answers, or are you toying around here hoping that the OP's or steveny's heads will explode trying to process how to answer those succinctly? :) A book could be filled discussing those and all the related what if's and either/or's. :)
 
Please share your thoughts on the following:

- property management (costs, tenant care)
- maintenance costs
- tenant acquisition, retention, and turnover strategies
- evictions (can take years)
- average vacancy you're experiencing
- property taxes
- types of lease agreements
- renovations and improvements
- construction costs

on a more macro note... What are your thoughts on the increasing asset bubble in the economy.

I thought my post have discussed those above items. The bottom line is you want to have the come of positive numbers. Other than that, why put the monies in the pocket that has no bottom. Then it goes back to the question, how much is your down payments? Or will you work for the banks to pay their interest, or be a slave for tenants?

Not all tenants are bad, but you will learn from the mistakes. I have heard a story about a tenant got into argument with landlord and when they moved out, they dumped concrete into the toilet and clogged the sewer line.

- - - Updated - - -

Ok ok Yeah I got a couple properties. My experiences have been the same but the outcomes have been much different than the docs. Landlording is not for everyone that's for sure but especially not the doc. The doc and I have shared many emails back and forth over the last few years. I looked and looked to find one email in particular and can't find it. I wish I could because I found a way to say to the doc, in a nice way, to get out of land-lording ASAP. It's not right for him. People see him coming from a mile away and take advantage of him very rapidly, even family members. He's too damn nice to be a landlord.

It takes a very particular type of personality to be a landlord. That's something I have learned through the years. People like myself who land lording is second nature to just think it'd be that easy for anyone else. To me it's as natural as breathing so I use to be unable see how it couldn't be that easy for someone else. You have to learn how to say NO, firmly. You HAVE to be a likeable asshole. You have to be ok with people maybe not liking you. If not you WILL be taken advantage of, not by one but by many. People who take advantage of others are a community. They communicate with each other. When they find a mark they rapidly share that information with each other after each one gets a bite of the marks pie. After that person is used up they move on to the next. And the person being taken advantage of doesn't even understand that they are in this web surrounded by people who are taking advantage of them in every aspect of what they are trying to do. It just seems normal to them. From the guy who's fixing their computer over the phone to the contractor that's charging twice what the roofs worth to the tenant suing you after they do something stupid.

Being that doctors choose a career that is all about helping other people they will often times fail at being a landlord. I've seen at least ten doctors I know fail at it. Doctors in general are great people but few are good at business, especially the doctors who are really good at medicine. The doctors who are really good at business often times are not good at medicine. This is solely from my own observations, and I also rent to many doctors and dentists.

Just the same, Im sure there are tenants who are being honest about why they'd like to miss a rent payment. When 9 out 10 reasons are lies the rule becomes, missed rent = lies. I'm sure there are exceptions to the rule BUT gambling on those exceptions is highly off limits. But again this is a quality of being a good landlord, being observant. Taking in everything around you and processing it, putting the pieces together that don't obviously fit together for everyone else. Making sure you use that information to not repeat the same mistakes twice. Past experiences can almost be used like a crystal ball for the future. I'd be a horrible Doctor that's for sure. The first time a patient sued me the rule would become, helping people = lawsuit which would end my career.

Hey Steveny,

My outcome was not that bad as you stated. I am doing fine :)
 
Last edited:
Are you asking in full sincerity and looking for solid answers, or are you toying around here hoping that the OP's or steveny's heads will explode trying to process how to answer those succinctly? :) A book could be filled discussing those and all the related what if's and either/or's. :)
I'm looking for some quick bullet points on the OP's general strategy. There is no magic formula but there are several "rule of thumbs" that can be broadly applied.

I've found in scanning through the OP's suggestions (thanks for writing about them) that his strategy will take a lot of patience. I'm trying to get a feel for how he manages his portfolio and how/where he spends the majority of his time. In giving his thoughts on my bullet points it should help me understand. If you guys think answers are buried in the replies then I won't be offended if he doesn't answer my posts.

I'm not a casual investor, nor am I new to real estate. Though it seems some of my questions have been answered in the very long winded (not a bad thing) comments/replies above. I may have overlooked them.

Clearly the OP has found a niche in the residential real estate market. You can play real estate in various ways from RIETs, ETNs, MBSNs, 1031s, Builder/Developer, Residential Landlord, all the way to casual home owner. I'm simply trying to learn what are specific strategies people here use to address the nitty gritty details of landlordship.

- - - Updated - - -

I thought my post have discussed those above items. The bottom line is you want to have the come of positive numbers. Other than that, why put the monies in the pocket that has no bottom. Then it goes back to the question, how much is your down payments? Or will you work for the banks to pay their interest, or be a slave for tenants?

Not all tenants are bad, but you will learn from the mistakes. I have heard a story about a tenant got into argument with landlord and when they moved out, they dumped concrete into the toilet and clogged the sewer line.
Sorry, I'm not sure what your general strategy is. If you stated that above, I will read and look for your posts. Patricio has done a great job of painting a picture of what kind of investor he is, at least as far as his real estate investment appetite is concerned.

With no disrespect, i'm not interested in your views as I feel I am ill-equipped in judging your specific investments niche (yet). Real Estate is such a broad field and it is folks who jump in and do not understand the nuances and the details get their ass handed to them. Not everyone can learn from their mistakes and come out the other end still breathing.

I do understand and agree with OP's general concept that you buy an asset for the cashflow not for the value of the asset at any given point in time. For example, I don't care that I bought an asset for $100 if its worth $80 tomorrow or $120. I care that i'm getting an annual return from the original $100 invested that is consistent and achievable. It is speculative investment that drive up prices and inflate bubbles. Of course, the Fed policies (rates manipulations, QEs, etc..), tax rules on capital gains or interest deductions, etc play a big part but that's for a different thread.
 
Last edited:
success breeds exuberance.....failure breeds contempt....
 
I'm looking for some quick bullet points on the OP's general strategy. There is no magic formula but there are several "rule of thumbs" that can be broadly applied.

I've found in scanning through the OP's suggestions (thanks for writing about them) that his strategy will take a lot of patience. I'm trying to get a feel for how he manages his portfolio and how/where he spends the majority of his time. In giving his thoughts on my bullet points it should help me understand. If you guys think answers are buried in the replies then I won't be offended if he doesn't answer my posts.

I'm not a casual investor, nor am I new to real estate. Though it seems some of my questions have been answered in the very long winded (not a bad thing) comments/replies above. I may have overlooked them.

Clearly the OP has found a niche in the residential real estate market. You can play real estate in various ways from RIETs, ETNs, MBSNs, 1031s, Builder/Developer, Residential Landlord, all the way to casual home owner. I'm simply trying to learn what are specific strategies people here use to address the nitty gritty details of landlordship.

- - - Updated - - -


Sorry, I'm not sure what your general strategy is. If you stated that above, I will read and look for your posts. Patricio has done a great job of painting a picture of what kind of investor he is, at least as far as his real estate investment appetite is concerned.

With no disrespect, i'm not interested in your views as I feel I am ill-equipped in judging your specific investments niche (yet). Real Estate is such a broad field and it is folks who jump in and do not understand the nuances and the details get their ass handed to them. Not everyone can learn from their mistakes and come out the other end still breathing.

I do understand and agree with OP's general concept that you buy an asset for the cashflow not for the value of the asset at any given point in time. For example, I don't care that I bought an asset for $100 if its worth $80 tomorrow or $120. I care that i'm getting an annual return from the original $100 invested that is consistent and achievable. It is speculative investment that drive up prices and inflate bubbles. Of course, the Fed policies (rates manipulations, QEs, etc..), tax rules on capital gains or interest deductions, etc play a big part but that's for a different thread.

You can not tell you all of them. You cannot just read books or read someone's posts and will become an expert. OP's post is not realistic in every day live. It sounds great, but it does not always mean it would happen as you have planned. I just want to share what is my experience, so you prepare your yourself ahead. Fortunately, everything has worked out for me so far. Experience is your crystall ball.
 
Last edited:
You can not tell you all of them. You cannot just read books or read someone's posts and will become an expert. OP's post is not realistic in every day live. It sounds great, but it does not always mean it would happen as you have planned. I just want to share what is my experience, so you prepare your yourself ahead. Fortunately, everything has worked out for me so far. Experience is your crystall ball.

I think you're misunderstanding me.

I'll make it clear that i'm commenting for the benefit of other folks. I've got my own investment strategy that, so far, is doing well. Like I eluded to earlier... OP's method requires A LOT of patience and it also requires a steady income stream from a different income source like a job. Speaking of OP, i'm unsure how he's funding multiple real estate deals. The bank will only allow a certain level of debt/equity ratio for the average individual, you can only leverage so much using this strategy. This is a basic criteria, so i'm convinced I missed this part in his post. I should reread it again on the plane...
 
You are correct debt/earning ratio. It is not possible to borrow from the bank . The OP' statement is not realistic.

Well you might have to pay a bit more interest and approach it from a commercial aspect. Go to the bank, show projections and let them see that you know what you're doing, they will pen a check to you with just a bit of effort. Again this is one aspect needed to be a good landlord. You have to be able to approach every situation with a dynamic attitude and planning and be able to change that plan on a seconds notice. Skin the cat this way or skin the cat that way. One way or another I'm getting the skin off this cat.

My downpayments are right at 100%! I had to pay lots of interest along the way to get that point though. No one is gonna start off without someone's help, either the bank or an owner finance deal is the only way. I suppose wealthy parents would get it done as well.
 
Well you might have to pay a bit more interest and approach it from a commercial aspect. Go to the bank, show projections and let them see that you know what you're doing, they will pen a check to you with just a bit of effort. Again this is one aspect needed to be a good landlord. You have to be able to approach every situation with a dynamic attitude and planning and be able to change that plan on a seconds notice. Skin the cat this way or skin the cat that way. One way or another I'm getting the skin off this cat.

My downpayments are right at 100%! I had to pay lots of interest along the way to get that point though. No one is gonna start off without someone's help, either the bank or an owner finance deal is the only way. I suppose wealthy parents would get it done as well.

When you have that kind of downpayments, you don't have to worry about vacancy and it will give you more time to select good tenants. Otherwise, you will have to worry about paying the mortgage monthly. I have the commercial loans and they always keep asking for Individual Income Tax and income property every year. They also have approved to lend more monies if I am ready to buy more, but I opted it out. I told them that I want to pay some of the principal down and build up more equity and I always have cash in hand to jump on good deal.
 
When you have that kind of downpayments, you don't have to worry about vacancy and it will give you more time to select good tenants. Otherwise, you will have to worry about paying the mortgage monthly. I have the commercial loans and they always keep asking for Individual Income Tax and income property every year. They also have approved to lend more monies if I am ready to buy more, but I opted it out. I told them that I want to pay some of the principal down and build up more equity and I always have cash in hand to jump on good deal.

My vacancy rate is zero percent, has been for some time. The most time a unit sits empty is just the amount of time it takes to turn it, five days max and that's a full gut. I made it my priority before, during and after I needed it to be my priority. I don't worry about it. I make sure it's taken care of before it becomes anything to worry about. I don't have a job getting in the way of my success. So I can use any, some or all of my time as I see fit to ensure I have tenants lined up, units ready exactly when I need them to be, not when I have time inbetween a job that sucks the life out of me and all my useable time.... Including perceived free time because most people who have a job are either at their job, commuting to or from their job, thinking about their job or making sure they have groceries so they can make a lunch to take to their job. A huge portion of most lives are spent revolving around this job thing and if anyone puts the same amount of effort into anything else they will get much better monetary rewards. They just see doing their own thing as risky when in fact a job is about as risky as it gets IMO.

I did have a two family house fully vacant this spring for 46 days because of a fire. The first 20 days I spent making phone calls to the insurance company every half an hour until they paid me. Drove around, got fire reports, police reports delivered them to the correct people, sat at their desk until they sped up the process, I don't do well at waiting. The next 26 days I spent gutting the house to the frame, wiring, plumbing, insulating, sheetrocking, flooring, painting, tiling, installing cabinets, siding the exterior, putting on a new roof, new heating and duct work, etc. had some help with the heavier items but mostly myself and my wife put the place back together in record time. And I didn't even get to close the door as the new tenants were waiting to move in before it was even finished. doc, we talked about what happened with your fire and I will say again, same experience WAY, WAY, WAY different outcome.

I have a list of tenants waiting to move into my properties and keep buying more to get them off the list and into an income producing situation. A list of names with no place to live nets me nothing. Finding them a place to live makes me money.

Commercial lenders will require you to provide financials every year. They want to know their investment is safe. Sounds like they are willing to give you more money to expand and get your income higher, maybe to a place where your monthly income could buy a property outright every month or so. The opportunity is there, the money is there, the bank is ready, the properties are waiting and it appears the only thing that's holding you back is you and or fear. So it is do-able afterall, just as Patricio says. It's there for anyone willing to put in the work, take the risk and bust their ass.
 
Steveny or Patricio, can you talk more about what "busting your ass" was like when you were just getting started? I'm sure that it takes on a different meaning now vs. your first property(s).

I'm assuming that the consensus of the successful real estate investors here that management services aren't worth the cost?

I'd like to position myself to get out of the rat race, if possible.

Thanks.
 
Steveny or Patricio, can you talk more about what "busting your ass" was like when you were just getting started? I'm sure that it takes on a different meaning now vs. your first property(s).

I'm assuming that the consensus of the successful real estate investors here that management services aren't worth the cost?

I'd like to position myself to get out of the rat race, if possible.

Thanks.

You say you want to get out of the rat race so I'm assuming you work a 40 or more hour work week. When I was just getting started?... It'd be comparable to your boss firing two people at your job you picking up their duties, not getting paid a dime more and looking forward to going in the next day, and all weekend as well to pick up that slack because you just love what you are doing and know the money will eventually follow.

However, don't do this at your job. Your boss won't appreciate it and you won't inherit the company, his fat lazy kid will. So do it for yourself!
 
That's the part I don't understand....how do you "bust your ass" if you have a regular job and can only afford one additional house per year? Due diligence? Rehab work? Managing multiple flips? It doesn't seem like that much work if you can buy right and rent out high enough for a management company to collect the checks for you.

I thought this was a "slow and steady wins the race" game?
 
Last edited:
My vacancy rate is zero percent, has been for some time. The most time a unit sits empty is just the amount of time it takes to turn it, five days max and that's a full gut. I made it my priority before, during and after I needed it to be my priority. I don't worry about it. I make sure it's taken care of before it becomes anything to worry about. I don't have a job getting in the way of my success. So I can use any, some or all of my time as I see fit to ensure I have tenants lined up, units ready exactly when I need them to be, not when I have time inbetween a job that sucks the life out of me and all my useable time.... Including perceived free time because most people who have a job are either at their job, commuting to or from their job, thinking about their job or making sure they have groceries so they can make a lunch to take to their job. A huge portion of most lives are spent revolving around this job thing and if anyone puts the same amount of effort into anything else they will get much better monetary rewards. They just see doing their own thing as risky when in fact a job is about as risky as it gets IMO.

I did have a two family house fully vacant this spring for 46 days because of a fire. The first 20 days I spent making phone calls to the insurance company every half an hour until they paid me. Drove around, got fire reports, police reports delivered them to the correct people, sat at their desk until they sped up the process, I don't do well at waiting. The next 26 days I spent gutting the house to the frame, wiring, plumbing, insulating, sheetrocking, flooring, painting, tiling, installing cabinets, siding the exterior, putting on a new roof, new heating and duct work, etc. had some help with the heavier items but mostly myself and my wife put the place back together in record time. And I didn't even get to close the door as the new tenants were waiting to move in before it was even finished. doc, we talked about what happened with your fire and I will say again, same experience WAY, WAY, WAY different outcome.

I have a list of tenants waiting to move into my properties and keep buying more to get them off the list and into an income producing situation. A list of names with no place to live nets me nothing. Finding them a place to live makes me money.

Commercial lenders will require you to provide financials every year. They want to know their investment is safe. Sounds like they are willing to give you more money to expand and get your income higher, maybe to a place where your monthly income could buy a property outright every month or so. The opportunity is there, the money is there, the bank is ready, the properties are waiting and it appears the only thing that's holding you back is you and or fear. So it is do-able afterall, just as Patricio says. It's there for anyone willing to put in the work, take the risk and bust their ass.

Steve,

There are 2 businesses that would never lose their monies: the banks and insurance companies. The reason they qualify me for more loans, because I have low debt/earning ratios; they know how to pick and choose the clients who can pay them back and also can make monies for them at the same time. And I don't want to work for them any more. I would rather do 100% down payment and wait for the opportunities to come. Yes it is do-able, but for the guys have no collateral , it is not do-able. It does take time to build up that collateral. Steve, I admire your hard work and work ethic, and so as your wife..you have a good teamwork and you can save a lot of monies from hiring a contractor or handyman. My main income is not from properties, and I am very busy with the office. I have hired a property manager to take care of properties, but I also have to look over his shoulder to see his work or I am being cheated with the monies. I can not focus 2 jobs at the same time. Therefore, buying another property will give me more jobs and will end up with bad management and lose monies.

Some real estate investors are successful and some are not. If everyone is successful, there is nothing left in the pot. Follow the puck that it has never been before.
 
Last edited:
Back
Top