All Forum Posts by: Marcus Auerbach

Agree with Rebecca. I also use Verette, and we have good experience with Gadish, Accurate or IHN.

For quick math, if the walls are cinder block and the bowing is below 3/4" you can budget about $100 per linear foot of simple wall (no plumbing in the way).

Brick walls are tricky - common on the Milwaukees east side. May have to replace with concrete. And if cinderblock, anything you can see bowing with the naked eye usually requires excavation, think roughly of 10k per wall.

Definitely something the select should pay for. Your lender will probably require it, otherwise you can escrow. 

Don, I agree with your list being dangerous, but none of the top five are what I would call mainstream strategies. I believe only a relatively small amount of people attempt liens and notes in the first place.

By volume, the most dangerous are OOS BRRRR and OOS flips, especially in cheap and very cheap neighborhoods - well below the median price. The allure of fat cash flow (at least on paper) and the low barrier of entry (down payment) never stop attracting new investors. And most regret it.

I'll make the opposite case: it is VERY hard to screw up when buying i.e. a duplex in good condition in a desirable neighborhood and either self-manages or hire a quality PM to manage.

To any new investor who is reading this: 

In real estate cost and risk have an inverse relationship. Low risk investments sell at a premium, that's the whole idea of cap rates. The higher the risk, the higher the cap rate, the lower the price.

My advice to anyone who is getting started: buy something safe. You don't need to make all your money on your first deal. But if you tank the first one, there will never be a portfolio..

@Eric Bilderback - there was a time when I felt I really should "gratuate" into MF, but I never did and stuck with nicer SF in the suburbs. Any MF of the quality and size (50 up) I would have been interested in would have been cash flow negative for the next 5 years or so, even with 30% down. SF investing supports my lifestyle goals better than MF, because it is a lot more passive and I can focus on my other businesses.

Which brings me to the next point. The time to scale quickly with REI is over. But 2025 offers other opportunities that did not exist 10 or even 5 years ago - think AI and online businesses. This is where you generate cash and you can then invest it in RE - or something else.

Most of the guru content was written a decade ago and it just does not apply the same way it did back then. So don't beat yourself up, it's not you, it's the market.

Like someone else said very well, invest inopportunities, not in a particularasset or strategy.

@Nate McCarthy the odds of disputes arising are considerable. I have seen too many partnerships go bad (almost all, just a matter when), that's why in 15 years I have never partnered.

Simplify the structure as much as possible, have clear roles and responsibilities that are not overlapping (meaning only one person is allowed to make certain decisions) and a clearly defined exit plan.

The Midwest is going to benefit, no doubt. Away from the coast, no hurricanes, fires, floods - we don't even have snowstorms anymore.

People can deny climate change all they want or blame it on sun cycles, and frankly, it does not even matter, the reality is that insurance cost will force the issue.

You can try to rebuild and you can put houses on stilts in flood areas, or fortify them against high winds and fires, but that makes it expensive. And it's not only the homes, you also have to fortify your grocery stores, schools and anything else. Keep your automobiles safe.. This is one of the things that sound a lot easier than they are actually done.

The crazy thing I learned about these CA fires is that the heat radiation is hot enough (1500-2000F) that it will ignite your furniture through the windows. Wood ignites at 700F, fabric a lot sooner. So yes, you can have solid concrete walls, it's still going to burn down.

I have read that worst case up to 80 million Americans will relocate in the next three decades. That seems extreme to me, but even if is only 10% of that, that's more than our States entire population, the implications are supermassive. That would mean entire metro areas would become ghost towns and entire new metro areas would have to be built. For reference, we currently build 1 million homes per year just to keep up with current demand. Now we have to build how many millions extra? And it's not only homes, it's all the infrastructure a city needs.

On the insurance issue, I think this may be the end of national carriers. I am going to see if I can switch to a local Wisconsin insurance that reflects our local risk level in their premiums.

Many of the homes in the Pacific Palisades are 3-5 million, but when you look on Google Street View, most are very modest homes from the 1960s (there are some $20m ultra luxury mansions too), so a lot is the land value, the home replacement value on a 1600sqft may be what - 500k at the most? Most people are not rich there, look at the cars. I am not sure what the means for insurance payouts, replacement value and property value are VERY different - does anyone know?

There are lots of listings currently under contract, I guess the buyers are not going to show up for closing next week.. 

And also rents! I see two high end homes for rent, 50k, 70k, 210k per month.. I guess not anymore.

We work with a lot of OOS investors and showings, inspections, and lending can all be done remote very easily. 

What you can't do remote is get a sense for the neighborhood and asset quality. That's why we require clients to spend a couple days with us in Milwaukee up front, so we can get on the same page and determine an asset quality.

Hint: the hood looks much better on a spreadsheet than up close in person.

Nice work and thanks for sharing David!! Love the visual!!

A few things that newer investors should note:

- it took 13 years to get there, you have to be patient
- rents are high at about $1,750, so probably a quality neighborhood
- looks like that is after vacancies, probably low turnover?
- very low remaining mortgage balance!! Grow wide first, then deep (pay off)
- your little expenses add up fast

The only thing that spreads faster than a wildfire in a 100mph wind is everyone's "expert" opinion. The amount of ideologically inspired nonsense online is mind-boggling. 

The only thing that spreads faster than a wildfire in a 100mph wind is everyone's "expert" opinion.

I think people visualize an amber quietly floating through the night sky like in an old Lassie movie. If you ever held a leaf blower into a burn pile you get a sense of what oxygen does to a fire. I can't even comprehend what a massive fire looks like in a 100mph wind - and the internet seems to think you can just stand there and spry it with water? 

I was doing some research yesterday, a typical wildfire generates radiant heat of about 1,500F and with high winds can reach up to 2000F. Radiant heat is what you feel when you sit too close to a campfire. Wood has an ignition temperature of about 700F. So you don't need any flying ambers, at 1500F anything combustible will just spontaneously burst into flames.

I was thinking about the people I have seen on social who tried to wet down their house with a garden hose. At 1500F that film of water evaporates in 2 seconds. 

But I was thinking only about the exterior, it did not even dawn on me that your furniture ignites from the radiant heat through the windows! OMG curtains, blinds,..

REI is not rocket science. You don't need a mentor. Actually, the last thing you need is a paid mentor!! I have empathy for you, because when I bought my first property and my agent had zero REI knowledge I was frankly more than nervous.

You won't go bankrupt over buying a duplex. Sounds like you have learned the basics. You don't need to know everything up front. You just figure things out one step at a time. And you can always come to BP and ask SPECIFIC questions. 

Nobody is going to do this for you. You are standing on a 32ft dive board, it is scary as hell and you will probably not look like an Olympic athlete the first time, but you are also not going to die. Noby can do this for you or hold you hand the way down.

Time to jump - or climb down the ladder.

@Chloe Salcedo investing in real estate is not a full-time job. It does not take that many hours to look at a property, sign a contract or even manage tenants.

If you are bored in your 9-5 it's time to move on to a job where you learn and get challenged so you can grow. You don't need to learn REI in your job, that's a side thing.

What you need to learn in your 20s is how professional business works, how to manage people and projects, how to run an organization and how to sell ideas and concepts. When you work at a large corporation (national or global) you learn a lot in your role, but also by osmosis, just by observing other people and seeing how projects are developed, business is done etc. This level of professionalism becomes second nature.

Frankly, when you come from a corporate background and you enter REI you are shocked by how primitive most "investors" operate. By working for a larger corporation you are gaining an unfair advantage, by letting them train and develop you (while you are getting paid) and you do real estate on the side.

This idea is not from me, read RichDad. 

It always cracks me up when someone hands me a business card that says "President and CEO" and they don't realize how ridiculous that looks. Because they are also the janitor and the secretary. That happens when you have never worked at a large corporation.

Can you go-full time in real estate and make it at 23? Technically yes, but your odds of success are very slim and your potential will be very limited. You can work 40 hours for corporate and still have another 40+ hours to work on REI if you really want to.