All Forum Posts by: Andrew Perkins

Hello!

A friend and I have recently begun sitting down with people who identify as “Happy”, and trying to find out what that means to them. It made me curious, as a part of the biggerpockets community, how real estate can impact happiness.

As a quick example for me - my wife and I started investing in real estate a couple years ago have just a couple SFRs so far. We aren’t making tons of profit yet, but some of the things that it has given us so far, I feel greatly contribute to happiness. It’s given us something to build. Something to pass down to our children. It’s forced me to learn and grow! I’m reading books again, listening to successful people, trying to do what they do. It has made me so excited for the future, and I’ve realized that the possibilities are endless. It’s even benefited my (non real estate) career. I’ve learned from the podcast that small steps lead to great things, and that momentum can be created! The list goes on and on, and it’s all originated from real estate - or more specifically, biggerpockets.

So, what I’m really wondering is - Is this unique at all to real estate? Or rather, is real estate a vehicle that can generate happiness more effectively than other paths?

Thank you! This tenant is hiring out all lawn care and even cleaning. She basically asked if she is responsible for hiring it out the gutter cleaning. Would that make a difference to you?

We recently had a tenant move in to a new single family property, and she asked if gutter clean out is taken care of by us or her. I had not thought of this and was hoping someone could share what they do regarding gutter clean out in their lease?

Thanks!

Andrew

@Jonathan Greene

Thank you! What are your thoughts about using the profit and putting only a small percentage down on the new primary and investing with the rest? Primary mortgage will be higher, but could be offset with passive income?

@John Warren

Thanks for the advice John. We currently have a HELOC on our house. I used this as a down payment on our rental last year. It was a great way to get our foot in the door, but we are paying $200/mo on 15 year amortized payments. I could keep using the HELOC for down payments, but I probably won't be really cash flowing for quite some time.

We purchased our first rental last year and are eager to keep moving forward. In order to do this, we’ve considered selling our primary residence. We bought the home during the Great Recession and have made a considerable profit on the appreciation and improvements. If we do this, we could potentially have enough cash to put down on a new (hopeful value add opportunity) house and put down payments on a couple more rentals. But in this market, to get anything comparable to what we have now, we will have no choice but to increase our mortgage. I’m hoping that the cash flow from a few more rentals will more than offset this, but we are a bit nervous about increasing our living expenses. Is sacrificing the safety of our current cheap mortgage worth cashing in on the equity to invest with? Any thoughts on this would be helpful!

@Daniel Dietz

Awesome! That’s exactly what I was wondering. So with you not contributing any of the down payment, do you forgo a management fee because you are splitting equity growth and cash flow for no money down?

@Ola Dantis

I agree, we are hesitant to start flipping and feel more comfortable with buy and hold at the moment. At least until we’ve had some more experience in minor renovations.

So you are saying that we should come to an agreement with the partner on a set return and then work the deal using that number to figure out our own cash flow and management fee? And in that example, are you basing that off each party contributing $30k?

What would you recommend if the partner were contributing the full down payment instead of half? We would be using a HELOC for our portion, so some of our cash flow will be eaten up by that payment. Could we still make it worthwhile for the investor if they put up the full deposit?

@Clint G.

Do you think an even split can be applicable on a buy and hold too? Is an even split with both equity and cash flow asking too much if I don’t provide an equal amount of cash?

Your last point is definitely something I am trying to figure out. I am very numbers focused and think that if I found the right deal, I would be confident in presenting it. However, I am less confident in my ability to find it. I will not make a move with their money unless I am very sure about the deal and it’s future success.

@Jay Hinrichs

That is a good point. If the investor puts up all the money and gets half the return, it doesn’t seem worth it for them unless we find a stellar deal. What are some ways to provide more worth for the investor?