All Forum Posts by: Adam Shpall

Thanks for your replies!

Joel- I have a little money, but am first wrapping my head around the whole concept of investing in real estate and making decisions regarding what strategies to use, etc.

Mark- This was a theoretical example and not something the author claimed to have achieved. I don't think he had paid down any of the mortgages so there must have been a high loan to value.

My concern with the strategy is the amount of leverage he used and the fact that he used all his equity to purchase new property leaving nothing for emergencies.

I am a newbie so I ask: Should someone using this strategy be concerned that they could have serious problems if one of the buildings turned out to have problems and they didn't have enough cash flow to pay the mortgage?

How could one mitigate these risks? In other words, is this too aggressive of a plan?

Thanks!- Adam

Thanks David- All good points. As I was skimming the book, I think the author said the historical averages for appreciation were around 7%, but like you, I thought it was 3%-4%.

Looking forward to hearing others chime in!

Hi everyone- I am a newbie looking into real estate investing.

Over my lunch break, I stumbled into Barnes & Noble and started reading a book about investing in duplexes, triplexes and quads by Larry Loftis.

In his book, he talks about pyramiding on your investments. He lays out a wealth plan that I thought sounded a bit ‘optimistic’.

His plan showed that after 15 years, you could have $27 million in equity if you started with only a $20k investment. I believe the strategy is to purchase and refinance every two years or so to pull out the equity to purchase other properties.

His assumptions are:

• 10% down payments to purchase duplexes, triplexes and quads, which increase to 20% down payments after several years to purchase apartment buildings.
• 10% immediate appreciation based on repairing the properties
• 7% annual appreciation

While I didn’t comb through the math, I assume it works on paper.

[u]Experienced investors-

Is this realistic in the real world?

What are the potential dangers to this strategy?

Thanks for the guidance!

-Adam

Super! Thanks Ryan- That is clear.-Adam

Thanks Ryan- When you say you 'can't touch the money', am I correct to assume that you could do anything you want with the cash flow? or is that the money you can't touch until retirement age?

Much appreciated!- Adam

Thanks James and Ned!- You both mentioned the challenges finding financing and higher interest rates starting with the fourth fourplex.

By how much do interest rates rise at that point?

Also, any recommendations to tailor the plan to make it 'easier' while still hitting my objective of $160k cash flow in 10 years?

Best- Adam

Hi Everyone!

I have been lurking on this site for a few weeks and am absolutely amazed by the wealth and quality of information available! Josh and Brandon have done an amazing job.

I have become interested in charting my own course. I understand there are a lot of different paths in real estate investing and I am still in the stage of deciding on a niche and strategy…as well as whether or not this is the right business for me.

I understand that real estate investing is not ‘get rich quick’ as many gurus market, but I am curious about the amount of time that needs to be invested and length of time to achieve ‘success’- I do understand that this varies based on capital to invest, region, effort, goals, etc.

Here is a hypothetical path I would consider:

Buy and hold strategy purchasing 2-4 unit multifamily properties at 20% below cost, investing $40k/year leveraging $160k of property. Purchase one multifamily each year for 4 years and 2 multifamily for the next 6 years. At the end of year 10, I would own 16 multifamily properties- approximately 64 units (assuming fourplexes).

I am figuring cash flow using Brandon Turner's criteria. Using the 2% rule, purchase properties yielding rents totaling $3200/mo (2% of $160k); with his 50% rule, my NOI should be $1600/mo; $719 is an approximation for debt service ($120k mortgage, 30-year loan, 6% interest) resulting in $881 cash flow/mo. - approximately $10k/year.

At the end of year 10, my 16 fourplexes would cash flow at $160k/yr.
My questions to the experienced investors are:

1. Is my plan realistic? With enough leg work and marketing, could I close on 1-2 multifamily properties/year with this set of criteria?

2. Does this strategy sound conservative and make business sense accounting for the ‘unknown’?

3. How much time per week would it take to find properties and manage these properties? (I understand this could vary based on region, marketing strategy, etc…) I have a full time career and family, so this is a consideration.

4. How much of my time/week should I expect if I hired a property management company? It seems that Brandon accounts for property management in his 50% rule.

I am looking forward to all the replies!

Best- Adam