All Forum Posts by: Daniel Hanson

 That is an interesting point.  In light of that point, my first freedom number is to get to $ X per month of cashflow from rentals/ flips to step away from the W2 job, which would allow the time to focus and grow at a faster rate.  The 2nd goal would then be to grow that portfolio to $Y of total liquid assets that could then be applied to a passive fund withdrawing by the 4% rule.  There may be a compromise point before the totally passive fund, where the business is passive enough to consider being mostly retired, but returns higher than an index fund.  To be evaluated.

@Chris Chesser

I'd simply say that you should calculate 2 levels of reserves.  1 level for when you have just bought it and there is the most risk of rent loss and rehab overspend.  Once you are fully rented and have completed any rehab or upgrades, your risk should go down.

A second level of reserves, probably lower than the first level, after you have the property operating steadily.  For that as a quick comfort level I like 3 months of rent saved, but I do a detailed calc looking at building a fund for predicted replacements of things like roof, furnace, any other item over $500.

@Chris Chesser

Without getting into giving specific $ amounts, I'd recommend doing a deep analysis of one of your sample $120k 4-plexes as a house-hack.  Include the rent from the other 3 units, rehab costs, monthly maintenance, monthly reserve for capex, uitilities, etc. vacancy expenses, and see what your cashflow is once it is up and running fully occupied.  Then do a worst case scenario and assume you buy the 4-unit with 0 tenants or they all move out when you buy it, it takes 3 months (or whatever duration is realistic but scary) to receive your first rent check, and rehab expenses are higher than or even double your reasonable estimate.  Also, possibly add in a full year's property taxes.  The amount of money it would take in the bank to support that worst case scenario might be a number close to what you would want in reserves, variable depending on your risk tolerance.

I started out majoring in Engineering Astronautics. This was great because I could tell girls at parties I was going to be a rocket scientist...

3 years in, switched it over to industrial engineering when it became clear to me that the aerospace industry was dependent on defense contracts and jobs were getting hard to come by.  All of the tools of analyzing and improving a production line, running a spreadsheet what-if analysis, investment go/ no-go decision making later came in very handy when applied to real estate.

@Kyle Grimm

I manage projects and do continuous improvement events inside a large multi-national corporation.  We do this in both offices and on the factory floor, all around the world.   I like to joke that on Monday me and a SWAT team go into a site where we don't know anybody and we barely understand the problem to be solved.  By Tuesday we know what the problem is and have a few ideas how to solve it, the ideas came from the people who are living with the problem.  By Wednesday we are in the pits of despair that we'll ever solve the problem.  By Friday we walk out of there with some of the problems officially solved, and an action plan to deal with the rest.  For the most part I love my job.

I have an industrial engineering background, but I got my "business degree" in the eBay PowerSeller School of Hard Knocks.  Sold LEGO blocks for many years on the side on eBay, then sold that business to move into Milwaukee area buy-and-hold real estate.

@William S.

Strategy 1 seems risky to cashflow at breakeven long-term on multiple houses.  $0 down with some cashflow cushion on each property would be more ideal.

Strategy 2 makes sense, it puts you at anywhere from an 18% to 24% COCR first year. If that's in your target range, sounds good. With this strategy you do eventually run out of your own cash, unless you re-invest the cashflow into your down payment fund.

@William S. I agree this particular property won't work as a BRRR. Combination of rent amount, financed amount, taxes, property Mngmnt. But what you could do is take your spreadsheet up a notch, so you could run what-if scenarios with every single variable over a range of values (say high, low, and medium) while holding all other values steady. This will give you some insight into the allowable limits that work for you and help eyeball future deals.

thanks @Katherine S.  I will have to check out OneNote.

also in search found this one:

https://www.biggerpockets.com/forums/67/topics/438434-project-management-software

on a search I found this Thread. 

https://www.biggerpockets.com/forums/80/topics/438874-project-management-software---how-do-you-manage-your-projects