All Forum Posts by: William Bannister

In a book I was reading on the wealth of dynasties that had been able to pool and keep wealth for centuries and keep building on it. They had 3 legs to the wealth. Those 3 legs exist today and are extremely strong with anyone you meet that has a net worth over 10 million.
2 out of three of these legs we already talked about. Real Estate and precious metals. The 3rd leg is antiques,fine art and collectibles as well as jewels. Stock markets and currencies come and go but hold a nice piece of real estate or some gold or silver and you will retain value in your investment.
Its interesting when you think these things you pass to your kids could help them in there ability to have a nice life. My collection of pre 1945 silver and gold coins and orchards are hobbies but my apartments support me. Im not sure about fine art but I do have a lot of furniture around here that is over 200 years old.

Hello Sean, The bubble is in Bonds and dollars right now. If I had a steam shovel to handle all the waste the fed is making with quantitative easing I still would not be able to handle the load. No pun intended. Capital in the form of currency and bonds that are burying us right now is the bubble. Normally I would call this financial Armageddon and the dollar is on its way to the bottom but. When the Japs have decided to take the same course the Europeans Chinese follow suit as well its a currency war. Each player wants to get there currency lower to help retain jobs and pay gov spending through inflation, This of course is at the expense of the currency and savers and all of us that hold the paper money.
Have you watched gold and silver the last 2 years its reacted wildly every time QE1 or QE2 or QE3 then you see a commodities jump and thats nothing look at this stock market. There is nothing in this economy to give you this type of growth yet the market keeps going up and up. Unemployment still not low enough to justify it and its not like Xmas showed fantastic retail consumptions.
Im not saying we are heading for a Weimar republic disaster but right now your smart money is in multi family even if QE stops as long as you have fixed rates going forward and are not over leveraged you will be fine.
The only way to stop inflation is to raise interest rates and quit QE. You see here is the thing the only way that this inflation could come to a halt is if they ran interest rates to the moon like to 14% like Reagon did to halt inflation and slow it down after we unhinged ourselves from gold several years earlier.
That will never happen why? Its not like 1980 we had less debt then.
The fed cannot go beyond 5% because they would never be able to pay off the debt;) So because you know they will continue with low rates they might stop QE but they wont go up with rates and destroy there ability to borrow.. not for several years.
You say why does this matter to multi? I view multi as a commodity that is also tied to interest rates after all the apt building can only be financed for what the income produces. Interest goes up cost of apts come down. so rates can only go one way up but we discussed this they cant go up much right?
So the multi will be fine as its still like a form of commodity and will hold value as the global gov forces fight each other, racing there currencies to the bottom. They race to the bottom because printing money reduces the cost of debt since they know there debts are going to be a real problem to pay any other way...raise taxes or budget cuts are limited there too and things like that are always unpopular too politicians. The austerity will come eventually in addition to inflation and higher taxes.
Multi family, Oh the stability there is rock solid. Its like gold and silver with a dividend on top. The key is get this low financing now because it wont last for ever. Or pay cash if you have the money.
I have been buying silver for a decade now, with my apt buildings and I am also making a play on farm land that will produce as I believe food and gas prices are headed much higher. im doing orchards mainly.
Multifamily will thrive for several years to come!
Although my opinion is multi family is a nice place to be even in a down market because I can drive past my money any time. I know there isnt a ceo trying to rip me off with a golden parachute or a crook stealing like Kenneth Lay or Madoff.

Once I have 1000 units that I own then I plan to coach a few people. I figure having only a 100 units just makes me the rank of a 2nd lieutenant in this business. So until I at least get to 900 unit Im going to stick to making the simple posts on this forum.
I met a guy that humbled me. When I assigned my 100 unit deal in Memphis. This guy came from New York he said I want your property if the price is right, Im trying to do something here. After we had made the deal I asked him so you never told me what you where trying to do after we had driven past at least 1000 units he had already bought and rehabbed in that city in a 24 month span.
He said Im trying to take over the residential market in Memphis. We are moving 40 million dollars into this metro market we like the returns here. I couldnt tell I thought this guy was going to have a hard time getting a construction loan to close my deal he needed 500k to buy 100 units that needed total rehab.
I thought it was money to be rehabbing 2 homes and a 12 units apt building at the same time while this guy thinks its money to be rehabbing 3 different 100 unit apt buildings at the same time. this guy was all cash and had no financing at all. He was really proud of his properties as we spent the day driving around looking at his properties.
I am awed when i look at certain business men that are having the type of success they have in this business. I take little bits and pieces from each man I meet like this and apply it to my own business.
Not long after I met a guy that could sell anything you lay your eyes on and he was doing pretty well to with a 3rd party wealthy factory owner that was backing him. I learned a lot from this guy too he was a road warrior making all of America his back yard buying rehab apt complexes from the east coast to the plain states building a portfolio for a man that owned a factory that knew he only had a 5 year income expectancy left from his factory and was desperate to replace the income. He decided to start buying apt buildings to take care of the problem. the more you get involved in this business and just do it the more you learn. I learn the most interesting lessons when I just get busy in this business.

I toke me 8 years to figure out how to get my first 40 units under my belt. It toke me 90 days of shopping to buy a 74 unit apt building in year 8.
What I am trying to say in that statement is a lot. The reason why it toke me so long to get from zero to 40 was I was working a job and started with zero capital. I also was doing things conventionally and had not the benefit of a place like this forum in my early days. My lack of education and creativity caused my business to grow slowly. I am also very conservative. I also made some monumental mistakes as most people do when they are 1st starting out in this business. Making those mistakes also cost me several years of business profits digging my way out.
I wasnt lucky enough to have a decent mentor until I had been at this 5 years.
I have since then taken many classes in construction and property management and at one point even had my re license a few years. Everyone mind you takes a different path and your personality and creativity will help you in yours.
If i could change anything I would have done 2 things differently.
I would have gotten more education earlier in my investing career and avoided buying some of the deals I did in my 1st few years investing.
I made more money in year 8 then I did in the 1st 7 in my business. The power of having capital and knowledge is the key it changed everything for me.
Its a reasonable goal and I like it. 50 units 5k a month cashflow. Its measurable, and if you break it down to what activity you will do to get each unit and build capital towards it you will have it.

I didnt get the chance to mention what I thought about the water bill and repair. They wonder why people say go big or go home. Its always the small things that seem to grow into bigger things and pretty soon headaches.
I cant count how many water bills I was stuck with when I was living up north in WI doing income property. Up there they make landlord responsible if tenant doesnt pay and they wont cut it off for non pmt! I remember getting bills in the mail that exceeded 300 dollars for 4 months of usage. I wised up and began calling the city on all my properties every 60 days to make sure they paid. I attempted to get city to notify me but they never would until the tenant was 90 days late. I just didnt appreciate being someone elses bill collector.
One of many reasons I quit land lording in that town. The high property taxes the cold weather and the Nazis that worked in the code enforcement. It all added up to me getting out of town and selling off my entire portfolio up there. So I feel your pain in the aspect of not getting the feed back on bills and moneys owed to you.

I like the idea to inspect the areas you cant see with a big spot light after dark. They are dormant at night if you dont hammer on siding you will be fine at night. The idea of killer bees ouch. Make sure your spot light isnt shining directly at the hive. lol
One thing I dont like about Tx and Florida. The size of your hornets and the potential aggression of your bees if they are of the African type.
If you brave the bees and get in to inspect after hours you might outsmart your competition on this deals and have a fewer bidders on the deal run up the price?
You can always wear heavy clothes if your really afraid of them a simple leather jacket and heavy garb on the rest of your body would suffice but the hard part is wearing all that in Florida. you bring protective clothes in your car and change when you get back to it.
Maybe a local bee keeper would lend you his protective outfit for a 20 dollar bill. Tell him you bring it back in good shape tell him you will leave him a 100 as deposit on the outfit then bring back outfit get back 100 and pay him 10 bucks. This would be a lot of screwing around just to take a look but why not because it leaves the bees and causes the competition to have to go through the trouble as well.. some may just pass on it. I know sounds a little silly but why not.
I once used a motorcycle helmut and scarf as well as winter jacket and snow pants with boots to destroy a small hive. It was about 6x8 inches and probably had about 50 to 75 about hornets. i scraped nest off of building with a drywall spatula into plastic bag in darkness with a 3rd body holding a flashlight.

Get em Amy I love that:) keep expenses down! Between money out the window and down the drain if you dont plan to bifurcate the utilities on old buildings like Joel says dont even buy em if your profits are eaten up by the utility companies. Going green if your good at it can be some good money when you look at old apt buildings to convert. Insulate, new heating and separate water meters.
This is why in larger cities in war zones its not just the crime that empties out these larger 2000+ sqft homes duplexes and smaller apt buildings its the outrageous utility costs.Its too bad too because I have watched some beautiful homes empty and will eventually be torn down. The location just doesnt work for me though.
I watched a guy convert a 12 unit to a pellet boiler unit he installed and his heat bill dropped 80%. saved him 1000 per month cash flow. The question is who are you going to pay to load it once a day? This building was a self managed operation the owner lived across the street.
If I could just get the pellet boiler to self load on a conveyor then maybe I could show up once a week if i did this to some older 4 unit buildings to cut heat down.
Im also looking at the outdoor units geothermal types.

Yes as an American! I welcome your foreign cash into our market after all it helps the value of my investments too;)
Your property rights are pretty strong here in the United States as a foreigner. This is why in Florida you see tens of thousands of Brazilians in Miami as well as Germans and others from the UK and Scandinavia.

I like Joel's take on this, by working this equation backwards you understand why banks are seeing the new construction as a riskier proposition.
The thought comes to mind of encumbering both apt buildings presents a juicy fruit to the bank as they get to encumber all properties involved with some sort of blanket loan.
My problem is as the owner no thanks too risky for me. Everyone may have a different take on this but getting those buildings free and clear isnt easy in a market like Riverside Calif.
Once the blanket is in place its a refinance it takes to get back off. Here is whats going through the bankers mind. You got the equity lets tie it up then there is no risk. My problem is this the banker also knows interest rates will climb and once your project is finished you will want to bifurcate the project. The banker might be thinking as you are will this loan stay in place long.
If I own this project I might stay away from it just because you might find a better use for refinance money on something else rather then just a build on your bare ground. Unless you plan to go up 5 stories or more.
Your experience will matter a lot when you look for money in the form of a construction loan (have you built before) but refi money is easy its just not as much cash out...since cash outs are being done but at low LTV.
I love new projects but Its not easy to get apt buildings free and clear take a lot of work.
Can we ask about numbers on this project to get a sense of ROI?
This would also matter a lot in my estimation as what options are available. A greater cash flow would create a few more options.
I laughed at the comment about refi and buy a Bentley it was a funny analogy.
By the way just food for thought I have been investing for 20+ years and building a new home was the most annoying project I ever did. I have rehabbed 50+ unit apt buildings faster. Il never build a new home again unless I am not personally involved in the project.

You should sit down and have a long lunch with an experienced cpa.
I would have to write a book in this post to answer all the questions you just asked here.
Between depreciation of things you bought to expenses like your gas in vehicle or do you have co company car and are you using home office space its pretty intense if your first starting out. I think finding a cpa close to home would be pretty important to so you can easily access them.
For another example a big purchase like a furnace could be considered a capital expense that must be depreciated over a long period of time vs a simple repair that can be expensed.
Maybe a cpa in here can jump in here and give him a few books you would suggest he reads so he can ask a cpa the right questions when he has the sit down at lunch.
Even your property how they are going to be in your portfolio ,,long term short term ect.
A lot of things to think about.
For the record "I am not a practicing tax professional"