All Forum Posts by: Will Barnard

Just to be clear, I am not here to sell this to "newbie investors" In fact, I have had all kinds of investors, both new and seasoned who have purchased this and other investments from my co.

Here it is anyways as posted on my website:

$155,000 Duplex - Currently appraised for $165,000.
Includes builder warranty and is guaranteed to have a minimum of one year lease contracts in each unit prior to investor's 1st months expenses.

Rental Income is $875-$925 per side/per month (we listed the low end)

Gross rents $1750
Taxes $222
Insurance $82
Management $140 (Original placement fees paid for, no other charges)
Repairs $0 (It is new with builder warranty)
Utilities $0 (Tenants pay all as wriiten in contract)
Maintenance $0 (Tenants pay all as written in contract)
Vacancy $0 (we have a variety of new tenants to choose from)
Vacancy $105 (Lets put 6% in there anyways to satisfy you)
Administration Costs $0 (Management handles everything for their 8% monthly fee)
Total Expenses $549 (should be $540 assuming the 6% vacancy reduce management fees, which is why I take vacancy out first as it Does affect the OE)
NOI = $1210
Debt Service = $906
Cash Flow with vacancy assumption = $304 ($152 per door)

You are not trying to give me a hard time, just trying to have me disclose what it is I do? All you do is give people, recently me, a hard time and I do not owe you anything nor do I feel the need to disclose to you what I do. If you want to brag about your few dozen low income rentals, that is your choice. It is not all that important to me tell you how successful I have been. It is fine for you to think I lack experience or knowledge, that is your poor assessment. It reflects more negatively on you than me.

You and I use different strategies. I have no desire to debate with you about who's investing is more profitable, more correct or more successful or who will have more investments or more cash flow some time in the future, as I am not in competion with you. All you speak about are generalities, never once giving precise examples of deals you have done either. I have some properties on my site, if you don't like them, no one is pointing a gun to your head to buy them. If you don't like them, keep quiet.

Your investment business is not the only one in town so stop trying to act like running poor rental units is the only definition of the landlording business, IT IS NOT. Not every one wants to spend their days painting houses, carrying firarms for protection, and dealing with drug dealers and the rest of the scum. Not everyone lives in close proximity to crappy neighborhoods where you CAN buy for 50% of value. Not everyone will "pay dearly" for hiring professionals to manage their properties.

You still have not shown anyone here one pre-construction property over $150k in which they can buy at 50 cents on the dollar. Obvioulsy your Mother never taught you to remain quiet if you have nothing good to say. I grow tired of hearing your negativity.

I have a very professioanl website in which I provide a number of services and information. Your website is an ad to sell your little program which there is no doubt consists of your 50% rule, your 2% rule, how to paint houses yourself, what to expect from the drug dealers living in your rentals, and any other usless generic information.

Everyone in this forum is not required to tell Mr Ohio what type of business they are in and how they operate it. People ask questions, others give answers. You act as the all knowing (which you are not), and consistantly trash other members who answer questions which are not to your opinions. Shame on you. Leave us all alone and keep your negative unprofessional opinions to yourself.

This will be my last response to anything you have to say as I do not intend on wasting any more of my time defending myself from your negative shots.

Josh, I request you jump in here and put a stop to MikeOh's negative comments. All he is concerned about is bashing my business and my opinions. I started off voicing my opinion to answer a question from another member as well as weigh in on some alternative methods to evaluate investments. He continues to attck me, and others personally, which is very unprofessional and not called for. I did not become a member here to be subject to his ridicule and I am sure the other members do not appreciate it either.

Trying to cut corners and skimp on not hiring a good CPA may cost you more than it saves you. Particularly if you plan on having multiple properties, I highly recommend a competant and experienced RE CPA. They may actually increase your bottom line rather than reduce it as Jon said.

I choose a location based on several factors. It must be an area I expect to appreciate (time or forced) and must be in an area that is showing growth in both population, jobs, & economy.

The actual numbers are most important in that it must show the cash flow I am looking for, it must have at least one large upside potential (rent increases, vacancy reduction, add income sources, divide & conquer, etc), and it must be good enough to pass the lender's criteria (dscr, cash flow, etc.)

ROI is important and I look for at least 25% or more. Cash flow depends on the type of commercial unit, some the minimum is greater than on others (my opinion). Banks generally look for a DSCR of 1.25-1.3 these days, however, I lpersonally ook for a minimum of 1.75. Cap rate is also a determining factor as I want a good return on my money. This rate can vary by city, state, property size, and investment type so it will be necessary for you to do your due diligence and determine what rate you persoanlly want in an investment.

Finally, the exit strategy (or multiple exits as it may be) must be considered and evaluated before deciding to buy the investment.

Wrong again Mike. as I have answered this same question for you in other posts, I am a landlord, I just choose to have different investments than you. I do not care for low income, low value homes to rent to the scum you speak about on your blog. In fact, I also do larger commercial deals and I do not choose to spend any hours during the week painting houses.

Be careful casting dispersions before knowing who I am or what you are talking about. I understand your 50% rule of thumb completely, I just do not think it is accurate for all investments and I make a personal choice to use other calculations. End of conversation.

Allcash - If you buy everything with 100% cash, that is great for you and your associates who do the same. I simply pointed out to others, the availabilty of leverage and how it can increase not only ROI, but long term wealth. For example if you have 1 million dollars cash, you can buy 1 million in RE. With 1 million in cash, in my example, I can buy 5 million in RE. Yes I have less cash flow because I have debt financing, but assuming we get the exact same appreciation over 15 years, I will have much more in assets than in your example. - Just food for thought for everyone else.

I strongly agree about the licking the chops comment. That is exactly why I encourage investors to buy now. RE will recover, and all of thoise who bought now during the low times, will reap the benefits when the market is in an upswing and everyone else is buying - that is when we will be selling.

What type of commercial properties are you interested in, Apartments, retail, office space, land, industrial, etc.? How much $ (aaprox) do you have to put down? Is there a specific area you have in mind?
Get a bit more specific and the answers can then be as well.

Mike, in a previous post, you lumped commercial properties with res. I never said you refered to a retail center specifically, I was only pointing out the vast difference in OE for different commercial properties for everyon'e benefit and to use different methods for res & comm investments.

I am so happy you finally agree with something. I must be a complete fool (or silly as you put it) according to you, as I must not know anything about investing, right? - Wrong!
Again, I need not prove myself to you and if some of the other members want to worship every word you say, that is their choice. Operating a landlord business of low income rentals is not the only way to be a landlord and many invest for long term capital growth in addition to cash flow. That, in my opionion, is a better choice than yours, as you will have to continue working each year to sustain your cash flow income, while others can cash out large sums of equity in the future, that of which can be eaten. I understand your 50% rule perfectly, I did not need you or Beachbum to explain it, I simply use different methods by choice, such as taking out vacancy rates first, then deducting OE.

As for what I do, yes I am a landlord, but operate differently than you. Yes, I know all about cash flow, cash is king, etc, but I only have two rentals in low income areas that have values under 100k. I also invest in the commercial area with apartments, retail centers, land development, and storage facilities. The 155k duplex on my website you keep refering to is much different than what you do. Yes it is currently priced at 93% of appraised value. Please show me a NEW construction property over $150,000 that you can buy for 70% on the dollar! Sure there are old units in foreclosure, auctions, desperate sellers, etc, but those units are pre-owned, do not have builder warranties, most likely are in poor neighborhoods, and do not come to the investor turnkey. These units will have greater appreciation in future years (this is not speculating, it is a fact as RE always repeats itself and always has its ups and downs, but for the long trem, 5-10 years, my new duplex will outperform your old 40k sfr) I have set up some of these properties for investors who are not investing full-time or maybe are just getting started and do not want the stress of repairs/maintenance/management. We have teams set in place to do that for them. So maybe they do not cash flow to your standards and maybe they do. The point is, it is an option for investors.
I can not possible buy all these units myself, and I have already arranged the deals and the teams in place, so why not pass them along to others who can benefit from my work and due diligence. If you do not like the deal, fine, do not buy one. I never asked you for your opinion on my available deals. I do not like yours either. I like lower maintenance/hands free operations, you do not. Fine.

Again the original question was where does the 50% rule come from. I gave other methods to arrive at more accurate figures, in my opinion, and other types of investments that require different calculations. So lets leave it at that and stop making this so personal. I am not slamming your product you sell on your site or your blog, or anything else, so refrain from doing so to mine. We simply have different investment styles and different methods for determining a specific deal. Let the others decide which is best for them. Otherwise, I hope a moderator steps in here to stop you from your personal attacks.

Jon, Thats too bad about Fisery. I never heard of them before but I will keep that in mind and warn my clients about that. Thanks for the info.

Also, I did not mean to get technical in regards to your wording, just wanted the original asker to be clear on how it works as it can be confusing when starting out, as I am sure you know.
I get a lot of clients question who has control of their $, so I usually spell it out for them.

By the way, if you have SDI funds that you use to make loans with, contact me. I always have deals in the works and use these types of funds for RE acquisitions, buildouts, and upgrades all backed by the RE of course. Rates and terms vary deal to deal but are always presented to you upfront and you have the option of choosing the one that is right for you.

Relax Amber, I was only expressing that the husband in question needs the support of his wife. I never said she had to be in the business. Teaching her the business as he went along was only another suggested option to have her feel more confident. Simply put, a married man will have much more success in anything he does with his wife's backing and encouragement. Strict? I do not think that is much to ask for. I get all the support I can possible get from my wife and it has made me a better investor.