All Forum Posts by: Ben Stout

Hey there, 

I do a mix of high and low end properties and have many in my portfolio that I bought around the $25k price point. THE MOST IMPORTANT THING................ is not price point. It's not curb appeal. It's management management management management management management. If you don't have a great manager, just hang it up and forget about it. A bad manager will quickly turn those lovely proforma numbers into something unattainable and will frustrate you into sleepless nights. You'll probably give up prematurely after you feel the pain that many of us that have fired PMs know so well. 

For a buy and hold I'll take a great manager with an acceptable proforma ROI on a deal over an amazing proforma ROI with a bad manager any day of the year. Looking over my data from the past 10 years, the difference in ROI I've realized is DIRECTLY correlated to the management over the property. Management is by far your weakest or strongest link.

@Derek W. 

 That's the epitome of a horror story!

I was set to bid on a house once and found out that the driveway was actually an easement and it was far from a main road. That could have been an ordeal. 

I've purchased a few houses via auction. One was with the infamous Hubzu and I wasn't able to get inside until after I'd purchased it. Someone had beaten up all the walls and the carpets were soaked in urine. It ended up still being a great deal, but it was kind of a reckless purchase. 

I generally avoid quit claim deeds, but even warranty deeds scare me. With some auction sites, if you back out you lose your deposit, which can be $2500 or more. What if the auction closes, you're the high bidder, and then someone runs and records a lien right before you close? That's always been my greatest fear. I guess some people must consider running numerous title searches for houses they don't close on as just a cost of doing business. 

Do you have an auction horror story? 

No problem at all. Let us know if you have any other questions. Good luck!

This seems about right to me. A lot of this really depends on where you're buying and what specific rules your city has. Keep in mind that tax is in essence an expense and not part of what I'd consider a cost to close. Someone might disagree with me on that, but I wouldn't consider escrowed insurance to be part of closing costs either were I financing. 

If someone were to ask, I'd tell them I have a few rental properties. I don't go into it in great detail anymore because it just ends up creating animosity. People become jealous and it creates problems. I don't work in real estate and the people I work with aren't really interested. 

Coworkers would much rather hear about a toilet overflowing and doing thousands in damage than they would about your sweet flip deal. I know most of you understand that he who works harder and smarter makes more, but the unfortunate fact of the matter is that people don't want to know you're doing better than them in any way. What motivates the average BP reader just pisses others off. I just play my work role, do my job to the best of my ability, and then go home. I've been accused of being "arrogant" before when I opened up about my business to people who asked. I no longer feel any need to disclose this information. 

Let me present you all with a question: 

Thought: 12% return on notes would far exceed most investor expectations. Many of you here also invest in paper. So, with that said, if I were to give you two options, which would you choose: 

Option 1: A portfolio of $30k properties that you could easily liquidate, for potentially more than $30k if need be, but with no assumption of appreciation, that yield a net 12% ROI and allow you to take depreciation and then 1031 exchange later.
-or-
Option 2: A portfolio of notes @ 12% with no tax benefit and no chance of them being worth more than a 12% yield over time. 

Let's assume we're all in the 28% tax bracket and all living in a state with no income tax implications like Florida or Texas. 

@Leslie Pappas 

Thanks for sharing this perspective. My aunt invested in a medical park TIC and was able to liquidate without incident after 3 years. It was effortless and a great ROI in my opinion for the most passive income you can get.

@Jay Hinrichs That's a great point you make about refinancing and cashing out assets. I had never realized that cost basis is reset to market value at the time of your death for your heirs until I read one of John T. Reed's books. Great things to keep in mind in terms of estate planning. 

@Jay Hinrichs No plans whatsoever. I have a lot of respect for Bill from reading his posts over the years and I was trying to politely respond which was apparently taken as me having an agenda. I have no such agenda.