All Forum Posts by: Jon Passow

@Jon Passow I feel like you've given great thought into finding ancient Egyptian gold lol

To answer the question, in that scenario where money is no object, I wouldn't BRRR. I'd buy large commercial buildings, apartment communities, self storage, and/or invest in others deals passively.

I have been very successful in the Cleveland area and currently have been acquiring apartment complexes in Lake County.  I have very very low vacancy rates and have been pushing rents about $100.00 per month per unit since I first starting investing in Lake county September of 2015.  In 2015 I could get per door price of $39,000 a door and then in 2016 I was getting per price door of $40,000-$42,000 a door.  Lately I am under contract for a 34 unit deal in Lake County at $33,824 a door.  When you buy an apartment complex at approximately $100.00 a unit under the comparative rents and only need to put in about $60,000-$80,000 to considerably increase those rents in a 18 month to 3 year period, you know you have a good deal.

Swanny

Hi @Jon Passow,

For someone in that hypothetical situation, it is good that he/she is looking for a CPA.  If the million dollars is an inheritance, the inheritance itself is not taxable but income that it generates would be.  Therefore, it is a good idea to talk about how to position yourself best for taxes before receiving the money.  It would also make sense to have a financial advisor on the team even though this hypothetical person plans on investing in real estate.  This person would also need a good attorney (both for estate planning and for real estate).

@Jon Passow It sure would be nice if it was that easy where someone else was finding the properties and doing all the work but nothing is THAT easy or passive. The BRRRR strategy works by forcing equity and you can't force equity laying on a beach somewhere sipping pina colada's. If you want something fairly passive, you might want to think about turn key. Even that's not totally passive. For true passive income, you could also consider being a private lender.

@Jon Passow I often preach about buying in markets with growing populations but I have to agree with @James Wise that since you are from Cleveland and know the area well. It makes sense. Cleveland is a larger Metro area so I'm sure there are suburbs that are doing better than others. I would say that if you were buying turn key it could make sense to choose a market with better demographic trends like Kansas City which I happen to like, but since you plan to use the BRRRR strategy, you're taking on more risk and it's crucial to stick to areas that you know very well. It would be very risky to go in to a market that you don't know and try to do a BRRRR.

Jon Passow
Sounds like the entrepreneur’s dream! Work as little as possible for the most amount of money and highest return. While traveling the world having adventures (maybe discovering your Egyptian gold while escaping from Vikings).

I know it’s cliche but it starts with your team. PM, contractors and lenders are the big 3.

So far it seems to me that while you are in the “empire building” phase the projects do require a lot of oversight. Finding deals, then lining up contractors and managing the project. Not to mention lining up financing for acquisition and refi. But then once the rehab and refi is done, it’s handed over to the PM and you just enjoy the cash flow.

I like to think that after doing this a few dozen times, I’ll be able to slow down and maybe start 1031 exchanging to upgrade my cash flow every couple years. But, it’s still a lot of work. You gotta love the game for it to be worth it, I think. Plus it’s gotta be better than a J O B, right? :)

Jon Passow

Connect with Logan Allec who is a very active CPA on the BP forums.

 I have a clear bias towards Cleveland as I sell rental real estate but I don't ever push out of state folks to Cleveland over another market for two main reasons.

1. I'm to busy to waste my time pushing someone towards Cleveland when it's a better investment of my time to focus on the folks who have already chosen Cleveland.

2. In my opinion most of the midwestern markets are similar. It's like splitting hairs on the differences an investor buying a handful of properties will make over the long haul.

That said I think YOU would do better in Cleveland as you have roots here. I always advise people to invest where they have market knowledge & connections. You have that in Cleveland so you should go Cleveland. If you were from Kansas City I'd say that'd be your market & you were nuts to pick Cleveland over it.

P.S.

Don't know if you've seen it yet or not but the The Ultimate Guide to Grading Cleveland Neighborhoods is always a good read.