All Forum Posts by: Brian Murray

My 15 year old son attended last year and loved it

I didn't start investing until my late 30's with kids. Had to get creative. You can read all about how I did it in my book Crushing It in Apartments and Commercial Real Estate. You can do it, but it's hard work and requires sacrifice. There aren't any shortcuts. Wishing you all the best!

@David Faulkner  Great point - you are correct and I should have clarified that I was referring to income-based valuations, which are generally the standard for larger rental properties. 

Going back to your original question, I would say that whether you need to factor property management into your investment spreadsheet really depends on what you're using your spreadsheet for and is independent of whether or not you choose to self-manage. If you are using your spreadsheet to value a property then absolutely you need to include it. Any underwriter or appraiser will enter it in theirs, so you should also, regardless of whether you prefer to manage your own properties or not. I think investors need to be careful about using a decision not to self-manage to justify paying a higher price. And there is always a cost for property management, even if you do it yourself. Your time is worth something so it really should be valued and included in most analyses that you're doing, including an internal ROI. One exception might be if you're using your spreadsheet internally to look at cash flow, in which case you can justifiably leave it out.

@Chris EakerThe broker is likely motivated to get the deal done.  Your request shouldn't make any difference or there is something else going on.  Best of luck and please let me know how it turns out!

@Tracey Williams Actually I don't use an LOI. When I make a purchase offer I do it in the form of a PSA that already has all the terms I am seeking. But if you elect to take this route, unless you are very experienced I would say that you should make sure there is a clause in the PSA that makes it subject to attorney review. You can also have your attorney do a template for you so that you can just make minor modifications for each deal- this is what I did.

Reserve requirements vary widely and there are numerous different types of reserves.  When you're assuming a mortgage the amount in the reserve can be enormous or almost nothing, depending on how much the seller has been paying into it each month, how long they've had the mortgage, and how many draws they have made.

@Chris Eaker   Ahhh yes- didn't realize you'd already agreed to terms and conditions.  These are clauses that really need to be incorporated in the initial purchase offer.  And I usually deliver my purchase offers in the form of a full purchase agreement.  Maybe next time!

Hey Chris!  Freddie Mac has different programs, some of which require reserves and some that don't.  I have two multi-family loans with Freddie Mac right now that have some pretty onerous reserve requirements.  Unfortunately, the funds in all the reserve accounts are typically disbursed to the seller at closing when the mortgage is assumed.  The lender (in this case Freddie Mac) will typically require that the Buyer to replace all those funds at closing as one of the contingencies in their approval of the assumption.  This can be a pretty significant problem at times because reserve accounts can grow rather large over the years.

My recommendation is that you include a clause in your purchase agreement that will give you a credit at closing equal to the total amount of funds that the seller has in their reserve account(s) at closing.  For the replacement reserve (if it exists) maybe something like this can be inserted (but consult your attorney)

You can adjust the language to be broader if you want- maybe something along these lines (again, I'm not an attorney so consult an attorney):

The seller may balk at this, but it's worth a try.  It has worked for me on several different projects.  Most sellers are more focused on getting top dollar than the closing adjustments.

Good luck!

PS Thank you @Scott S. for the shout-out on the book!

Hey Scott! I have degrees in engineering and business, but I am a firm believer that all of the knowledge anyone needs to be a great real estate investor can be gained through self-study. In BP podcast 212 I said that if you start at episode #1 and listen to all of the BP podcasts, that’s like getting a PhD in real estate investing.  I'd supplement that with a boatload of reading too, including lots of books and time on these forums.  Now that's not to say that prior experience or education in other areas can't come in handy on occasion - I completely agree with that. @Dustin Haviland hits it on the head when he says, "There are takeaways from every experience in life that can be leveraged as a strength in another profession." Amen to that. BUT, a degree is not a prerequisite for success. That's one of the things I love most about real estate investing. Anybody willing to roll up their sleeves and do what it takes has a chance to be successful!

Congratulations Sonny!  So awesome.  Thank you so much for the shout out - I appreciate it.  I completely agree with your takeaways.  Great stuff.  Best of luck on your continued success in your real estate endeavors!  CRUSH IT!