All Forum Posts by: Bradley Marion

@Ian Ippolito Yeah I like the max leverage numbers in your scenario, and here in the Midwest, we almost never see those large market swings like people on the coast have. The idea of having large cash reserves incase of times where the economy and markets get severely recessed seems like a solid plan. Thank you for the evaluations! Helps a lot when planning on what to do going forward. I appreciate all the input from everyone

@Ian Ippolito I like the breakdown! So deciding future moves, it would be prudent to make an educated guess as to whether or not the market will be good, bad, or very bad. 

Guessing with my market that we will be coming back economically and housing market wise, my next move will probably be to source private financing over the next year or two

@Jason V. - Bump. I too always feel that if I buy a house for 100K with 30 year terms the total cost is 220 or more thousand dollars. That means I gave some bank 120K minimum to buy a house which I still had to pay 100K for. Assuming rent is 1000/mo and zero percent vacancy I make 12K per year on it (which I won't because of taxes and insurance). It would take me another 10 years after the 30 year term to "earn" back what the bank loaned me. By then it would have been 40 years before I see a dime of true free and clear profit. Other than the cash flow I was receiving on top of costs all those years. Which in my opinion is chump change, a few thousand per year... not even worth my time and headaches (I consider my time very valuable) 

So 40 years... I am not even 30 years old (30 years is a long f-ing time). In 40 years I will be 79 years old. Most likely I will be dead much before then. My grandfather passed away at 69... RIP 

So yeah I will have a 100K house in 30 years paid off with no cost out of pocket assuming I 100% financed it. I also may very well be dead by then. Which means I spent my whole life managing every tenant complaint and repair and never saw the rewards of making bank!

I want my properties to start making me bank aka maximum possible cash the day I buy them. No loans or anything because I consider my time too valuable to waste making less than the maximum possible cash from day one.

As for raising capital, I do that at my day job where I will be making six figures very soon and able to finance deals from my actual income. Therefore jump starting my REI business with earned capital that I worked so hard getting my MBA to make.

Another thing is I want to get into being an accredited investor some day to start doing crowdfunding on the debt side. Basically I want to be the bank and people can pay to use my money if they have good credit and history / portfolio of performance. Also the real estate is tied to the loan so the chance of a loss is minimal if a foreclosure goes down.

@John Arendsen – Passive income is where it’s at! I can’t be managing all this stuff all the time because I have other stuff to do most of the time. I am a busy professional and I am focused on my career most days because I know I can make six figures with an execellent pension if I just keep working hard for the Government. However if I can make money on the side with some paid off assests that makes great sense as long as I don’t have to manage a bunch of properties and dozens of tenants all the time with repairs and whatnot.

Actually for my current day job with the Government I am a professional manager of property management companies. I oversee these tenants AND the property management, site managers and professional property management individuals 9 hours a day at my day job. I know how much work it is to take on property and I am not interested in “leveraging” so much because I know dollar for dollar my time is better spent only managing property where I am collecting 100% of the rent and I am not giving all to some bank or investor.

I have very limited amount of time in my life with my career and family. Therefore I do not have 60 hours per week to create some sort of Donald Trump real estate empire. I am landlording “on the side” right now and will always manage up to 5 or 6 properties. However when I get above that I will most likely hire a couple of property management companies to help me out and also let them know that I am keeping a very close eye on them.

Also I just don’t like the idea of some 3rd party having an interest in my business. I do not know why but it just bugs me, I enjoy the freedom of knowing that I am the boss and no one can tell me that the “rent” is due. As of now I am the only one telling people when the rent is due and it feels great. 

@Chris Reitzel - That is a really good philosophy. Borrowing money to make money = good idea where borrowing money for all other reasons is foolish. I like that mindset. Also @Jay Dean the idea of never being more than 50% in debt on a property is something I like. That way you can still get the use out of leveraging money, while still having a sizable reserve account on the books. Even enough to pay the property off outright in the bank might still be wise to pay for a roof or foundation issue or any other number of issues that could come up

@Jennifer Lee - I see what you mean by doing the research before buying! Do you buy places that need rehabbed for low low price then fix them up to make your profits? Just wondering because it seems that most nice ready to rent properties fetch top dollar

Well I am not buying anything because as I stated originally I an not trying to finance anything and I only have 2 properties building me wealth right now so it will be a long time before I could be able to buy another.

However my exit strategy has always been to buy good properties. Keep them forever, retire, and die off leaving them to my heirs

@Jennifer Lee - Sounds like a fantastic strategy! How do you always know if it will be positive cash flow to be in your portfolio? I would like to know how to do those numbers up front. Yeah financing will help you get ahead for sure! I have hit that wall long ago haha and I can't do anything about it. Anyway I don't have any exit strategy because all I want to do is own more and more outright profitable properties, that's what makes me sleep good at night

@David Krulac - I want to go full circle in that regard so I can finance anything I want at any time. It is just taking me forever in the beginning, I appreciate the good advice

@JD Martin - Higher price points certainly make for a riskier environment. I am going to keep that in mind going forward, and an exit strategy? I had never thought about one of those