All Forum Posts by: Bruce Petersen

@Danny Randazzo, neither, I know the millage rate so I just take 90-100% of the purchase price and multiply. 

Depending on the property, some times I go as low as 90% but that's only if just before purchase I know they have already gotten assessed and is at or below that 90% number though I never go below 90.

For second year I will take it to full purchase price in the above example.  I have seen more than one get reassessed above purchase price and year-over-year increases of as much as 75%

- Never trust broker's proforma for RE taxes no matter how they try to justify, I would always do 95-100% of purchase price for projected tax valuation.

- Watch for sudden jumps in revenue, often putting dead beats in to prop up occupancy prior to sale.

- Be suspicious of any "miscellaneous" expenses.

- If payroll is significantly below $1000/unit, are they paying staff out of another property or some other company?

You can structure the Co. Agreement with you as the Managing Member and outline the fact that you alone will have day-to-day decision making authority/responsility.  There will likely be major decisions (i.e.-sale, refi, changes to the Co. aAgreement, etc...) that you partner will have a vote in but you will have operating authority.

Comes down what the money guy will agree to, it's a negotiation.

@Carter Anderson

Sounds like you may be in underwriting stage, if this is accurate I would underwrite without premium especially if you have no comps in the area to go by.

If you do end up getting the property you can try to sell it as an added amenity compared to other properties and try for a premium.  If you do get the premium that's a nice little bump. If you are needing a premium for the deal to work it might not be the right deal?

I'd say that a big problem for newbies is requiring the property to be "perfect" which could be considered a form of being scared.  

I think many have a list of musts before they will pull the trigger and try to have a contingency for everything and thus can never find a deal they are comfortable pulling the trigger on.  There will never be a perfect deal and even if they think they have found one there is always something that will pop up after take-over that they hadn't planned or expected.

You have to have confidence that you can and will be able to overcome whatever may pop up, having said that it's really hard if you don't have someone highly experienced to be able to lean on when things DO go a little sideways.

Find a mentor or someone that has experience in what it is you are trying to do and trust the process and their guidance and always buy with a margin of safety.  Don't get into something with inadequate cash flow and bank on the appreciation on the sale.  This is how people get destroyed.

Just my two cents.

I will try to make it.

Don't know where if anywhere this went but if it's still a thing I'd be interested in attending if you guys have put it together.

@Aaron Villarreal I'm local and willing to meet.

I'm local and willing to meet. 

I know multiple people that live an amazing life purely as passive investors.  They had two things in their favor when they started; 1) - they started with roughly 300-400k and spread it over multiple deals and 2) - they got started in the early stages of the recovery (2012-2013).

It is possible to build a nice passive income but as shown above it usually takes some decent capital and the right time in the market to really get it going.

The folks I referred to are making 200-300k a year passively and have grown their net worth to between 2mm and 4mm and travel all the time.  This happened because many of the deals they invested in doubled, tripled or even quadrupled and have also done many re-fis or supplemental loans along the way that grew their portfolio exponentially.  This good fortune also had some bad deals along the way but has worked out well for them.

As mentioned by others, there are definitely pros and cons but if you have the capital and patience you can build quite the passive portfolio.

Caveat - obviously, these folks go involved at a fantastic time that may not exist currently and they started with a fair amount of capital but you can still start now and end up with a nice little nest egg that pays for a pretty good life passively.