All Forum Posts by: Calvin Thomas

Happy to lend some of my experience.  You'll get there, just watch your leverage.

JPM Private Bank, Morgan Stanley Brokerage, TD Ameritrade Private Client or Interactive Brokers.  They will usually play ball when you have a million or so in investable assets.  The first two you need a bit more.  I think Interactive Brokers still has some very attractive margin rates if you have the investible assets to spare.

https://www.interactivebrokers.com/en/index.php?f=...

What I've always done is keep a certain amount in the bank to run the buildings and the rest go into my investment accounts.  No, I do not allow any of the firms to touch my money.  I then take those funds and buy either actual insured GO bonds, corporates or agency bonds which pay tax free or taxable 3% - 4%+ plus and place the money there.  I also have a secondary emergency fund for my buildings I place in a Vanguard prime money market fund right now earning 2.44% and backed by SIPC.  I then have my own little bank where I can borrow 80%.  That 80% is earning money while I am also using some of that money to snatch up properties to earn more money.  So, in review, take excess funds, place them in a brokerage account with aggressive margin rates, place cash in secured assets, borrow against said assets, and expand my real estate holdings essentially for free.  I am earning income from the securities and my real estate.  My effective margin rate is less than zero still due to the fact that my security holdings are earning more than what I am paying out.  Though, as these clowns raise rates, I have started to pay of a lot of the margin.

Also note, if a seller is willing to hold paper, that's fine too.  I just can't stand dealing with banks.

I'm rehabbing one of our buildings in an A rated neighborhood.  It has only 6 units, but we gutted the building and added AC to each apt, new SS appliances, granite, etc.  One of my guys thinks we should add Nest thermostats, sensors, doorbells and outdoor and hallway cameras to the building and units.  It would be the first on the block to have IOT rentals.  Other buildings on the block have all been rehabbed, but none have IOT devices.  The demo would be successful doctors, lawyers and politicians.  I normally don't add the bells and whistles, but the IOTs are starting to get popular.

Wha t are your thoughts?  Is there a way to give tenants access to the devices w/o compromising the ownership of the device?  That's my primary concern; not the cost.  We install them ourselves and get them pretty aggressively priced through our distribution partners.

Mortgages can make sense in some circumstances.  However, I'm an anti-debt kind of guy.  If you can get a mortgage 2% - 4% and lock that in for 15 or 20 years, then it could make sense.  However, nowadays, most rates are north of 5% and I'd rather have that 5% in cash or cash equivalences to use.  After a certain amount of units, you really do not need many more.  I know a lot of other people in the business that use debt is their friend.  And, at certain times, it can be.  However, when crap hits the fan and they up crap creek because of cash flow issues, it's a great time to have cash or cash equivalences to scoop up the property at a discount.  Think like Warren Buffett, not Pres. Donald Trump (when he was a developer, not U.S. President).  He almost went bankrupt due to debt several times.  He got out of it because he owed so much it would had been mutual destruction for for The Trump Organization as well as the lending institutions.  The banks had learned form this and rarely allow that much leverage anymore.  At that time, developer Trump lost most of the equity in all those buildings; if not all.

Again, I do have a mortgage on my large complexes, but I am in the process of getting rid of that debt too.  I have a feeling that we're going to reset for a bit and then take off again.  I want that cash available to me so I can pickup any deals on sale for cash buyers.

P.S.: When I mean cash equivalences, I mean insured muni bonds, money market accounts, and CDs.  All insured and pulling in something while I wait to pounce.  Always good to have more than one stream of revenue.  I would then margin those securities at 3% (2 years ago, I was paying less than a point), and be my own bank.  I prefer being my own lender than giving it to banks and private lenders.  I give myself better terms. :)

Just remember, it's not what you make, it's what you keep.  If you earn 1 million dollars a year, but your COA, personal and business are 1.2 million, then you are essentially living on borrowed time.  

What everyone should do is get to a target number, pay off their loans and mortgages and then live off the income with zero debt. Remember, you can't take it with you. When the crap hits the fan, like around now, you're sitting pretty with income from your rental properties, some stocks and bonds, and of course 1 year of emergency savings in an FDIC insured account paying at least 2%.

Then again, what do I know..

Always multi-family so you have an economy of scale. More units (usually) less risk (financially). What areas are you looking at? Major metro, State capitals, cities with many colleges and universities, and hospitals are always good options. I usually prefer urban areas, but that's just me.

Yes. Very unwise. Hire a good PM. Or, you can setup a support number for the tenants to call you, but collecting rent can and will be a pain. If you have to have an eviction done, it's just going to be more of a hassle and waste of time / money.

Again, hire a good PM.

OP, I do not think you should be lending any money to anyone any time soon until you really learn the game. I read your opening post, and a old folktale comes to mind...  A fool and his money are soon parted.

OP, ever hear of buyer beware?

Don't really listen to podcasts, not really on Youtube much.  The guys who work in the fields now I am sure know more about him than I do.  I'm an old guy that's been in NYC and surrounding areas since the 70's.  Never took on much risk and just grew from there.  He seems entertaining, just the numbers the rep stated, unless there's some sort of rebating makes very slim margins (I could be wrong).  That's okay when the market just goes up, but when it retracts, not so good.  Now, it doesn't really matter if you own the buildings w/o a mortgage.  Most, like us, can wait it out as we've done in the past.  It only becomes a problem when you have vacancies and such.  Thus, when the market corrects, I feel, and I could be wrong, the investors in Cardone Capital will be holding the bag.  We stick to working class and blue collar buildings.  Nothing fancy, but the rentals are decent income producers.  We have one property in Manhattan that many have been eyeing since I've owned it sine the mid-70's.  It's probably our only B or A area.  Paid 35k for it.  It makes more than than in a month.  :)  All others are scattered around in NJ, CT, NYC, Upstate NY, Philly, and Chicagoland.  Though, the last one is becoming a bit rough.  

Nothing against the guy, just wanted more information.  When I Googled him, he seemed more like a flashy showman than a real estate tycoon.