All Forum Posts by: Calvin Thomas

My office received a call from one of his reps today. I thought the pitch was a pie in the sky type of deal.  Anyone hear of this guy on Youtube,  Grant Cardone?  He boasts a half a billion dollar real estate empire in Florida and Texas.  I believe he get's around 90% financing, plus he also takes in money from investors.  Something doesn't seem 100%.   He also does these seminars and other marketing stuff.  He seems all over the place and also trying to raise capital from others.  Just some basic math, if he's financing 90%, paying out at least 6% to investors, and locking in a 3.5% mortgage from Fannie Mae; because he's a preferred client, there doesn't seem much leeway for him to make money.  I understand the cash flow portion of it, as that is what we do.  We just do not raise capital or borrow money that much anymore.  However, my concern is that when the recession hits and the evictions start, that cash flow will dry up.  He seems to be working on extremely thin margins.  He's also in very lofty areas of Miami; which were the first to go in the last recession.  He reminds me of the Polka King (https://en.wikipedia.org/wiki/Jan_Lewan).

Am I reading into the numbers incorrectly?

I'd run.  If it is that bad, roaches can be hell to get rid of.  They are in the basement and the walls.  It's just not worth the headache.  We had to deal with this once.  It was an absolute nightmare.  We sold the building about a year later; for a slight profit; of course.  Went through three professional exterminators, cleaned all the units, no good.  It was pure hell.  

Troy is over heated.  We just flipped a house we got in Troy a year ago for 90k to almost 145k.  Troy is not Brooklyn.  Even if it was, Brooklyn fell too in the recession.  Be careful.

Interestingly enough, I have buildings on that street.  Ten Broeck Triangle is technically in Arbor Hill, but not really.  It's always been a significantly safer area than Arbor Hill.  IMO, it's more downtown than in Arbor Hill.  However, I can be bias.  Not sure if she's living there, if she does, I am sure she'll have an around the clock police detail just like her old home.

Thank you.  Just posting some things I've learned over the years.  

Why south Jersey?  Do you have a fascination for Camden County or Wildwood / Jersey Shore?  If you're going to consider south Jersey, might as well go over the Ben Franklin bridge and head into Philly.

Nothing wrong with multi-families.  Once you have 50+ units, it brings in a nice income each month.  You take that money and parlay some of it into the next one, then the next one, so on and so one.  Everyone needs a place to live.  Urban areas are a headache, but at 600+ units, it's part of the job for us.  That's what employees are for.  Or, if you do not want employees, or are not big enough yet, then you hire a PM.  

Buying into Realty Shares now is like buying at the top of the market in 2007, but you own nothing but shares.  Similar to a co-op.  If there is a downturn in a few years, your income from Realty Shares will drop significantly due people not paying rents, mortgages, etc.  If you own the property, you have some more flexibility.  

Personally, we have only a few with mortgages, the rest free and clear.  Though, we bought them years ago after the dust settled from the crash, there is some nice appreciation.  However, I hate mortgages, and only use them now for larger projects.  But that's me.  We have 3m -- 5m in unmortgaged real estate over several states.  Yea, I know, we can buy 15m+ more in properties and grow even faster.  I do not like going through all the ins and outs for mortgage approval.  I've leveraged enough in my time.  It's always best to have cash reserves, lines of credit and equity in other buildings in case we need to tap them.  

But hey, I'm an old man...  What do I know...

Good luck getting a tenant to pay a 2.7% fee to use a debit or credit card on top of their rent.  We can barely get them to pay their rent on time.  They get charged a late fee.  They think they get away from the late fee, but we take it out of their security deposit as stated in our agreement that they've signed.  When you have over 600 units, you learn how to handle these smart alecs.

We get our pound of flesh one way or another.  

If you have a mortgage, you should keep 20% - 30% in cash reserves for hard times.  Why? Fire, expensive turn-over, vacancies, fines, etc.  Also, it would be wise to get some credit lines just to have in case as well.  Use it a little, then pay it off so it shows there's some activity.  Some may say that's a bit aggressive, but if you have a couple of months of vacancies or more, you'll need those reserves to hold you over.  I like to keep 10k for reserves per building.  Keep in mind, our properties are in the Northeast, Philly and Chicago.  Props. are a bit more expensive in some of these areas.  So adjust accordingly.  You don't want to be caught with your financial pants down when it's time to pay the piper.

We just finished rehabbing a few commercial units in Bridgeport.  Can some people recommend a good  veteran realtor to help us lease them out?