All Forum Posts by: Charles Worth

@Jay Hinrichs

Maybe thats always possible and I totally agree in terms of the personal experience described not being as bad as the picture painted in the post or in the title so a little unfair to @Jay Walsh. I am no old hand like yourself in RE but I am in the investment business in general and thats is how I would view it as well. Lesson learned and I got my money out, can't take it personally and its a good outcome at the end of the day. Seems like ABC did the right thing by the client end of the day. 

However, the fact is most TK esp when they go through a third party marketer promise a much more seamless process than the underlying asset or business can realistically deliver. Its no wonder that many of these businesses end up with upset customers such as @Sarah Lam at some point because of this. At the return profiles being looked at esp in this market that is just what you deal with to get those returns. Most people I feel just don't know what they are in for and that is what I took from the post (though again I know to look past the this is a terrible company etc. etc.). 

In my own personal limited experience, I have dealt with nightmare scenarios that sucked my time and my money into a dark hole. Evictions, city issues, construction issues, property managers who had terrible response times, violations, garbage issues, bad tenants who didn't even want to tell what their problems were even when I asked, etc. etc. Just what the asset class has to deal with and I think those who don't see it either got lucky or had a property manager that did their job very well on all points and didn't tell them about it.  

In most of these cases, I think its tough to blame the investor for being upset about that when they had no clue what they were getting into (I am generalizing I don't know what the conversation was between any of the parties involved) . Also tough to blame the marketer because well thats not how you sell the product not by starting off by telling people your life might get turned upside down for a while once every few years and your 15% - 20% return could have as much volatility as my crypto investments if something goes wrong or your property manager has a hiccup. There is a reason true regulated capital raises require certain disclosures which as far as I know no TK provides right now. 

I will also note that in my own experience with @Jay Walsh I found him to be fairly straightforward and less paint a pretty picture than some other folks I had talked to but that was a long time ago and I didn't end up buying anything at the time for other reasons. That was just my experience though and it could mean very little as everyone's experience may differ.  

Have to agree with @Jay Hinrichs this is a tough tough business. @Jay Walsh and other TKs like him rent properties in urban cores which is twice as tough as B class properties with the city issues and tenants you are normally dealing with. Its a very delicate balancing act between growth and getting to a point where things fall through the cracks like they obviously did here. Property management and construction management are the keys and just a little problem in processes or employees can just domino. Just my opinion.

it looks like Jay did the right thing and paid you and you are whole so at least for this property alls well that ends well and anyone that will buy your property back (including costs I hope) is tough to complain about from a personal perspective. Hopefully, @Jay Walsh can fix any issues as I am sure he is trying to do. 

With that being said I think this post by @Sarah Lam

is important. if mess ups become a chronic issue its tough to keep paying rent guarantees out of pocket without hurting the business itself and as for pricing you don't get that till you sell and there are transaction costs. Its certainly nice to have had a good exit possibility here but I wouldn't rely on that going forward (not that it won't happen just that I wouldn't let that makeup for poor performance elsewhere). So its good to know issues that have come up and more important see if others have the same issue as well as if those issues keep happening as time goes on. If they do its definitely an issue, if it gets fixed just a hiccup as any business would have.  I think if you want the returns that come with urban core investing this is a risk that is just part of the package. Not saying it doesn't suck when it happens but its tough to know who is going to have problems tomorrow. I am no expert but have seen a number of these everything is great than one day its not happen mostly in urban core or lower class properties. I am sure @Jay Hinrichs has seen even more. 

@Danny Randazzo 

This makes a fair bit of sense its really just a partnership structure. The issue would be in building the relationship. Just going to an investor with this straight away is asking for trouble imo. I don't see why you wouldn't start BEFORE you got the property under contract. This allows you both to find out if you are good partners, builds trust over that time and gets to the point where it looks more like a partnership. 

There are reasons this would make sense:

1) You can takedown much smaller units where many of the deals are

2) the exit strategies like getting money out or 1031 etc. can be much easier with this structure 

3) timeframes can be shorter because the process is more fluid. 

Course tons of downside too a lot more risk. 

@Tom Smith

First off this is not advice and should not be taken as such just my thoughts.

First, what is your situation? Is this your only $100K? How much would you miss it if you lost some? Do you need the income? How much time do you want to put into this including learning, traveling, managing etc.? Do you want monthly checks or lumpy income is ok? All these things will greatly influence the strategy you take. Without it very few can tell you the answer to your question. Yes many people I think can hit those numbers, butthe flip side is many of them put a lot of time into this RE thing and others are taking on risks to do so (some good risks some not so good). 

Second, I think the fact that this didn't get a sure can do it no problem should tell you something about the market today. The great thing about BP is you can go back in time and if memory serves me correctly this question has been asked before and people were a lot more positive. Fact is, returns have come down because prices went up. Going back to the questions above I don't know what your situation is but assuming its more of a passive investor (by location) keep in mind many people on here have to invest you don't.

Third, if you don't need the income now you might want to think in terms of total return and not just cash flow. You might not get a check every month but if the return on the total investment is good I see it as the same but I also don't need the money to live on today.

In the end, I certainly know people making that. Some are even doing it on debt investments which are more secure than equity. Issue is they are subject to risks. If you lend to a flipper you might end up with less or it might take longer meaning your yield would go down. It might still be safer than equity but its still not money in the bank every month no matter what. 

For equity, its really the same story yes its possible but you probably have to put in work or take some risks. I have turnkeys that those numbers but then sometimes they don't give me anything in cash for a few months. I also have flips, again same story sometimes I get as big check and sometimes it takes longer and the check is smaller. On average I am hopeful to be at much higher than your number (as it should be for the risk) but maybe not and I have certainly had my fair share of war stories. 

@David Fitch Did you ever get tickets resolved? I have found that calling the on the ground person on the property myself does wonders. The people in the PM office basically just route the work orders to them. In my case the delay was that the tenants on the two floors kept not sinking up to do the work we needed to do. I called him once a week for a few weeks and it finally got done. I bypassed the PM office entirely. 

@Ian Ippolito

While we can probably argue about the merits and/or lack thereof for Bitcoin all day including the libertarian aspects of it, its really more opinion in many cases as well as being an ongoing experiment.  I will say that Yemen, Rwanda are not good examples of libertarianism to me because there are parties in control its just not the government. Personal freedom is certainly not high. 

More to the point of our conversation, Bitcoin and crypto are not interchangeable. Today Bitcoin dominance is very low by historical standards and is only 34.4% so its evolved away from just Bitcoin. A lot of crypto people own almost no Bitcoin. Except through a fund I actually don't own any today (though there are arguments for its merits and I might buy some because of price).

Most of the things you mentioned are not necessarily problems for many cryptos.  Energy hog is easily solved and many cryptos do not use proof of work (which is what uses the energy) or are switching off of it now. I don't think security will ever be solved but its definitely getting better and it already I would say is often better than the alternatives on the internet, which we use every day.  Many of these are still a work in progress right now and we are far from the end but that is the evolution of most of the tech we use today. A lot of cryptos are also not libertarian, faceless bitcoin type systems. Many of the successful cryptos now are really more like companies with token structures. They are working in partnership with major companies, have developers that work for them or the non-profit behind the token, etc.  Its not the decentralized no one is in charge type of crypto like you are referring to when you talk about Bitcoin (though core dev is actually really in "charge" of Bitcoin dev)

Also, I think saying that blockchain would exist without cryptocurrency is a tough argument. The currency is needed to reward participants, that is how most blockchains work and why is has been so successful. Without it there is really just a big database or open source project, which has existed for years. 

Volatility and overall price bubbles (arguable obviously no one knows till its over) are def an issue but I would argue that for those working on the products and getting tokens this is part of the incentive. Most of the price action is up at the end of the day and as long as that is the case talent, energy and resources will keep flowing. What you end up with is some really great technology just like we saw with the internet, iphone apps etc. 

@Jon Q. would be great to hear more what you are doing with Blockchain. 

@Ian Ippolito

Seeing as we have had this discussion away from this forum a numer of times you will not be surprised that I agree with @Jon Q.  here.  

Let's say your right that Bitcoin is one of the dumbest investment fads out there right now. That doesn't really mean much for the future of block chain or its ability to grow and greatly reward those actually building things on it or using it. Bitcoin did three important things that I think will be long lasting well after a bubble bursts if it really is a bubble (let's just assume it is so we cannot have that argument). First, is the block chain itself which solves fundamental problems in computer science and trust based electronic commerce. Second, is a libertarian streak that has been bubbling up as trust has eroded from traditional institutions. As someone who loves history I would say this has been building since Nam and Nixon but certainly in the last few years since 2008. This is probably the more controversial part of Bitcoin but I think its here to stay but that a lot of mainstream crypto will basically ignore this in order to stay on good terms with governments and large companies. Already you see this from people like Vitalik (Etherum) who was against large institutions when this all started but is now working with them and from the market which has fallen in love with a very centralized crypto (Ripple). Third, is a move from “old” ways of doing things to digital as millennials become more prominent and take their place in the world.

I think all three of these things are here to stay. We can argue all day as to if Bitcoin will make it or be the AOL of this new world but Bitcoin does not need to survive for block chain to be important. I know of very few people who are not interested in blockchain and digital tokens. It’s the tech behind the crypto currencies referenced here. I wouldn’t be surprised if a large number of the cryptos are not here in 5 years but that is beside the point. Just like the internet itself or the app economy the success of blockchain does not depend on one crypto. Crypto is basically technology and like all technology it evolves and builds on itself. That evolution is healthy even if it means people lose a lot of money. Tulips are an awful comparison because tulips will always be tulips they will not evolve in hundreds of ways no one can even imagine. Already, powerful institutions and governments are starting to build on blockchain and this will continue as long as the technology is promising. I would think of blockchain more like a piece of software and less like a currency. The market aspect of it has let people bet on what is basically startup software. I can’t see the future but if it looks anything like other software outcomes fortunes will be made on some and lost on others as crypos and block chains fight for dominance. This is natural. Chrome was not the first browser, Google was not the first engine, Facebook was not the first social network and gasp BP was not the first bulletin board.

As for Bitcoin, I know of almost no one building only on Bitcoin. Very little is 100% dependent on Bitcoin’s success at this point. Even those accepting Bitcoin right now could adopt other currencies as anyone will a multi-currency wallet can attest to.

To be clear there is still a ton of uncertainty around Bitcoin and crypto in general and no one knows how it will play out. There are also structural issues from who owns what to the true economics of the crypto space. All this will play out in the years ahead just like it did with the internet space. Remember when people were wondering how on earth Facebook would monetize stupid what I ate today posts? I do. We are a long way from there now. Seems like only yesterday. 

@Vika Bha

highly depends on what is put in. You can always request they give you a scope of work performed. A gut reno can easily cost way more than $50K - $60K. TK margins should be much smaller than that (key word is should be). 

@Tomer Shani

yes I did end up hiring someone though after my LLC was formed.

@James L. as others have noted I don't think there is any fee in NYC. I have never paid one. 

Also, you should be aware of (or ask a tax pro) about the diff between a sole member LLC and an LLC with others so be sure to discuss that with whoever you choose though they should ask you anyway.