All Forum Posts by: Chris Baker

Typically building material prices jump up, sometimes nationwide, and contractors will be slammed. I don't have any empirical data, but I've got to imagine when you knock out a large percentage of the housing, the remaining stuff that is habitable is going to be more expensive for awhile. If she happens to own a tool belt and truck, it's probably a good time to get all the work you could handle swinging hammers.

The local gas or electric companies may have efficiency programs that will look at how the building is operating and recommend solutions, usually called Tune Ups or Audits. Payback on boiler replacements can be 10+ years, but you might be able to change the controls on the existing so it's not using so much in the summer. If should be able to turn off in June unless it is also heating the domestic hot water.

You will need to check local regulations, but every time I've purchased a house, all the people I've spoken with (realtor, home inspector, contractors) have said the safest thing is to enclose it in place. I'd make sure your drywall has a good coat of paint, and if and when you do renovations, you will have to address the parts you work on then.

What part is asbestos? As with lead paint, mitigating is often just making sure it doesn't become lose. I'm in the north, and we often have asbestos pipe insulation for the heating pipes and asbestos floor tiles in basements. With the pipes, you can wrap them and seal it in place. The floor tiles, you can either remove, or lay plywood over the top and seal it in place as well.

Ivan Barratt , in six months I will have $25k cash, and could tap about $200k in home equity. Since the first foray or two may be losses, I don't want to pull out any more home equity than I can cash flow with no additional income. This is all outside of both our 401Ks, IRAs, and 529s for the kids college. I'm leaving those in index funds, because even if I do terribly in real estate I still want to be able to retire and pay for my kids colleges.

David Faulkner , I am not accredited. But there is a big difference between most and all. The thing that got me started thinking about this was discussing with a friend who is one of the higher volume realtors in our area about a Multifamily unit for sale the next block over. During the discussion he suggested I look it to a certain local company that does take non-accredited investors that he invests with. He'd make more money if he talked up buying individual properties directly, because I'd almost certainly use him. The way I figure it, I've got to understand the pros and cons of the two general approaches, I've got to vet out the specific company, and the specific deals. If the general approach doesn't make sense, then I don't go to the next level of due diligence on the company or the specific deals. My inclination right now is to talk to the company, and keep looking for other deals, and compare them side by side. My gut says that for the first 5-10 deals, having a pro do the prospecting, and coordination would be a lot better than the mistakes I'd be likely to make. Syndication pros and cons -could be a Ponzi scheme -passive -better returns on early investments, but less potential for a home run -less learning for me since I don't get to make the mistakes -recommend by a savvy real estate guy I trust -seem like a better option for our of town purchasing when I get there If I can make 10-20% per year, with an average year on the upper side (my speculative numbers, not historic numbers from them yet), but as a direct investor could lose it all to an upside if 25 or 30% but with a full time job equivalent, I'd rather the passive. Especially since the closer to 20% or higher returns are mostly going to be a result of lots and lots of work as an individual, and for the next few years I think working my job will produce more free cash flow to invest than investing full time would.

Thank you all. Getting all your comments has been helpful.

I totally agree, I don't know enough yet. I'm planning a six month stretch before I do a deal, during which, I've got a lot of learning to do via books, talking with people, podcasts, and running numbers in excel.

As for active or passive, I guess it depends on the difference in returns, which of course depends on the individual deals. Either way, I'm going to hire a property manager (with a full time job and kids, I don't need to get calls from tenants). 

I shy away from REITs because they don't seem to have the same returns. One of the Bigger Pocket podcasts the person mentioned that yields on REITs were about 1/2 of that of private deals, which makes sense from what I know of private companies verse public companies. Less liquidity, and less public visibility means those companies sell at lower multipliers. 

I may be missing a distinction, is there a difference between a syndicated deal, and being one of several silent equity partners in an S corp with K-1 distributions?

My ultimate goal is to be able to produce 50-75k per year in mostly passive income.

Hello all,

I'm totally new to this. I've been reading voraciously, listening to the podcasts, and trying to understand the best route for me. I've got a full time job, with a little cash to spare that I'd like to invest in real estate. I'm currently thinking around a six month ramp time between now, and actually investing in a property.

I'm trying to decide if I start looking for deals on my own, or go with a syndicator? My inclination is to use the syndicator, but parallel to that look for deals and evaluate them against each other, I'd assume for the first few months, or even years, the syndicator would likely have more attractive deals. What do people see as the pros and cons of investing directly verse with a syndicator? I think I could invest around $25k per year with my current financial situation, more if I did a home equity loan.

About me and my situation:

• Married, father of a 2 year old and 4 year old, both me and my wife have full time jobs, so I've got limited time to bird dog deals.
• MBA, and work in commercial building energy efficiency, so I know enough to dangerous, but not enough to be effective (yet, hopefully) when it comes to real estate investing.
• I live in Minneapolis, so I'd likely need to invest in other towns to get cash flowing deals.
• At this point I'm looking for investments, not another full time job like flipping.
• Have been maxing out my 401k and IRAs since graduating from college, so this is additional savings to diversify, and maybe allow an early retirement.

Any thoughts and suggestions would be appreciated.

Thanks,

Chris

You could go to a book store and find an RS Means to find a local new build price. Around here I've heard it's a range from $100 /sf for super basic affordable housing done as a batch of projects, to $200 /sf for more typical custom. I'm up in Minneapolis. Up here quotes are coming in really high right now because everyone is busy.