All Forum Posts by: Henry Clark

OP.  The obvious answer is yes.  But you said to the first responder, not working in that field.  If you could be more precise, you will get better responses.  Make 80% of all your failures on paper first.

OP:

1.  Paying tax is great, means you are making income.  You can defer to some degree.

2.  Your deals will always have both Cash Flow and Equity components.

3.  As Poster above noted, Cash Flow and Income tax/Income are two different outcomes.

4.  Your major issue in the discussion.  How to go for an Appreciation deal.

You force it.  And you do control the outcome based on your deal and Market analysis.

A.  Buy the oldest ugliest home in a really nice neighborhood.

B. Buy a home that you can split, ADU, or split the land into an extra lot. Move it to STR or MTR.

C.  Buy an empty lot in a development, in a nice area, at the "Correct" time early in the development.

D.  If you're talking Commercial property then the higher your Net Operating Income goes and the leases or quality or renters you have, the higher your value goes.  You do both, you increase your income, and in Commercial that forces the value of the property up.

E.  Let's say you are a dentist or lawyer.  If you take a nice empty property buy it and lease it yourself, you have increased the value.  If you go to sale, they will want you to have a long-term lease on it, so you don't move out.  Or you develop or bring a business into that building.  Could be as simple as an empty building.  You then turn into a Fireworks warehouse and sales location.  You have to be creative, then you create equity.

Quote from @Wesley Peixoto:

Quote from @Henry Clark:

What type of businesses did you do before. I would try to tie those experiences and skill sets to your REI path.

Work backwards from your $300,000 annual target to monthly say $25,000 per month. Then look at different REI to scale to that number.

Keep in mind most REI is a combination of monthly cashflow and appreciation. Recommend you go after both. You can always sale on your date and convert appreciation to monthly cashflow.

Hey Henry! I was involved in a bunch of industries—from wellness and gyms to digital marketing and consumer products. At the end of the day, the backbone of every business is pretty much the same: you need a strong, committed team. And at the top, you need three key people: an artist (to deliver a great product), a manager (to keep things running smoothly), and an entrepreneur (to drive it forward). Plus, keeping things as simple as possible is always a win!

You might look at commercial.  The value generator in commercial is the lease or use of the building.   With your background get the building going.  Lock in a renter then sale.  You will need to scale up versus doing houses to hit your numbers.   

Quote from @Jed Butikofer:

 I have researched as you suggested and found a pretty good understanding of what these property tax sales are and it looks like a great opportunity. However, everything I have found in my preliminary search is via the auctions and it sounds like that's not the way to go. What is the best way to go about finding these property listings online before they go to the auctions?

I’m going to PM my brothers phone number in Italy. Join WhatsApp to call.  The calls are free.  Call after 5 pm Pisa Italy time. Don’t share number or call odd hours.  Tell him I sent you.  Look at properties but then contact me.  You want the best location for making money.  

Quote from @Jed Butikofer:

@Henry Clark When you say Texas property tax sales are you referring to land flipping? If not, what are property tax sales?

 Google and research.  Yes land flipping or use.

In Texas you take ownership of land in 6 months versus houses 2 or 3 years.  Only do land.     
On line look for property listings that aren’t in the auction list by county or city.  
Make the county or city an offer.  You don’t go to an auction.  If $20,000 due offer $5,000.  Then it goes back on the tax rolls.   Look for strategic property.  You can subdivide or it’s a great location.  Then clean up or subdivide and sale.  
 

OP replying to your question in my suggestions above.  To hit $1mm net equity in 5 years you have to approach from mainly an appreciation approach.  Monthly cash flow won’t get you there.

You need to fit this to your family life and financial ability.  You need to approach this from several approaches.  Start small and your snowball will pickup speed.

1.  Get your spending under control.   You already have this covered.

2.  Build cash  Do Texas property tax sales.  Only land.  Only off sale listings not at auctions.  You want to net $100,000 to $200,000 in the next 3 years out of this.  Your wife can look up properties online and you two can make decisions and then offers.

3.  Since you travel.  It will get old if you do the RV move with family.  Find a great Airbnb spot and buy a location.  Stay there in the offseason.  Rent out in the busy season.  Find an RV spot for your family to live while they are out of the unit.  Could be with you or within 20 miles.  

4.  Start an RV park.  Look for rates $500 and up location.  Sell later.

5.  Do Selfstorage and build a managers house your family can live in.  Sell in 2 years and do again.  Go bigger second time.  

Start small and Make Your Big Mistakes Early.

Quote from @Joe S.:

Quote from @Henry Clark:

Prenup from a young persons standpoint I would say no.  

If you’re worth a lot and get married say when your 50 and the partner has very little I would say yes.  

Our son is 23, through a trust we have staged him to get funds at 30 and 40.  Money is worth very little if you wait till they are say 60.  We did another tranche at 40 so by then he will have gone thru life by then.  If he screws up after 40 that’s on him.

OP you’re in Texas.  Worked on a $50mm divorce settlement.  Neither party worked more than a year in their life.  Married 25 years.  Kids out of the house.  Money came from her parents.  In Texas it is split 50/50.  Even though 99% of their initial wealth came from her parents, all assets were commingled so could not isolate any of the funds or assets to make an argument about her being the owner.  Plus 50/50 in Texas to start with.  

If I could give my son one thing it wouldn’t be money.  Would love to teach him Real Estate.  In 10 years he can be net worth $10mm on his own without any money from us.  And no one can take that away from him.  

If it’s a young person, how much Networth would you think would justify doing a prenup?

 I would go with $3mm.  
1.  If you take 1/2 that the young adult has $1.5mm and can still do anything.

2. If $500,000 they should know up front how much will get used up. Let say the new spouse has $150,000 in college debt. Your child should know that up front they are losing that much. If they lose 1/2 of the $500,000 they still have $250,000 and that is still enough to do anything in REI career wise.

3.  If $200,000 or less.  Who cares. That is just a good downpayment on a house.    
   
4.  If they get divorced before they are 30 they have time to regroup.  If they have child support in 2 kids then they are hard pressed financially till the kids are 18 or the parent is early 40’s.  That is why we are giving funds at age 30 and 40.  

Before 30 I would only give them seed money or a single starter rental unit in their name.  They need to fail and learn at a small dollar level.  

What type of businesses did you do before. I would try to tie those experiences and skill sets to your REI path.

Work backwards from your $300,000 annual target to monthly say $25,000 per month. Then look at different REI to scale to that number.

Keep in mind most REI is a combination of monthly cashflow and appreciation. Recommend you go after both. You can always sale on your date and convert appreciation to monthly cashflow.

Prenup from a young persons standpoint I would say no.  

If you’re worth a lot and get married say when your 50 and the partner has very little I would say yes.  

Our son is 23, through a trust we have staged him to get funds at 30 and 40.  Money is worth very little if you wait till they are say 60.  We did another tranche at 40 so by then he will have gone thru life by then.  If he screws up after 40 that’s on him.

OP you’re in Texas.  Worked on a $50mm divorce settlement.  Neither party worked more than a year in their life.  Married 25 years.  Kids out of the house.  Money came from her parents.  In Texas it is split 50/50.  Even though 99% of their initial wealth came from her parents, all assets were commingled so could not isolate any of the funds or assets to make an argument about her being the owner.  Plus 50/50 in Texas to start with.  

If I could give my son one thing it wouldn’t be money.  Would love to teach him Real Estate.  In 10 years he can be net worth $10mm on his own without any money from us.  And no one can take that away from him.  

I’ve lived and invested in Texas and think it is great.

But your local market anywhere in the U.S. is the best place to invest.