All Forum Posts by: Doug Pintarch

Alright, so it might not be "breaking news" but it's news to some. So many of the threads and forums I've read since joining BP in 2018 have pushed the power of leverage and maintaining a high LTV to boost your ROI and grow your portfolio faster. There is a faction of investors on here that have steadily urged caution and cited the risks vs rewards of leveraging up properties without adequate reserves, but in my observation they have been in the minority.

While I’ve always erred much more on the conservative side, when refinancing recently I struggled with the decision of whether or not to pull out as much as equity as I can and leave 20% down or stay more conservative to enhance cash flow and keep my leverage down. After running a lot of numbers, I ultimately decided to be more conservative and keep 30% equity in the property and use the cash out money primarily for additional reserves. The most recent turn of events has further affirmed that decision by giving me more long-term flexibility.

Now, I am seeing a lot fewer people on here advising people to max out LTV and many of the "conservative" investors are looking like RE oracles right about now. When I discussed my decision not to maximize my cash out at my last RE meet up, I was surprised by how peppered I was with remarks about missing out an opportunity to cash out my equity to buy more and the insinuations that I'd made a rookie mistake. While there are good reasons for and against higher leverage, this time serves as yet another good reminder of the importance of risk mitigation and reserves.

The downside of lower leverage is it decreases your return and slows down growth. The downside of high leverage is that you could grow too fast and lose your investment(s). I like the former more than the latter. We’ll see what changes come about in real estate on the other side of this pandemic, but hopefully investors as a whole will see how quickly unexpected events can occur at any time and put a little more importance on reserves and financial flexibility. You can’t thrive if you can’t survive.

Well put again, Scott. Plenty of small businesses are starting to crumple in my area. Far too many of them were great at daring risk and terrible at preparing for adversity. It's all a big show of positive thinking and cheerleading and inspiration until two or three good body blows bust them up proper, and then they curl up in a little ball and it's no-mas and pass-the-buck and listen-to-my-sob-story from that point on.

Jim - Agreed about the big show, and I am seeing some of that here in the Harrisburg area with crumblings...and I find myself clamping a hand over my mouth (Sometimes literally) because I want to yell "Why the hell did you buy that"?!?!? or "What did you do with all your cash flow"?!?!?

My sympathy meter in these cases is pegged at zero.

We have our two measly STR condos and have splurged on exactly one celebratory dinner for the end-of-year meeting with the four of us. The rest of the cash is just sitting in a pile in the bank...

3 Votes

Originally posted by @Nathan Gesner:

Originally posted by @Bruce Runn:

@Joey Copper

No one will care about my property/cash flow as much as me.

This is the mind-set that keeps my company growing! The majority of owners I pick up are the DIY type that think they're smart by doing things themselves and saving money. They avoid paying 10% but they lose a lot more than that by not keeping up on market rates, longer vacancies, lower-quality tenants, rougher turnover, unpaid rent, etc.

I share examples all the time. Woman bought five properties and managed them herself for five years. Between vacancies, damages, and unpaid rent, I estimate it cost her close to $100,000 in that five-year period. If she had hired me, it would have cost her $6,000. When she did hire me, I evicted every single one of her tenants, I spent thousands renovating each unit, I bumped rent 25 - 50%, I placed good tenants, and last year she made almost double what she's made in any other year AFTER paying my fees.

No property manager is going to drive by the property once a week or pull weeds from the sidewalk every time they drive by. It's unlikely the property manager will remember every detail about your home as well as you because they have other things to think about. But there are many things a PM can do that private Landlords can't and it shows in my clients' bottom line.

Nathan - This post is in my opinion the single best argument for a Professional PM. We have 2 condo's so there is nothing "Outside" that we need to worry about, just interior maintenance and supplies and cleaning. Our plan with these 2 is a pro cleaner each week on a different unit, that way we still clean every week and see in side our units every other week ourselves. This will be during the summer season (If there still is one this year...).

After our 3rd STR condo we are figuring on a cleaner full-time.

Great post!

1 Vote

We have managed our Short Term vacation rental from 3 hours away for the past 2 years, and just picked up a second one in March (Yes, mid-covid!!). At $120 - 140 each turn for cleaners that aren't going to clean it like we will would have cost us over $6000 last year. That's ALL cash flow we'd rather keep, and we get a Sunday at the beach every weekend (short walks or lunch, but it still counts) :)

Nice post, but the hard-yet-still-subtle sales pitch doesn't work on me. MY money, brother. :)

4 Votes

If it ain't broken, Marci...

I am a big believer in sticking with something you are good at, (Or at least getting better at in my case...Ahem.) We are talking about selling both condos in 2 years and buying a "Fatter" SFH closer to the beach, but for the extra expense and labor and the same relative cash flow...why?

0 Votes

I have 2 pieces:

Your losses only become actual if you sell.

In the whole history of recessions, none of them have ever lasted forever!

2 Votes

Folks, PLEASE delve into research in here on Morris! THERE IS NOTHING LEGIT ABOUT HIM OR ANYTHING HE HAS DONE!

0 Votes

No.

That's the term, it's already part of the RE vernacular and is instantly translated by the listener when it's heard.

4 Votes

Originally posted by @Jon Motsenbocker:

Do we suck or do most of you wantrepreneurs tell us a bunch of BS so you can get free comps and never use us to buy or sell? I'm sorry if you haven't had a great experience with agents in your neck of the woods...but please don't lump us all into the same boat...and I don't work for free, sorry if that upsets you!

Jon I am absolutely stealing your term. Outstanding!!

1 Vote

Good advice @Kim Lisa Taylor. We have 4 members in our LLC but only 2 of us have access to any accounts, and we check repeated times throughout the week on our balances just out of habit. This should curtail any shenanigans right after they would start...hopefully!

0 Votes

Originally posted by @Logan Hassinger:

@Jeff S. It’s sad the amount of time these scammers put in to their “business” and I can’t help but think how successful they would actually be if they spent the same amount of time on a legitimate business venture.

There will always be people like this so it is what it is. I’ll send you a PM to discuss further.

Logan I agree. If these guys spent their creative theft time productively we'd all be living on Saturn and the common cold would be a distant memory. I'm glad you're on this hard, scary stuff using your picture even. Hopefully anyone interested in their scam will do some checking and find the real you here!!

0 Votes

All Forum Posts by: Doug Pintarch

Doug Pintarch has started 0 posts and replied 359 times.

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