All Forum Posts by: Franky Maslim

snowballing = compounding. Re-investing your profit from your very first rental property into the next deal.

So the idea is that you have a stable income. Living frugally on that income, you use your saving to buy the first rental property. Then you re-invest the profit, including your day-job income, into the property, and repeat the process. Before you know it, you could be a millionaire real estate investor, assuming things are going right.

When we're starting out, the most important thing is education. Getting educated on real estate investing. Getting educated on whatever your day job is, so that you can maximize your income in order to be able to invest in real estate. Without it, you wouldn't be able to invest in anything, if at all, which then makes everything else impossible.

Say you make $100K. Take home pay is then $70K. Say your living expenses (including rent/mortage, bills, etc.) are $40K. So you have $30K/year left to say. Using that money, saving for 2 years, you can buy your first property. Assuming you go the rental route (this is my preferred way of building wealth):

Year 1: Income -> Property 1

Year 2: Income + Profit 1 -> Property 2

Year 3: Income + Profit 1 + Profit 2 -> Property 3

Year 4: Income + Profit 1 + Profit 2 + Profit 3 -> Property 4 (possibly even Property 5)

Year N: and so on, and so forth.

The snowballing/compounding effect can make any serious investor really wealthy.

Now, if you spend the profit on consumption (a.k.a. buying a new house, a new car, clothes, jewelry, etc.), it'll just slow down your wealth building strategy. So it's up to you

Hi BPers,

I wanted to get your opinions and/or ask if any of you guys have experience with buying a condo and making it a rental corporate housing. Is it profitable? Is it too much hassle due to rules, restrictions, etc.? What about the length of the rent, tenant-based or corporate-based?

Thanks in advance for your replies.

Hey guys,

I wanted to get your opinion on a duplex that I'm looking at. Below are the numbers that I'm crunching.

The seller (motivated) is willing to chip in $15,000 for the 2-car garage rehab. So the final price may be down to $54,000 (say I'm going with the listed price for this analysis' purposes) - and it'll also affect the CoC number if we take the $15,000 into account

Price		$69,000
Rent (estimated)		$1,339
Rent/Price Ratio - 2% Rule	1.94%
Income	Rent	$1,339
Expenses	Loan payment	($270)
	Property Tax	($221)
	Property Insurance	($117)
	Asset Management Fees	($141)
	HOA	($120)
Investment (Total)		($29,285)
	Down Payment	($13,800)
	Rehab Estimate	($11,000)
	Loan Fees & Costs	($1,035)
	Acquisition Fee	($2,415)
	Closing Costs	($1,035)
Other Costs (Total)		($6,880)
	Maintenance Reserve	($1,000)
	Stabilization Estimate	($1,824)
	Prepay Tax & Insurance Estimate	($4,056)
TOTAL INITIAL INVESTMENT	($36,165)
Monthly Expenses		($869)
Monthly Cash Flow		$470
Total Cash Flow		$4,230
Cash on Cash Return		11.70%

@Andrew Bishop, @Ryan Johnston - Thanks, guys!

@Joe Villeneuve Oops...somehow, tagging your name on a smartphone didn't work

@joe villenueve - Yes, that 35k is all cash. 20% DP, $10k rehab, 3.5% acquisition fee, etc. Could you explain more how you can get 100% back the first year? Even without PM, that wouldn't be possible. 100% makes the 14% look so small :)

Hi all,

Got a question for seasoned veterans around here. After reading some of the discussions, I'm not sure if I fully understand what makes a good CoC number. The numbers I see are around 20%, give or take some, which to me, seems out of reach.

Let's take a look at this hypothetical property (managed by PM)

Price: $90,000

Initial investment (DP, rehab, taxes, insurance, PM fee): $35,000

Estimated rent: $1,400

Cash flow after expenses (including PM fees): ~$420

CoC%: ~9.5%

Does this number look good? I'm working with a PM, and their CoC numbers are nowhere near 20%. Most are around 5% up to 10%. I must be missing something :)

Great. Thanks, Mark!

Good to know. Thanks, Samantha!

Great. Thanks, Joel!