All Forum Posts by: Fred Cannon

The government and the politicians take credit for bringing back the economy after the big bubble burst @ 2008. If fact it was the government that probably cause the issue by demanding loans to most anyone for little or no equity. It was investors like BP members willing and with the cash to bail out the banks. Sure we may have gotten great deals but the properties I bought required a lot of rehab and then brought in low rents. It took about 3 years after buying a property to get a decent return on the money that was invested and in took courage to pay cash for the purchase and the rehab. With RE it’s always about risk vs rewards, and about timing. As the saying goes. In RE you make or lose money when you buy not when you sale. Just want to give a shout out to all the investors who came to the rescue when it looked like the end of capitalism.

@Nathan G. Yes a lot learned in a very short time. I have expanded to six rentals now and still make mistakes but keep learning. I am a much better landlord and I have much better tenants. Who the heck labeled real estate as passive income. It would be nice to just sit back and collect the rent every month for sure.

@Nathan G. My first tenant was a disaster. I knew nothing about screening tenants, just knew I had just purchased a condo and thought I desperately needed a tenant. Two days later I had a walk by. A single middle aged lady that on the surface seemed nice. So we signed the lease. She gave me a check for the deposit and two checks for first months rent. The next morning she called and asked if I would hold the deposit check until Friday. I guess you know the rest of the story Two months later I am still holding checks after the first one bounced. By then she has moved her daughter and grandchildren (2) into my 1/1. The way I got her out is to threaten to cash all three check and then turn her into the sheriffs office for writing bad checks. She begged me not to do that because she was on probation. Ha, I am the sucker that is born every minute. I gave her three days to vacate and she was gone. Lessons learned

1. Always do background checks

2. Never hold checks

3. Evict as soon as possible

4. Don’t let your emotions make your decisions. This is a business and treat it that way

@Nick Macklin. Referrals are a good start. If you can start with a small job to see how that goes. Say maybe paint a room or tile a bath. If that goes well give them another or ask them to bid on another job. Hopefully you find a good resource that you like doing business with and can trust if you are doing a major rehab find someone who is bonded and has been in business for awhile.

@Jasmine Hu check out Murray Hill area. Lot of possibilities there. Most SFH in the 150 range that is turn key It's a neighborhood next door to 5 points and is up and coming as they say. Young professionals are moving there because 5 points and Riverside have gotten to expensive. It will be hard to cash flow in 5 points unless you find an ugly dog with potential. Also make sure of the neighborhood. Some can be a little rough over there.

@Daivis DeJesus. If you are using hard money and the note comes due you will be up Shiffs creek without a paddle. You should be using conventional financing and the deal works pretty good. I hope you can hold on to this deal.

@Jake Hottenrott

Thanks Jake. I thought I was posting on the local board of BP but looks like I went national 🙂.

Looking to change CPA/Tax accountant. Any suggestions. Also retiring in 2020 and want to put 401k money into self directed IRA.

@Nathan Shankles. I try to use the 8% to 10% rule but the rule is not based on the purchase price but on my money invested. If I put $50,000 down on a $200,000 property then I want cash flow minimum of $4000 per year. If I can’t get that why bother. I can get that in the stock market but don’t get the tax deductions. So basically I do RE for tax deductions. The market is much more passive and liquid and at the moment outperforming RE. RE income is classified as passive but owning rental properties is not a rocking chair activity. Plus it is not liquid money. The day the government takes away the tax breaks given to landlords with be time to cash out. So be aware of who you vote for. Not a political statement but a business model statement.

@Marduk Mooshoolzadeh. Seems like a risk to me unless you join a syndicate. I would suggest find a friend that wants to invest to share the risk. Not sure you can get thru closing with 10k for down payment and closing cost and on top of that to expect to cash flow. Put that in to an after tax mutual fund so you can withdraw without penalty or buy short term CD’s. Borrowing money cost money and the banks don’t fret about taking your property from you if you fail to make payment. With 10k to invest you are just one big repair from losing that 10K. Say a big storm comes thru and a tree falls on your roof. You lose your tenant for 6 months or longer because they won’t live there, the insurance company will not pay up without a long delay and the bank is saying on the 5th of each month pay your mortgage. I love to invest in RE but I want the risk that I can handle. I will never be a multi millionaire from my investments but over a long time I have done well And if the big bad wolf comes knocking at my door I can let him come and share a glass of wine and send him on his way. Personally I don’t invest unless I can put 50% down and cash flow 10%. RE may be considered passive income but my friend if you are passive about your rentals you will wake up to a nightmare. Good luck to you.