All Forum Posts by: George M.

Yeah...I had to reread this half a dozen times to even wrap my head around this argument. (Its early.  Where’s my 2nd cup of coffee?!)  

Your starting argument is correlating buying a share of the dow Jones industrial average  for $28,000 to an average wage of $26/hr and doing the same thing in 1971 to come up with a time worked / share comparison.

So what are you trying to say?  That the economic performance of the top 30 industrial companies in the US economy are higher than the average US wage than they were 47 years ago?  This spread can be discussed as an argument for the disappearing middle class of America.  However as an argument on stocks vs real estate?  

Someone has a chunk of money ($10k, $50k, $100k+...). Where can they put that to make money with their money?  The stock market is a reasonable option for all of those dollar amounts.  Real estate, maybe not so much on the lower end.  I bought my first shares of stock when I was 17 with $50.  You don’t need to buy a share of the DJIA to invest in the stock market. 

Additionally, comparing time to money returned is subjective.  When I invested heavily in the stock market, I enjoyed researching companies/stocks.  I didn’t consider it work, I really enjoyed it.  Same with trolling for RE properties now.  I spend a ton of time sourcing deals, closing on deals, planning renos, etc.  because I enjoy it.

Be cautious about trading in these properties for “high return” properties.  These are paid off, proven properties, and may be on cruise control. Don’t let greed get rid of a good thing for the promise of higher returns.  Yes he/you can make more money with that equity, but he’s already achieved the goal... he won.

Jorge,

You probably aren’t going to get a lot of support here with being conservative.  A lot of people on this site seem to be “all in” on maxing out leverage.  Maxing out leverage makes sense as long as everything goes as planned.  Many times it doesn’t go as planned. Some people can sleep at night leveraged to the hilt, others worry so much that they analyze to death and never end up buying a property. Do what’s right for you.

Originally posted by @Joe Splitrock:

@Cassidy Farnsworth I wouldn't say anything stopped us from doing our first deal. In fact, from the time we decided to invest to first purchase was probably 2 months. We looked at maybe 4-5 properties before making one offer that got accepted after a counter offer. We talked to three banks, two said no, then we got financing with the third. I read two books, Rich Dad Poor Dad and How To Buy and Manage Rental properties. 

We didn't analyze hundreds of deals over months. It is really not that hard to find an acceptable deal with minimal effort. People over complicate the whole thing. It is called analysis paralysis, which is when you spend so much time preparing that you freak yourself out and take no action. You keep looking for the "perfect" deal, chasing an unrealistic standard that you can never meet. Or you just try to educate yourself a little more, just one more book or one more podcast. You will learn 100 times as much by doing as you could ever read in a book. 

The only thing that will stop you is yourself. Once you understand that, nothing can stop you.

 @Joe Splitrock said it well. Find a good deal and make it happen.   We ran into some potential major issues on our first offer.  

We were nervous about some of the issues, but the inspector actually was a voice of reason.  “There are investors and there are people that want to be investors.  You just have to figure out what you want to be.”  

Looking back, I wouldn’t even blink an eye now at the issues that almost derailed our venture into buy and hold rentals.  We would probably still be looking for the “perfect” house.

We have switched over to the keypads. They are very convenient.

We have a mid sized SUV with hitch and trailer. There hasnt been anythjng that we have done that required a truck. Ive moced appliances, drywall, plywood, snowblower, etc with the trailer. You can get a new utility trailer from tractor supply for $700.

We have been kickin around getting a truck for a couple years now but they’re $$$$. Once we get 9 years on the SUV we will swap it out with a truck.

Student rental profits and headaches are high. Turnover costs can eat you up with property management taking a months rent for placement. It will likely happen every year for every unit. Also consider other typical college shenanigans. 1 BR’s might be less of an issue though since there should be less kids per unit.

@Matt Kauffman thanks for your input

Originally posted by @Frankie Woods:

@George M. No worries! Just remember to stick to actuals and partly ignore pro forma / APOD info. You want rent rolls, 2-3 year tax returns, and lease agreements. You then base your purchase price on the market cap rate based on the NOI. Look for value-add plays where the management is not doing well (e.g., low rents, deferred mx) or you can be creative (e.g., rubs, laundry). Best of luck!

 Thank Frankie.  I appreciate the suggestions.  This is really helpful.

Thanks Frankie.