All Forum Posts by: Russel McMillan

If you are looking to make higher returns and have some spare time, I would suggest the fixer-upper. In my opinion, a turn-key property won't return very much so you might as well put your money into an index fund and let it ride. The turn-key condo that I invested in was a lot less work, but returned only ~4% per year for me. The fixer-upper duplex that I bought has presented many more challenges in learning how to properly fix up and maintain a building but the property is on track to perform very well (around 14% cash on cash). It takes about 5-10 hours per month on average, but I believe that I'm compensated well for that time. (I am new at this though, so I think that time commitment will lessen as I get more comfortable with things.)

And for what it is worth, if you do buy a fixer-upper, I think it's a good idea to manage the property yourself. I believe you can keep your maintenance costs much much lower by maintaining it yourself (with the help of handymen, plumbers, etc.). All the property managers I have spoken to don't do preventative maintenance; they just get things fixed after they break. Best of luck to you!

Hi everybody, I've recently bought a vacant lot that is about .1 acres in size in a suburban setting. Another project has since come up to demand most of my attention (since these will be my first design and development projects) so I won't be able to build on the lot for about a year. So yes, I will now have to pay for both insurance and a lawn mowing crew for the next year. (Not great.) Anyways, I received some quotes for a general liability policy from a local agent and just wanted to compare what others in this forum have experienced. Here are some details about the quote.

-$637 per year premium for general liability

- 1,000,000 per occurrance

- 2,000,000 per year total

If anyone else has been in the same situation, what have they paid?

Also, is there anything else I should do besides maintain the lot, have insurance and work as fast as possible on this other project so I can stop paying holding costs on this property? Thanks!

I would echo what everyone else on this thread has said. Use an excel spreadsheet to mirror the Schedule E. Use a separate bank account account for each property. I only have one duplex and I run everything for that property through the same account. Since I have only one property, I track general business expenses through the same bank account (for things like my G Suite subscription and to pay my accountant). My accountant gave me a spreadsheet to use that is already set up to differentiate between general business expenses and property specific expenses so you can more accurately track how your property is performing. If you have a CPA, maybe you can ask them if they have anything you can use. Also, just for good measure, I use MileIQ to track mileage. I also use Expensify to track receipts. 

I would also love to see some numbers as to how profitable property management is. My boss is considering setting up a PM business on the side. I saw that IREM has Income/Expense Analysis Reports for property management companies that they sell for $250. Does anyone know if these are worth the cost? 

Hi, I'm going to be in the Detroit area later this month to look at potential investment properties (my first). Does anyone know an agent that's good working with investors in the area? I'm really interested in the Ferndale, Oak Park, Hazel Park areas but am open to any areas that you think might be good for rental properties. Would greatly appreciate any advice. Looking forward to giving back to the forums some day after I have some experience under my belt. Thanks!

I'm waiting until I move to the Detroit area in January...trying to think of a way to get started before I arrive...in the mean time I'm just reading and listening to those podcasts

David, I'm dealing with a similar issue. I haven't been able to find anything besides a few savings accounts paying ~1%. I guess this is the flip-side of all the low mortgage-rates out there these days. Short term bond funds offer a higher yield but could go down in value in the short term. 

Pat, if I were you, I would roll the 401k over into an IRA. Then you could explore your options from there. In my opinion, it's very aggressive to pass up on investing in a tax-advantaged account like a 401k, given the tax-deferred growth. It's even more aggressive to withdraw from one, given the penalties. Best of luck to you.

Welcome to BP @Account Closed! First of all, congrats on Princeton architecture! I'm just finishing up at SCI-Arc myself. You're well ahead of the curve in already thinking about REI. I only have experience with conventional financing with the "investment" property I bought back a while back (it was my home that I later rented out.) However, if you can, attend the local REI club or meetups or take some local experienced investors out for coffee, they should be able to point you in the right direction in terms of financing. Plenty of investors would be happy to help a young investor like yourself.

I can speak from personal experience in saying that you should make sure to stick to the 1-2% rule when buying, depending on how your local market is priced. Back in 2008, I had shiny object syndrome and bought a condo in downtown Chicago that definitely didn't meet this criteria even though it was a foreclosure. I lucked out and the market turned around allowing me to exit, but I would have been far better off buying something frumpier out in the suburbs.  

Welcome to Bigger Pockets, Hayden! I would say that you are well ahead of the curve in getting started early. I'm a new investor myself and only wish that I had gotten started earlier. Best of luck to you! I've found that the BP community really is like a big, giant, multi-headed mentor so if you have any questions, just ask!