All Forum Posts by: Michael Powell

Jing,

Some questions I might have is: How much money is the sponsor putting into the deal (aka skin in the game)? Do they have an excellent track record? 

Are you getting cash distributions?  How often?

Mike 

@Minuit Spence

When I was 25, I was broke, discouraged, and cleaning office buildings at night (I had just started a cleaning company).  I used to listen to a couple of audiobooks while cleaning buildings: Jim Rohn's "Art of Exceptional Living" and Brian Tracy's "Thinking Big.  Listening to these books over and over (dozens of times) not only made the task of cleaning buildings a lot more tolerable, but it began to shape my thought process and also gave me encouragement to keep going.

"Profits are better than wages." - Jim Rohn

Two years of blood, sweat, and tears into starting my company I started to gain traction and began investing in real estate.  It takes a lot of financial discipline, but if you persist you'll eventually start seeing your efforts snowball.

Brian Tracy once said in one of his programs that even though most millionaires do own real estate, it doesn't mean that they made their millions from real estate.  In my case, it was my business that enabled me to get the capital I needed to start investing in real estate.

So what I'm saying is that a small service business might be a good idea to get income generation going.  It doesn't have to be a cleaning business, but it should be something that requires very little capital to start with and a high potential for big rewards later on.  It won't be easy, but nothing in life that's worth it is easy.  

We all have a limited time to pursue our dreams - so if not now, then when?

Mike

CrowdDD and 506 investor group are excellent due diligence resources.  Over 1000 accredited investors are members and many share their experiences with sponsors nationwide.

Josh,

Congratulations!  That’s an incredible feat at 37!  I’m the same age.  You’re in a great position.  

I like investing in commercial syndications with experienced sponsors for passive cash flow, tax benefits, and appreciation.  Cash distributions from my experience have come quarterly which is a nice boost in those months.  Ive been in deals with a timeframe between 3 and 7 years.

In addition to equity, you can invest and earn interest in debt funds.  If you have a multi-million portfolio you should definitely diversify across many asset classes.

Mike 

@Anthony J Ruma

Welcome to bigger pockets!  Being an electrician will definitely be an asset as you add to your portfolio!  

Mike

There are many ways to become a millionaire.  Just take the following:

Bogleheads (buy and hold Vanguard Mutual Funds, live frugally)

Money Mustache (earn above average income, live frugally, cut waste, adopt stoic philosophy)

Bigger Pockets (house hack, rent, flip, etc.)

Millionaire Fast Lane: own a business and aim for high income acceleration / sell business at a high multiple

Millionaire Next Door:  Live frugally, save and invest, own a small business or choose the right vocation

Rich Dad, Poor Dad:  Convert earned income into passive and portfolio income as quickly as possible, buy real estate, aim to be a Big Business owner and/or Investor

I like owning a small business for the income it generates and buying properties or equity syndication shares for income + appreciation + tax benefits.  I try to incorporate the best information I can find to my personal situation and get out of my comfort zone at least occasionally.

Mike

Hi Mark, 

When I bought my rentals (in decent neighborhoods), the first tenants I brought in were paying rent just under 1.1% of purchase price.  So it's pretty close.  My cash on cash returns were around 10% in the beginning.  

I prefer to buy rental properties with the least amount of renovation work as possible so I can get them rented out faster.  I improve the properties as needed to increase rents later.  

Your financing or subsequent refinancing will make all the difference in your cash flow.  I had owner financed deals at 7.25% to 7.5% refinanced to 4.25% a couple years ago.

Hi Steve,

If you have over 50% equity in your home, why do you have PMI? Is that not supposed to be removed after you have have 20% equity?

I would call your mortgage company to have it removed.  

Mike

@Dave Foster

Thank you very much!  That was an informative read.  I will definitely pursue 1031 exchanges in the future.  

I was curious about how much a 1031 exchange costs.  Is it usually a fixed cost or is it a percentage of the transaction?