All Forum Posts by: Mike McKinzie

Thank you Russell.  You are correct that buying and selling does incur costs.  But as you mentioned, so does a large Cap Ex expense.  My problem is that I have just been holding properties for too long, some approaching 30 years.  If I would have sold some of those back in the 2005-2008 time frame, and then bought in 2009-2011, imagine where I would be today.  I was able to weather the 2008-09 recession because I did nothing and just kept collecting rent. I did buy a few in the 2010-13 time frame, but I could have bought a LOT more if I would have just been cognizant of where my performance actually was.  And while trying to TIME the market is tough, KNOWING the market isn't.  Here is one example, I have as asset that is NETTING me just shy of $1,000 a month (last years net was $11,500) and my Realtor tells me that it is worth about $350,000.00 today.  Let's be conservative and say I net $300,000 in my pocket.  A first year newbie could deploy $300,000 and make more than $1,000 a month today.  Also, let's say I borrow $300,000 to buy something.  At 4.5%, my payment is $1,520.06.  I would be better off being the LENDER than holding $300,000 to make $1,000 a month.  Sometimes, holding, while being safe, is not the most advantageous.

With a lot of changes in our personal life, I have had to re-visit all of our investments. There is no doubt that well purchased and well managed rental properties, whether a SFR, a small multi-family, a large multi-family, commercial, retail or even land, can bring a nice income and build wealth. But one of the toughest questions that I am facing, and I wonder if anyone else faces it, is WHEN to abandon (sell) an asset and redeploy that capital? Therefore, my first question to you seasoned investors is, 'How often do you figure the Cap Rate on the properties you own?' A $50,000 property that you bought in 2009 that rents for $750 is very different if that property is worth $150,000 today and rents for $900 a month. I just added an Excel Spreadsheet column to give me my current Cap Rate and was shocked. Most of my properties are returning a less than 5% Cap Rate. We just deployed some capital into an Apartment Syndication that is returning 8% from year one, and more after that. And while appreciation is nice, it doesn't buy the month's groceries. So my second question is this, "When/How do you decide to sell an asset?" If an SFR is a 15% cap rate at purchase but is at a 4% cap rate today, is it a candidate for selling? Obviously, if you are an 'Appreciation Investor', the Cap Rate is not as important. But if you are a "Cash Flow" investor, the Cap Rate is vital. I would love to hear many opinions!

Todd, you are in the same boat as I am. 24 doors, 9 property managers in 7 states. I received my first Syndication offering last week, looks very promising. I am hoping to be about 25% Syndication and 75% SFR rentals in a couple of years. As I am approaching 60, getting grandkids and enjoying the golf course more, Syndication seems like a good opportunity.

Did you mean February, 2019??

I have been investing since around 1980 but want to get into syndication. I think it's just the process that is a bit intimidating. I was wondering, for those of you that do syndicate, did you invest in some syndication's before you did your own syndication? I am sure that I am an accredited investor, due to asset and income, but it is only on SFR where I have the experience.

Another reason to have a Professional Property Manager.  Of course, when starting out, it is best to get some experience in hands on management.  As others have posted, have a check list or score card or Pro/Con list to use.  A couple of things to consider, when analyzing applicants, do not look at name, gender, familial status, or any other inane criteria.  Next, be consistent when analyzing applicants.  Land lording can become very emotional and thus creating different mindsets during the day.  If you look at an applicant right after learning your recent offer was accepted and then looked at an applicant right after learning you need to replace an HVAC system, you might look at each applicant from a different mindset.  Thus the checklist is invaluable to provide an OBJECTIVE system to analyze applicants.

I do not know if the law has changed or not, but back in my "hey day", the 80s and 90s, on the rare occasion, the deal did automatically cancel if it went past the scheduled closing date.  In most cases, the buyer and the seller want to close, BUT, if either party gets "upset" for any reason over the transaction, the deal DOES cancel if it isn't closed.  We even took it to our attorney at the time, and he told us that the contract terms were NOT met, so the contract is Null and Void.  IThe best practice is to keep all parties informed as to the progress.  If it is going to go over, it is usually knowsna few days before the scheduled close date and it can be re-negotiated then.

I am already staying in Golden, Colorado so I might as well come and network with the other attendee's.  Sounds like a lot of fun.  I keep clicking links but no where do I get an option to purchase a ticket.  How do I make sure to get a ticket?

While not a "home run", it is a solid "single" and a lot of "singles" make for many runs, in the LONG GAME! Also, after 3-5 years, if there are not large CapEx or other repairs, you keep it rented and the property value goes up, what little you may have lost in the beginning will eventually make for a good return.

Fantastic Story.  You have proven that all you have to do is WORK HARD.  I think another big star here is BIGGER POCKETS!!!  No other website is operated in such a way as to help Like Minded investors help, educate and inspire each other.  Brandon Turner, thank you for creating such a vehicle that has helped, and is helping, so many people.