All Forum Posts by: Account Closed

This is something that really bothers me and I am positive that a lot of real estate agents and brokers could up their game, retain more loyal clients and make millions of dollars. As stated in my previous post, during my 50+ years of purchasing properties every real estate agent and broker only wanted to sell me any property that I would by and regardless of whether or not the property would maximize my ROI. No agent or broker ever did calculations and projections with the exception of showing me the cap rates and financials that come with the listings.

Here is a very classic example. Back in 2008 to 2010 I purchased 24 properties in Las Vegas. I paid an employee to drive and look at the properties, purchased them at auctions and I paid a real estate agent 2% for going to the auctions to watch my back. So, this agent knew exactly what I wanted, but every time she sent me a property that was listed on MLS she told me the property was a great (not hood) investment. Every time I crunched the numbers and told her my calculations showed the property was worth 30%+ less than the asking price she agreed.

So, one day this agent called my on the phone and told me she had a really good deal. It was a small strip with 4 stores and the asking price was $280,000. I did the math, called her back and told her my calculations indicated the property was worth about $180,000. Of course, she immediately agreed with my assessment and a few months later the property sold for $165,000. It is sad to know that brokers don't do the math to help their investors so their clients can maximize their ROI. Incidentally, you can probably find the 4 stores and the price paid. They are the only 4 stores with a post office in Sandy Valley Nevada.

I went to a real estate club meeting this past Thursday and had to bite my tongue two times to avoid arguing. I love good arguments for the sake of learning, but it seems like the gurus and brokers get their business model burned into their brains and there is no way they can be wrong. At this last meeting, two different brokers told me that the big money is in single-family homes. One broker with about 30 years of experience said he never invested in multi-units because single-family properties are easier to maintain, easier to rent and the tenants stay longer. B.S.! I bring my tablet to meetings to show the numbers and the difference when purchasing multi-units. Even duplexes have much higher returns and how would this broker ever know because he never took a few minutes of his life to crunch the numbers and he wanted to argue rather evaluate a business model he never had an interest in learning that could actually benefits his clients who are paying him thousands of dollars for his lame an erroneous, supposedly, professional advice.

The 1% Rule was a dumb rule-of-thumb-dumb calculation never made any sense during any period nor in any state. The only way to determine whether or not a property is a good investment is to do all the math and...

you have to stretch the projections out for as long as you want to own the property. I am finding that 99% of the brokers, real estate agents and gurus, even on this forum, do not have a clue regarding how to do the proper calculations. I go to every real estate club possible and I meet real estate brokers who have been advising people about how to invest for 30+ years and they are pushing investors to stay away from multi-units while claiming that single-family units are better, easier to rent, easier to clean, the tenants stay longer and the ROI is better. B. S.!!! There are too many people (way too many) who do one deal and they are selling the garbage advice for money.

I've been investing for more than 50 years and I made millions of dollars before 2001. Starting in 2001, I met the smarted most-experienced real estate broker who won an award from President Bush for making a certain number of people millionaires in the real estate business. I got a simple business business model and a simple math formula from him and since 2001 I made more than $30 million by investing in real estate.

All you gurus are missing the boat and I never read in any book, nor saw in any podcast, nor heard during any over-priced workshop what I am going to tell you.

THE BUSINESS MODEL - Purchase only the properties that will give you a 50% to 100% return on your money within 1 to 2 years. That means, you want to double your investment capital every one to two years.

How is something so difficult accomplished? By setting this goal, having the mind-set, looking at as many properties as you need to, by taking the time to do the simple math that no wannabe guru taught you.

How do you make 50% to 100% every year on your investment capital? When looking at single family properties you need to purchase properties that are undervalued and/or you make up part of the difference with cash flow. Suppose, a seller wants $160,000 for a home. You offer $110,000 and the seller comes back with $120,000. You purchase the home with $40,000 down and the day you close escrow you just made a 100% ROI on your money. You rent the property and get a $4,000 annual cash flow. At the end of the first year you earned a 110% ROI. Keep the property for life, or put in on the market without a real estate agent, sell it and start over again. If you live in the property 2 years you don't pay capital gains tax.

What investors are not doing? They look at the ROI when they purchase single-family properties and they don't stretch the ROI out for 1, 2, 10, 20, 25 and 30 years. By doing this an investor can see that with my business model you can earn 50% to 100% on single-family properties every 1 to 2 years, but after a few years the ROI starts to average out to an overall average of 10% to 14%.

Now, we get into another area. Most investors have the mind-set that they will buy several homes, have the tenants pay down the mortgage and they will be on easy street. This is a lame business model because you don't get rich by collecting rents. In 30 years, the rents you collect is just a little additional income. Especially after considering your average over 30 years was only 10% to 14% and the cost for everything 30 years from now is 5 to 20 times more expensive.

Here is another thing nobody tells investors. You can purchase multi-unit properties for 30% to 40% less per unit, get the same amount of rent, more cash flow per unit and the profit you earn can exceed the entire price you paid for the property in 3 to 5 years. Using 30% to 40% less than you pay for single-family homes you can earn with multi-units a 40%+ average ROI over a 30-year period compared to a 10% to 14% average ROI for single-family properties.

How can this much money be made with multi-units. It is done by having the right mind-set with the goal to achieve this, by taking the time to understand the reasoning and power of the Gross Multiplier, by doing projections starting with the day you close escrow and increase the rents, by calculating your annual rent increases and calculating annual profits when factoring your Gross Multiplier and by stretching out your projections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 20, 25 and 30 years. I have a software program that does the math, but BP will not allow me to give it away without paying to be a Pro Member and for advertising. So, since I am not going to pay $600 to give information away you can ask me how to do the math and I will see if I can help, but you don't have to be a rocket scientist to do it.

If you are referring to my post it reads, "they need to take the word 'lord' out of rental property ownership".

Too many rental property owners get some sort of mental problem as soon as they own one rental property. Maybe the problem is called an ego problem, superiority complex, Napoleon Complex, or maybe they really think they 'Lord Over People'. I don't use the word 'landlord' and you will find articles in several apartment association magazines that recommend avoiding the use of the word 'landlord', but I stopped using the word more than 30 years before I ever read an article about avoiding it.

Unless I just learned something, renter's insurance is a policy that your tenants purchase in case their personal are damaged inside your home. Your current owner's insurance policy does not cover your tenant's personal property should the house burn to the ground, or the roof blow off in a storm and your tenant's personal property gets damaged. You still need to pay for your current policy that is required by the bank.

With the little information provided and the small cash flow you currently have and the small cash flow you would have purchasing a 2nd property I am fairly positive that you are taking too much risk. Your situation reminds me of Burning The Candle At Both Ends. You will not have enough of your own Hand In The Soup and you are taking a huge risk with property management companies. A co-investor recently had an experience where a property management company in Idaho literally disappeared with $18,0000 worth of rent checks and security deposits. Even with the money gone, it doesn't make good business sense to pay attorneys to try to recover the money because after spending money and going to trials you can't squeeze blood out of a rock.

I love your enthusiasm about the business, but I am a strong believer in limiting risks. Not taking risks! I live by the rule that, "We Don't Live In An Ideal world" and Murphy's Law, "If It Can Happen It Will". It is very hard to put significant amount of money we earn in savings accounts and it takes only a few seconds to make the wrong decision that wipes out what took a lifetime to save. I never make my decisions based on another person's opinion. The only time I make an investment decision is when I am 100% positive that I have found the right deal and positive that everything will be favorable.

Bottom Line? Don't be anxious to invest your money. There will still be good deals when you get back and maybe better.

It looks like you may need a small wad of cash in the bank since your new rent income will be $1395 minus $140 for management = $1255 - $1125 = a tiny $130 cash flow. I am hoping the air conditioner, or furnace, or water heater does not go on the blink. I hope you don't have to wait more than a few weeks to get a tenant to move into the property if it is already vacant, or the tenant breaks the lease, or if the tenant decides not to pay and you have to lose several months rent and even pay an attorney.

Be careful about getting a few tips pointing to how simple it is to make money in the real estate business and thinking you can walk on water. Always calculate the risk and be prepared. Otherwise, when you leverage money to maximize the number of properties you purchase when things don't go as planned your empire comes crashing down like dominoes.

If you have the cash, I have been looking at Texas for several years and the numbers look much better than 
Denver because you can control more properties for less money and the home prices have been steadily rising. Comparing with Denver and when you don't have bundles of cash you can purchase a greater number of homes.

It is often better to have 2, or 10 homes financed and increasing in value vs 1 high-priced home increasing in value. Although, that statement is not entirely true because a $2 million home on an ocean from property will (most-often - hopefully) increase in value many more times than 10 dumps in an undesirable neighborhood. But, not everyone can afford to dabble in multi-million dollar properties.

Unless you purchase single-properties at great discounted prices, multi-unit properties, even duplexes always (most-likely) produce profits 500% more than single family homes because multi-unit usually cost 30% to 40% less per unit. The rule-of-thumb value for multi-unit properties is based on gross annual rental income and the increase in value increases exponentially every time you raise the rents. In fact, when purchasing multi-unit properties it is often possible to earn back every penny you paid for the property is 3 to 5 years. 

Sounds more like a party than business meeting? Is there a special room or area where investors can speak to an entire group and get all members' attention. Is there a computer setup with a display screen?

I would like to put together a think tank at my office where members can actually work, learn and train each other on their own deals and teach and help with other members' deals. Members can do everything including data mining, prospecting, crunching the numbers, deciding which potential purchases give the best ROI short and long-term, whether to buy single-family or multi-units, writing letters, sending bulk email, writing offers and do everything it takes to the day there escrows close. If interested, contact me. I may come to you meeting to see what's up, but keep in mind that a lot of words fly around during network meetings and there is no productivity. I have a setup large enough for small groups to work with each other to make it happen and I am thinking that members can come any time 6 days per week. There has to be a better way to make meetings more productive.

Thank you very much! I never heard of that. Back 50 years ago, we got loans against our savings accounts. I run several large properties, run a construction with 60 employees and have about $1 million in all checking accounts, combined, at all times, but when I want to mortgage a property, or buy an expensive vehicle I still have to submit financials and tax records for every property and the construction business I own.

In fact, I get very angry with the banks that finance my large multi-unit properties because every bank does a financial audit, every year, and I have to submit every tax record for every property I own , my personal tax records and the financials and tax records for my construction. Every year, I have to submit the same amount of records as when I wanted to get approved for my original loan.

So, I wondering why a bank would give a loan for the amount you are asking based on only deposits, or average balances when I have $1 million in average balances and still have to produce every tax record.

I just like to gripe. So, be patient, but another gripe I have is when I forget to submit the financials for one property I own, or when I forget to submit bank statements for even 1 checking account that has a near zero balance the banks catch those errors every time. It sort of annoys me to think they have the ability, or really take the time to find a property I did not report, or to find an insignificant checking account I opened and never used.

Lots of luck with your loan.

Are you using the money for investing in real estate? If so, contact Zinc Financial. They give loans up to 70% with no requirements for your records and they will finance 100% of a flip if you want to give them a percent of the profit. I don't think I am allowed to put their phone number in posts. They also do long term loans.

The best thing for flipping is to pay cash because you lock in more deals with bigger discounts and then go to Zinc Financial for the loan so you can do the rehab, or buy other properties. 

I am in Gardena California if you need anything.

What is a bank statement loan?

Maybe, landlords who write those types of things should not be warned about what they write so they do get sued. While I love the real estate business I am also 100% against landlords who mistreat their tenants in any way. Tenants rent properties because they don't want the hassle of running the property. They don't want to have to deal with maintenance issues and other things. What do many landlords do? They blame their tenants when drains clog in 100-year old drain pipes. They blame tenants for sewers clogging when the sewers are infested with tree roots. They blame tenants for rodents when there are holes in all the walls and screens where rodents get access to inside the home.

i find that a very high percent of landlords hate their tenants with a passion. My philosophy is; renting to tenants is a business, should be treated like a business where service is provided and if a landlord hates doing repairs and dealing with tenants then get out of the business.

Sorry, but they need to take the word 'lord' out of rental property ownership. i always tell my tenants I am the Property Owner or Building Owner. I always call my tenants Residents on all my leases and on every letter. I always tell my tenants to notify me when there is a plumbing or electrical problem and I tell them not to worry about being blamed because as the owner of the property it is my obligation to make sure that everything is functioning as is expected.

Treat your tenants with the respect they deserve and the way you like to be treated.

You are not obligated to pay for the mold testing. Especially, if the report came back negative. Put a mold clause in your rental agreement. Use something similar to what I wrote, or pay an attorney a few hundred dollars. It is a great feeling to at least think your rental agreement protects you when any type of issue comes up. My rental agreements / leases are about 24 pages.