All Forum Posts by: Account Closed

We own several apartment buildings and the first thing we remove at every building is the system that allows tenants to buzz someone in. We install only an keypad where someone enters the digits, the door buzzes and opens.

We do this to keep our maintenance of entry systems simple. Phone entry systems are expensive to purchase, expensive to maintain and they require constant updates when tenants move or change phone numbers. A high percent of tenants don't want people they don't know to have the ability to have a door entry system ring their phone.

Today, everyone has a cell phone and even delivery men (and women, too) call their customers on the phone and the tenants either give them the door code, or run to the door. 

We use the

I need a lot more information to understand your ability to weather the storms. I am not an advocate for leveraging yourself into a position where your empire crashes down upon you like a stack of dominoes. When leveraging there is the possibility that you lose both your investment and personal properties all in one swift swoop.

So, I would need more numbers to understand what the rental income will be, how much extra cash you have in the bank, or are earning to pay the mortgage when it does not rent as fast as you thought, or you cannot get as much rent as you planned, or your tenant both fails to pay rent, thrashes the place to the tune of $10,000 and it takes you 9 months and costs you another $5,000 to get a judge to remove him from the property.

This is my philosophy and I've made millions and millions in real estate over the past 50+ years. I never re-financed  or took cash out of a property so I could purchase another property. I may be a fool and 100% wrong, but my philosophy has always been to reduce risk so that I move only forward and never backwards.

Throughout my life, I met many investors who I idolized because they were re-financing their properties and hogging up everything they could get into with their leveraged cash. Later, down the road, a high percent of those investors lost every property they had their hands on and this happened for many reasons e.g. changes in the market, mental inability to manage the properties, illness, etc..

My biggest question is; will you have the money to back yourself up if (when) you ideal plan is not as ideal as you thought it would be.

Your words 'extremely excited' scare me. Excitement makes me think of 'anxiety' and both excitement and anxiety makes investors blind. These make think that people can see only the positive things they want to see and they block out the risk factors. If you have to ask someone else questions about your investing decisions so you can re-assure yourself that you are making the right decisions then you are not ready to make any investment decisions. You will be ready to make decisions when you have done so much research, crunched so many numbers and look at so many properties YOU will have so much knowledge you will be positive you are making the correct decision you will be 'in the zone' where you are telling other experts what is the best and right thing to do.

What area do you live in?

We always find the internet services we pay for provides the best methods to research the property owners names, addresses and sometimes the phone numbers. The best website we found and use daily is propertyradar.com. It covers several states including Arizona, California, Nevada, Oregon, and Washington. If it does not cover your area there are many other services.

Propertyradar.com is the most powerful real estate website I've seen. I have real estate brokers who get angry when I tell them that I can look up more information than they have access to and can even do it faster. you have to watch the tutorial videos to see what this website can do. 

Hope I don't get into trouble for this post!!!

A high percent of successful investors already have a lot of money that was earned by working, inherited, or received from some other method and then they invested their money in real estate.

There are a few investors who have the talent to put together a real estate syndicate with very little of your own money, but you need to speak with an attorney who specializes in syndicates and you had better abide by the laws or you can end up in jail.

I would like to see more of the numbers that show this property can cash flow enough to pay more the investors more than $4500 per month, plus pay yourself, pay for maintenance, vacancies, insurance, property taxes, attorney fees, bookkeeping, etc.

It appears that you want to be a Syndicator and there are many laws that can send you to jail when doing a deal like you describe. If you don't end up in jail you may end up with so much costs for legal fees you will see jail as a better place to be. Believe me! I've been in these hokey partnerships two times and ended up suing the general partners both times because, sad to say, most people in this world fail to perform what they promise.

The type of partnership you are writing about rarely ends well. 

Speak with an attorney who specializes in syndications.

Whether you tell the tenants or not you are the owner is a discussion that has been brought up many time. I believe that being 100% honest about everything you do in life is the best policy. Then, everyone knows exactly where they stand. I rented apartment when I was young and the managers tried to hide the identity of the owners. I hated that game with a passion. Landlords can benefit dearly when tenants can report the things that managers do wrong. I have a 25-unit apartment building next door to me and the manager is higher than a kite 24/7. He rents apartments to friends and keeps the cash. He parties until 6 a.m. and blasts thumping music that can be heard a block away.

As a landlord, I have no problem with being the decision-maker. I have no problem with knocking on a tenant's door and tell a tenant to remove their trash bags from the balcony. I prefer to get firs-hand information from everyone vs. taking a chance that my manager is not telling the truth, or is mis-managing the property.

But...for every apartment building I purchased the first task on my list is to evict the property manager. We manage our own properties and we tell the tenants we are the owners. We give the tenants all our phone numbers. We want our tenants to call and complain when they have a problem. Tenants rent apartments because they don't want to have to worry about repairing the plumbing. They don't want to worry about all the things a property owner has to deal with and as a landlord we don't want our tenants to worry about being blames because a drain clogs. We want our tenants to call us in the middle of the night when there is even a tiny leak because this show us that our tenants care about their landlord's best interest in regards to preserving the property.

I am going to put this notice at the beginning of many posts. Many of my posts tend to tell people what they cannot do. It is very difficult to earn and bank bundles of money. There are millions of great ideas for making money. At the same time, one mistake can cause the loss of what took a lifetime to accumulate. The very first thing most investors tend to look at is the great fortune they will earn from an investment. If you want to be successful the very first thing you need to do is calculate the risk. 

I already know how to lose money. I lost almost exactly $1 million two times. The first was an investment in a limited partnership that consisted of two K-Mart shopping centers in 1985 and the 2nd was by trusting stockbrokers with my investments. What genius would ever think that two K-Mart shopping centers would result in a loss of $1 million when K-Mart had lease agreements for 100 years for both of the properties and at the time K-Marts were booming. I even paid an attorney and a financial investor a total of about $1500 to do due diligence and the investment offer passed with flying colors. So, every time I hear from someone that they know, for a fact, that their investment idea is foolproof I feel the need to explain that assessing the risk is difficult and the most-important aspect of investing.

How many times does it take to understand that investors should never rely on or trust someone with your money or to think that a partnership is a sound and foolproof way to invest your hard-earned money.

Very rarely, do partnerships work out. The only thing the best partnership agreement in the world will do is give you more issues to litigate in an expensive lawsuit.

I will give you an example of what can happen even with the best partner in the world. I have a current partner, a woman who is a super religious Jehovah Witness and she would never ever do something wrong to someone angry. Between 2001 and 2003, this woman invested 10% of the down payment in a 28-unit apartment building, 10% in a 24-unit and 25% in a 14 unit. Our partnership agreement stated that she would get the same percent of cash flow and appreciation. 

During the past few years, this partner decided she wanted a little more money so she could travel the world and this was good thing for me because it gave me the opportunity to buy her appreciation a little at a time and without having to sell a property. So I paid her double the amount of money that was stated in the partnership agreement.

Yesterday, I took her with me to an attorney to work on my living trust and to discuss have the attorney counsel her and write an agreement so there will not be a problem when I leave this world. Our attorney told told her that if she lets me buy her out somewhere down the road she will be liable to pay capital gains tax. Now, she wants to get another attorney involved to resolve this new concern. This is not really a serious problem, but it is going to cost a little more for attorneys, take a significant amount of time to resolve and is it makes me a little angry because I did not need one penny of this investor's money to buy the properties. I let her invest only because she had the cash and I wanted to help her as a friend.

So, regardless of how perfect you think your partnership is there will always be issues that arise. Some you can resolve. Some you cannot resolve and that is when you realize the honeymoon is over and you need an expensive divorce attorney and partnership breakups can be more painful that a divorce.

What happens when Partner A wants out and Partner B can't get the cash to pay so they dump the property for a flea market price. Partner A buys a light bulb and Partner B is furious because he was not invited in the decision process and because Partner A paid one dollar more than it was at another store. Then there is The Blame Game. For every little thing that goes wrong it is because of either a bad decision and Partner A and Partner B are constantly angry with each other's incompetence.

I like to have 100% control of my money. At the same time, if I had a partner and the money he invested went south I would feel guilty for being part of the decision process that included statements like, "I am positive we will make a profit with this investment." Only a fool will make in investment if he is not positive. Then why does something like 95% of all new businesses fail. And...you had better start believing that a lot of real estate investors lose money and many investors' egos cause them to inflate their profits even when their profits are negative.

I will sit on my investment cash until the end of time when the risk-to-reward ration is not highly favorable.

Overall, I will partner with someone like my woman friend who is super passive and since the day she invested in 2001 she never asked me one question about the book keeping, never visited one property and never asked one question about more than $2.5 million worth of remodeling that was done to the 3 buildings. At the same time, if something went wrong with our investments I would pay her back every penny even if I had to sell my personal residence because I would feel guilty if I told someone an investment would work and it failed.

Call the banks, trustees and beneficiaries when you can find them on the foreclosure list. It takes a lot of time and patience. I don't have neither. So, I pay someone $20 per hour plus 5% of the profit we earn on a flip, or I pay 2% of the a property's purchase price if I am going to hold it for a long time. 

Trying to buy through probate has to be the most-difficult and take the longest time time to find real estate. You have to wait for families to dispute their claims to the properties and it can take several years.

Foreclosures are much easier to deal with. Go to the auctions, or find lists of all the properties that went to the auction and nobody bid on the property or won the bid. Since the banks and beneficiary trustees are still in a jam and want to dump the properties you are in a good position to negotiate.