All Forum Posts by: Jason Howell

Hey @Justin Fraser, I've been watching your YouTube videos both leading up to this deal and after the deal was done. 

I know you posted just this portion of your talk at the REI but I'd love to hear the whole story if the full video exists. I understand if that's not possible but thought I'd ask! And anyone interested in more background on Justin's deal should watch this:

https://www.youtube.com/watch?v=sYG3r4Gq9Lw

Again, great work. Very inspiring. And shows how you leveraged the amazing resource that is this very forum to make the right connections and foster relationships that enabled this deal to happen in the first place.

I am on the fence on signing up for this course: https://courses.propertymetrics.com/join/iaf/

I'm in a highly active and regimented education-focused period right now and one of my big interests is leveraging some personal relationships I have to get further involved in commercial real estate investing, but its the fundamentals that I know I need work on right now to prepare for that. 

I had already signed up for a course at the local JC to fill my time this next semester, but this course offered by PropertyMetrics on this particular topic costs about the same as the class I was going to take, but focuses more on commercial real estate investing.

Curious to know if anyone has any experience with the courses offered through them? Thanks in advance!

Thank you. OK, so if CapEx on SFR is overkill, then that would technically free up the 10% that I have been saving for CapEx every month. What to do what those extra funds:

1. Redirect that extra 10% into the repair fund to get it up to 6 months worth of coverage funds ASAP (essentially would be throwing 20% per month into repair fund... that sounds like overkill)... 

2. Or I simply save the original 10% for repair over time and expect that somewhere down the line it will be filled to 6 months worth of rent coverage. Use the 10% CapEx I've been saving for extra principle paydown.

This is what I struggle with. In my mind, it's hard for me to take that extra $$ and apply it to principle when the backup reserves aren't yet fully funded.... (In case I need it!) But principle paydown is important too, so maybe I should adjust that line of thinking.

I have bought four properties in the past year and prior to purchase, ran all numbers based on budgeting 10% for repairs and 10% for CapEx expenditures. These were acquired via turnkey, so in nearly all cases, all big ticket items are relatively new (within the past few years), though there is one instance where the water heater is a bit older and will need to be replaced in five years or so. So I realize that CapEx budget should reflect the reality of replacing those big ticket items by the approximate time their useful life is up which in most cases is far down the road.

But I struggle with this idea that I want those funds full NOW and not slowly accumulated over time. If I have extra money, I've been throwing it into those funds to build them up, sacrificing the HELOC principle paydown that those extra funds could be directed to.

Is 10% for BOTH repair and CapEx overkill? And how do you determine whether your extra money goes to principle pay down or building up those funds? I'm considering dropping CapEx to 5% to increase principle paydown but part of me is hesitant to do that to protect myself in the long run.

On an unrelated note, I will say that the repair funds that have accumulated have already been used on a few properties and it was really nice to know I had those items budgeted for from day one. I didn't feel it when it happened, just utilized the repair fund for each property to make up for the shortfall in rental income and moved on. YNAB is amazing for managing all of this easily IMO.

Very inspiring @Justin Fraser, thank you for sharing! I think a critical element that I'm currently knee deep in trying to figure out for myself is making that key connection that can be your window into the process first hand, and offering a piece of the deal in exchange for that one on one support is a fantastic idea. But that couldn't have happened if there was no deal in the first place, so kudos to you for making the OTHER relationships prior to that that led to the deal being presented to you in the first place. Seems to confirm the fact that finding the deal is the most important part, cause once you have that, you'll do what you need to do to get it done... and in this case, that involved reaching out to someone to be your mentor along the way.

Great stuff and CONGRATS.

Say you have a property management company managing one of your properties and you notice that the tenant is regularly complaining about something particular... Kitchen sink is slow, or keeps getting clogged. Property management company is authorized to act on these automatically without clearing with you first if the cost is under a certain threshold. So they send someone out and that person fixes the drain and tells them how to fix it themselves next time. Tenant again contacts the property management company later with the same issue. Each time someone is sent out there, it costs $60 to treat.

At what point do you just replace the sink? Or do whatever it costs to fix it for good? I guess I'm curious what your own threshold is before you say as the property owner "just replace the damn thing, eat the upfront cost, and stop sending someone out there to unclog the sink."

 Best of luck, and enjoy the journey!

I know its probably easier said than experienced first hand, but everything happens for a reason. You've shown other investors the value of keeping your head high, persisting, evaluating your OPTIONS, and picking the one that sets you up for success as you move from a bad situation to a better one. Especially choosing the option to get OUT instead of showing how you can turn it around... in the end, that obviously was the right direction.

All the while, you learned valuable lessons that you will carry with you on all of your investment opportunities going forward, many of those hard learned through experience and those stick with you even more than those you read about. And your willingness to share the journey with everyone here has literally LITERALLY saved people thousands of dollars along the way. Bravo, and looking forward to your continued journey here. I really hope you'll continue to keep us updated. After all of this, we are invested in your journey too! Cheers. If you ever wanna talk Indianapolis REI, hit me up. :)

This is a terrific answer! No doubt, I would look into this with a professional if it were to happen. To be honest, I'm not in a position at this moment where I'm considering participating in a syndication deal... I'm much more interested in being close to the structuring of a syndication possibly. (But obviously I have a lot to learn!) It just occurred to me that we hear so much about investing from the perspective of the person setting up the deal, and little about those passive investors looking to participate. Appreciate your input!

You bet! Happy I actually had some advice to give. :) Update here and let us know how it goes!