All Forum Posts by: Jeremy D.

Also, if anyone in this area knows which property I'm talking about...please don't submit a competing offer. lol

I made an offer on a MFH foreclosure listed at $34k in an up and coming area, it needs about $40k worth of work and will result in $1600/mo in total gross rental income. I offered $38k on the property the day it hit the market since the listing agent informed me that there was another offer on the table. Now we have 24 hours to come back with highest and best. During this time it's my gut feeling that there will be many more offers submitted since 1) the property is such a steal and 2) there has been absolutely zero inventory like this hitting the market in the past two months.

I would feel comfortable increasing my bid by 2-3 grand to help secure the property, but I don't know if I'm bidding against myself or what.

Overall I would be happy getting into this property for $83k (41k purchase price + 40k renovations + 2k closing costs). This total cost puts it relatively in line with the 2% rule and would make it a healthy addition to the rental portfolio.

I am sure others on this forum have had similar situations. Would anyone like to share their experience or thoughts? There is a fine line between being greedy and losing out on a new property, which i have experience probably 5 times over the past few years of foreclosure acquisitions.

Welcome! I'm from GR as well and always looking for more properties. Good luck with the new venture!

Wow, that is some impressive volume. When you first started doing flips full time did you hire out less work and do more yourself? I imagine that when you had a full time day job you sub'd out most if not all the hands on carpentry work. After making the jump what was your strategy?

David VanSteenkiste - I couldn't agree more with your quote - "Its much harder once you have had it and let it go than if you never had it."

The grass is always greener on the other side, that's for sure...

I just think that my profit potential is higher doing REI and surrounding businesses full time than it is working for the man (that being my current career track of Corporate Finance.)

Thanks for the input.

Wow..thanks everyone for the feedback. I am a pretty conservative person when it comes to my financial situation. Thanks Ann Bellamy and Ken Latchers for your suggestions on either keeping the day job until RE can replace it entirely, or maybe trying to pursue a part time employment status with the day job. As I think about this more, I might try to have a candid conversation with my boss about how my long term goals are outside of cranking out TPS reports and spreadsheets. :) Justin S. - it sounds like you had this conversation after the fact with your assistant GM and he fully supported you. I'm curious- when you made the leap what kind of properties did you have in your portfolio to support you financially while you did rehabs, flips, or other projects?

I figure I'm going to work 60-80 hours a week or so at whatever I do, right now that is a combination of the day job and REI. If I were to drop the day job I have some RE related business ideas that I'm dying to pursue. Those ideas have a higher risk vs. reward potential than my main track of buying and holding REI as rentals...so we'll see.

It is a tough decision, thanks all for your input and support!

Mike Jakobczak - Thanks for the comments, I will definitely post updates either way!

Ken Latchers - Thanks for the feedback, I really appreciate it- I'm pretty sure I addressed or have thought about your concerns at this point-
1) I found a cost effective HSA/high deductible plan which should fit well,
2) Agreed- the lack of recurring, reliable funds is a trade off
3) I will have $50k in cash reserves, plus already have a RE LOC at $50k, credit card max of $30k, and 3 F&C properties just in case,
4) I have already secured the funding to continue growing over the next 18 months at the current rate of 2 properties per quarter. This funding is in place even without W2 income.
4) Agreed- getting back into my industry within 2 years should not be a problem. anything longer than that might be.

Thanks again for the feedback and thoughts.

I know this subject has been discussed numerous times in various threads on BP, but I'm going to bring it up again.

I am looking for feedback from anyone that has gone from investing and managing their own properties as an after-work activity to doing it full time. I currently have a full time job which I really do not enjoy at all. The problem is that I'm wayyy overpaid for the area where I live and the job itself, so if I do quit, I'd likely be looking at a 25% cut if I decide to re-enter the field. I've been taking advantage of this situation by investing all of my extra disposable income into REI over the past 4 years. But now i'm thinking it's time to jump ship and invest/manage full time. I have come to the point where I know that money is really not everything and I would love the idea of waking up and looking forward to the day or week of work!

I am confident that at this point I can pull about $3,000/mo off of the properties as a "management fee". I self manage, and I factor in this cost when I purchase using the 2%/50% rule anyway, so the only effect it would have would be that I would not be paying down RE debt as quickly as I am now. So, I'd be looking at about $36k/yr as a salary from managing my own properties.

The alternative is keeping a six figure day job which I do not enjoy at all, and I'm overpaid by about 25% I would guess... The upside of the property management salary is that I already have the financing and capital lined up to continue growing over the next 18 months even if i quit the day job. By the end of the 18 month growing period I should be at a point where I can pull off enough to maintain the lifestyle i currently have with the day job. At that point the RE portfolio should be able to continue growing organically without the need for additional contributions.

Has anyone out there gone through the same thought process or situation? I am 30 years old, single, have no dependants, and my monthly base expenses are pretty minimal...I'll even live in one of my own units if/when I pull the plug on the day job to focus on REI to save even more.. I appreciates any thoughts or advice!!

I agree with Steve L. - management scales very easily. I couldn't imagine managing only one property, but managing 26 is not bad from a time vs. profit perspective. As you ramp up you tend to see economies of scale in other areas as well...hiring a maintenance guy to save on overall maintenance costs, building relationships with subcontractors to save on costs, etc.

Michael X - I use Propertyware. They charge $40/mo for 1-25 units and we just stepped up to 26 occupied units so we're at $75/mo for 26-50. It's a great system and i'm sure it's comparable to buildium, etc. It tracks all apartments, leases, provides financials by building, late rent notices, rent tracking, etc.

Joe Delia - I'm in Grand Rapids. The historic buildings I'm rehabbing are mainly in Heritage Hill and surrounding areas. The Hill buildings are great because we've been utilizing the historic tax credits on our renovations. I try to buy places using the 2% rule based on purchase price+renovations+closing costs. If i put $60k in renovations into a place, I get 20-25% of that back as a credit against my federal and state tax liabilities. When you factor in the tax credit into the purchase price it gets us well over 2%, and we're in fully rehabbed, nearly maintenance free multi's.