All Forum Posts by: Joe Faruko

Since the rehab is not done, both the flip and rental activity will be reported in 2021 tax return that you that you will file in 2022.

If you want to deduct some operational cost of your flipping activities, then you can report some deductions in 2020 tax return that you will file in 2021. Your post does not give us enough information to determine what is best for you.

Got it, so in the case of a flip I would report it in 2022 for 2021 tax return. Thank you again for the reply. Any other information I can provide for a more accurate answer, my apologies for the brief description here. 

Hey @Joe Faruko I just finished reading Michael Blank's book Financial Freedom with Real Estate Investing:

https://www.amazon.com/Financial-Freedom-Real-Estate-Investing/dp/1986532364

I highly recommend it. He provides useful resources/templates and clear, no BS strategies to follow that will lead to this financial freedom we are all chasing. He doesn't make it seem easy BUT he does show you how it's achievable. What sticks out right now is the Law of the First Deal and I think you're touching on in with your last question. That first deal is NOT going to lead to financial freedom but it will lead to the next deal and the one after that. Yes, you need multiple properties and yes it will take 3-5 years. But the case studies prove it is possible. 

Hey Joe! 

Yes to everything you said BUT remember "deals are not found they are made".

There's no way to achieve financial freedom with the numbers you gave (unless you save up another 65k and repeat until you reach your desired monthly income) which is were other more creative approaches come into play. 

Have you tried looking at properties further away from you(out of state or city) that might be more affordable and generate more cashflow? Have you found any properties in which the investor is willing to do the seller financing? They might agree to less down payment with a balloon payment, this strategy allows you to allocate your left over cash into other projects and double your returns. 

To maximize your cashflow I suggest you look for properties that have very little landlord expenses (separate meters, self managed, low insurance and property taxes). 

Lastly, if you're like multifamily, I suggest you read crushing it in apartments and commercial real estate by Brian Murray. Sometimes we limit ourselves and possibilities but remember that in this business it's about asking the "how can I get make it work" and then executing the plan. 

Good Luck! 

@Joe Faruko I felt the same way. I bought a 3 family in CT for $195,000 with a residential loan, lived there for 5 years and moved on. I only put $10k into it and it currently cashflows about $700 a month. On $10k that’s not bad but On $50k that’s not too exciting. The same property can look like a rockstar or a dud depending on how you fund it. 

I started buying larger properties. The larger MF (5-12 unit) don’t cost a whole lot more (cost per unit goes down) and you can make the same $200 a month per door. It’s a numbers game, if you want to make $2000 a month and you get $200 per door then you need 10 units. That could be 5 duplexes or 2 five families, or one 10 unit. Personal finance is personal and everyone has their own take on real estate which is why it’s so exciting.

So I think that one of the most important things you can do financially is to pay yourself first outta every pay check before paying a single bill. Let's say you can save $1000/mo outta your paychecks at work monthly to pay yourself. That's $12,000/year I can put away. Not horrible, that's way more than the $0 most people put away. 

Let's say now I bought a multi-family that produces $300/mo after expenses and I add that to my $1,000/mo that I "pay myself". Well now I'm saving $1,300/mo 

I make some improvements to the property. Now it's got $80k in equity. I can borrow 70% of that to purchase another multi-unit that makes $400/mo now I'm saving $1,700/mo. That's $20,400/yr.

Sure it's not anything crazy but With 2 properties you can Basically double what you're "paying yourself" a year. Sure that's not crazy insane money but remember most people don't pay themselves outta their paycheck like that. This will pretty much keep compounding if you keep investing it in other properties. Eventually you'll reach a point where you'll make more through you're investments than you will at work if you keep buying more. Then in 30 years your properties all start becoming paid off one by one. 

Sure you're going to get phone calls and deal with bad tennants but remember you'll also have bad days at work making someone else tons of money while you get your little tiny slice of their wealth and you miss your child's football game because you had to work late and your stuck at a dead end job. That's the rut most people get stuck in. Investing in real estate and learning to save and spend wisely helps you avoid that rut. 

@Joe Faruko

This is the great part of investing.  What’s a great deal for one is no deal for another.  There’s plenty to go around.  Figure out your Investor ID and what meets your criteria.  If it’s $100/door, but you have 100 doors it might make sense, but for two units it wouldn’t fit me.

Good Luck.

What other investments are you looking at that will pay you $200-$300 per month on a $50,000 investment?

@Joe Faruko

I bought a 4 unit a couple of years ago.  Each unit cash flows $250.  If you occupied one of the units you could live for free and get a residential (I used commercial).  Still might cash flow $1000 with you occupying it.  Live there a year and buy another.  In 5 years that’s $5000 per month plus all of the advantages of pay down on the mortgage, depreciation, interest pay down, property tax deduction and possible appreciation.

It’s a methodical system.

Good Luck. 

REI is a long term slow and steady investment. Getting rich over night will not happen with a few multi-family houses. But let's say you had bought this property your in it 60k and you bought it for 200k.

Eventually there will be a day many many years from now when your other 140k of the loan will be paid off fully by Tennant's, that paid your mortgage. 

You're only in it your original 60k plus your expenses over the many years. You'll have years of steady cash flow monthly. Which you can use to reinvest in other properties. Also you'll have a paid off building that probably is worth substantially more than when you bought it most likely. 

I have customers in NYC that are in their late 80s and bought properties many many years ago for prices that back then were considered Insane (40,50k) and now they're properties are worth 1-3mil and are renting 2400+/mo each apt. That seems like a awesome retirement to me! Especially when they bought them 50years ago and were paid off 20years ago. 

Now it's not a guarantee that your property will ever be worth a million dollars but If you combine this with a good paying job and a retirement plan that's diverse, you'll be ahead of the game.