All Forum Posts by: Joe P.

Welcome and good luck to you!

I think your question is invalid. The question you should be asking yourself is "what is my goal or goals from investing?"

Any investment strategy can be ideal for different scenarios. You should determine what your goal would be if you had funds available for investing. If you had a million dollars cash, it might be better to put all that money in the stock market, for instance. It all depends on what you want.

I want to quit my job in the next 10 years, work as a full time investor, and live off the passive income from my properties. Therefore, I need cash flow positive properties (I have standards I used to determine if a deal is right or not) where I can provide value in managing my properties and tenants. This is a SPECIFIC, MEASURABLE goal, and now I can tune my investment vehicle(s) to attain it. I do not wish to take cash and put it into the stock market, because I don't see how that would help me invest. See what I mean?

So, figure out your goal and come back to us. Then we'll find out your specifics re: available funds, timing, education, etc. Your ideal investment strategy today, based upon working full time and living at home, might change in 2 years, no? So why would you base it on that? Base your strategy on what you want to get out of it and then tune your investments accordingly.

I would consult a lawyer if you were concerned about legal ramifications, but unless there are specific local or state laws that dictate otherwise, your lease should specify if an occupant is a tenant, a tenants dependent (i.e. a minor) or a guest. I don't know what legal ramifications would come from specifying persons in that manner.

Carpets seemingly take a beating in any settings nowadays. Any stain has to be cleaned, sometimes professionally. I'd say go vinyl/laminate as others have said and tile where you can. Durability is better, cleanliness is better, and it'll last longer than carpet ever will.

Ooooh good one! I would follow your lease to the letter. It is your first "lease question" and the tenants haven't even moved in. If you bend the rules now, that's when your subject to potentially being taken advantage of, dealing with an untenable situation in the future, or the "legal" ramifications of such.

Cover yourself; he's either a guest for two weeks or less, or he's a tenant. The rule protects you, it protects them, and it protects your property.

I already have an idea of what direction I should go and I am not sure if I will get help here at all but I just wanted to see if there is any advice that I havent even considered.

• First, congrats on taking the first few steps, and congrats on being (seemingly) independent wealthy. If I had my smarts and your money in my 20s, I bet this post is from my own beach home in SoCal while I'm sipping on a cold brew and enjoying my lunch. Alas...

I am very interested in real-estate because it is an income producing investment meaning I have the freedom to work or pursue personal goals and dreams.

• Yeah, sure...but any smart investor will tell you that income producing investments are work. This isn't the stock market -- you will have to manage properties/tenants/financials, or pay someone to do it all for you, and manage them. This is not a "set it and forget it" investment. I'd advise you to be prepared for this, or else put your money elsewhere.

First is whether I should invest with the cash or get financing. I have had trouble getting financing because I am young, self-employed, very little credit trying to get a million dollar mortgage. 

• Makes sense. I would say given your location, its going to be tough to fund projects with cash even if you're flush with it. And then things I would be concerned with, like COCR, may be awful in that area. You might be better off in investing in other areas of the country, assuming the numbers work out. Perhaps linking up with another investor who can be hands on while you provide the cash funding?

Whatever you decide, first determine what you want out of the investment. I say this at the end of every post and I'm sure if people are following my posts, they might get annoyed, but if your goal of investing doesn't match your investing vehicle, then it's probably not the right approach.

If I had your available funds, I might consider a mix of investments including stocks, mutual funds, and perhaps REITs. Whatever you decide to do, determine your goal out of the investment(s) and if the vehicle gets you there. I want to invest in properties because I like the concept of putting little money down, using OPM to hit cash flow numbers, managing properties/tenants, and eventually (hopefully, within the next 10 years), I want to be able to quit my job and be a full time investor. I have to work because its just the type of person I am, but I'd rather manage properties and maybe coach youth soccer than work a 9-5 because that doesn't interest me.

So as you can see, my goal, timeline, and vehicle is very specific. Things may change over time, but my analysis tells me this lines up. If you want the same for you, then great. You might be the type of person who can take $200,000 cash and put it in the market, and live off returns or something -- again, determine what you want to do and how you want to get there, and everything will become more clear!

Good luck to you and keep us apprised!

@Harry Karambizi you seem like a nice guy, so I want to be delicate in my response. I don't think, based on what you've told me, you're in any position to invest in anything (today).

Sadly, I cannot personally agree with what @John Franczyk said; I just can't suggest that someone focus on the deal when it appears that his financial situation is not in proper order. But this is just personal "gut feeling" and opinion -- I would hate to see you stretched and I see John provided his response prior to your response regarding your finances. I would certainly hope he would revise his recommendation to you based upon the info you provided.

You need to meet with a CPA immediately. @Amy Beth is 100% correct in her statement. You need to take care of your bills right away. I also agree with her that your credit score should not be your focus now.

It sounds like things are going to turn around for you soon whereby you can save more of your money, and more importantly, take care of this low hanging fruit. @Graham Lutz made a point to encourage you and I want to do the same. I haven't done a partnership (yet) and I wouldn't know the amount of due diligence required, but I hope someone would ask me about my assets, liabilities, income, credit score, etc. (I would certainly ask the same of them) so we can build a profile. Credit score and ability to pay bills isn't the end all/be all, but I would want to partner with someone who has the ability to contribute financially and with their time. Someone with boatloads of time but terrible financial profile is probably not someone I would look to invest with.

Again, I stated I am incredibly cautious and cagey. I just lost a deal because my spreadsheet numbers didn't look "perfect" and in reality, I could have added value to bring up the rents and make it perfect. I am by no means an expert and certainly take my advice with a grain of salt, but I think its vitally important to have a clean financial house before you start looking at others.

You have debt, you might have IRS issues, and your credit score is in the garbage bin. These are all long-term issues where you like the categorization or not. Your debt didn't appear out of the blue one day, your credit score didn't drop 400 points out of the blue one day, and you'll be nearly YEARS without filing your taxes. I think its great you look to the horizon, but you're doing it in while sitting in quicksand.

I wish you luck my friend, but if you are seeking my $.02, there is no question what needs to be done. Sweep your financial house ASAP.

Just goes to show you that just because you've got money, you've got a "business" or anything like that, it doesn't make you SMART.

How could you possibly be that behind on your taxes? Well, its simple, you didn't have the right numbers going in, or you didn't know the reassessment process, or you're a criminal, or maybe some combination of the three.

What a joke. This is the classic speculation without rationalization. 600 properties! SIX HUNDRED! Guy should be a millionaire, yet he's probably going to jail for tax evasion.

"Now, I am in a great financial situation and am looking to start investing again."

• First, congrats! Glad to hear you say this.

"The business expenses were piling up and I ended up selling my condo and used the money to pay down all of my business equipment financing, pay off business debts, and school tuition."

• Is it a fair statement to say you no longer have ANY debt? What is your debt now? What is your income, your expenses, your "remainder" at the end of the month?

My salary and affordable living is great but my credit is still poor and I only have an online bank account now."

• OK, but why? Have you looked into credit rebuilding programs? What steps can you take to get out of the 400s? How long have you been living this good salary/affordable living life? See second question as this would help as well.

"I have not filed my personal tax returns since 2015"

• Why? It seems like you would owe money based on some of your statements? Without knowing much about that world, if you've kept "great records" wouldn't you be a candidate to be audited if you don't execute your personal tax returns?

I'm the type of person who believes in a strong foundation to execute ANYTHING. This makes me overly cautious in many ways, but I prefer the term "calculated." If I'm going to cook a meal, I'm setting up everything before hand, making sure my knives are sharp, my recipe is clear, and I have the best ingredients. If I'm going to play soccer, I'm researching the field, observing players in warmups, ensuring I'm in the best possible shape to be successful, etc.

When it comes to investing, you have to ask yourself if you are going to have a cement foundation up to the standards required in the state of Florida, or if you're going to have a house of cards. A bad credit score, not filing your taxes, etc., to me, signals someone who has a house of cards.

I would be curious to know the answers to your questions, because we can then truly see how deep the water is. If this is just a matter of hiring a tax professional to square you up properly, you have no debt, and we can see that after your salary, affordable living, etc., you're able to save say, $500 per month, and have been able to do so for at least 3 to 6 months, then I think its easier to tell you how to proceed.

If you've got debt, if you have tax issues, if you have no cash flow (not even property based, just salary, expenses, etc. on a positive side) then thanks for the post pal, but you know the answer to your questions, and you won't like the rest of the responses that might be forthcoming, and I hope to gosh you realize that.

Give us some insight into the questions above and hopefully we can help.

The numbers don't make sense and don't tell the whole story. ROI/COCR seem incorrect at the very least.

But I think a helpful response is, what is your goal? Do you want a cash flowing property to put more money down for the next, and in some specific timeframe? If so, if you could take say, 20k cash and 5-10k of your proceeds, and put it towards a property that has very positive cashflow, perhaps that is a good reason to sell. But the cash flow is low, I don't know if you've captured expenses like maintenance, vacancy, PM, CAPEX, etc., to accurately paint the picture.

My evaluation would be ultra conservative, and if the numbers still look good ultra conservative, then you either are missing something or its truly great deal.

If you've got the funds laying around to the tune of 3.5 million, please partner with someone who can put the proceeds to good use. Your analysis is concerning and troubling.