All Forum Posts by: John Carr

I'm wondering if anyone is cashflowing from properties they recently purchased that aren't ancient, torn up, or in awful areas.  Or is this the unicorn that doesn't exist?   I'd like to buy cashflowing properties but anything close to the 1% rule seem to be extremely old or in very bad areas.   If you wouldn't mind sharing an area that would be a tremendous help.  Thank you.  

First off I want to say the current Marshall Reddick company is owned and operated by some great new owners who are very careful to only refer quality investments.  It has nothing to do with the company pre-2009.  Marshall is not an owner of it anymore and doesn't work there.  But like any investment do your own due-diligence especially with turn key real estate companies.  Because they can make money even if you lose.  With that said let me tell you some unspoken details about the old MR network.

Marshall is a very kind person who sought the best for everyone.  How do I know?  I was like a son to him and I worked for him as a young naive man at 22 years old.  He had his pro's and con's like we all do.  His main down fall was that he trusted too many agents who abused his trust which sold many bad properties to his investors including Marshall and myself.  The managers of those agents got greedy and used the trust the investors had in Marshall to make a ton of money.  Marshall did practice what he preached buying property in all the same areas with the same agents.  He however didn't keep a tight watch on the agents, property managers, cashflow, etc etc.  As the owner of the company that responsibility does fall on him as the founder and leader.   Himself and all of us investors created a massive portfolio of properties that were negative cashflowing.  Therefore unsustainable when the market flipped.  He also is an extreme optimist and ignored the red flag warnings that were given to him by myself and many other staff.   We warned him, but  he was a PHD economics professor and only chose to see the upside.   I left the company at that point because I saw a fatal flaw in the company.  Sales just kept increasing and so did the problems. It was brutal, depressing, and extremely stressful once the market flipped.  We had a house of cards which we couldn't maintain.   Yet, we must take personal accountability on the mistakes we made as well.  We didn't do  proper due diligence,  we were over trusting, naive, and yes i'll say it.. greedy.  We are guilty for our wrong doings and being the owner and operator of the company yes Marshall is guilty for his.  His intentions were good but as the saying go's... the devil is in the details.   AKA due diligence, compliance, holding people accountable.  He is a brilliant man with many wonderful gifts that I'm still thankful for.  He took care of a lot of people and yes he made many investors extremely rich in the early years.  We have a choice as adults to be bitter and blame others for all of our hard times or to take personal responsibility and to grow.  Choose growth my friends.  Be safe, Be Wise, and always make every decision the best as you can so you cannot blame others for your personal results.  We are ultimately responsible for where we are and what we achieve in this life.  Owning that is the most empowering thing you will ever do.  Best of luck!  

Hi Bessy,  Fellow former OC investor here.  We will never see the 1% rule work here.  1% is just a quick eyeball figure to see where the cashflow might be at.  But it isn't enough.  With the current interest rates, a property at .8% or less might cashflow.  Theres many other factors to look at. 

The variation of these factors will make a property cashflow or not. 

Interest Rate

Down payment amount

Yes including, property tax rates. Which luckily OC is a tad cheaper then LA.

HOA fees

etc etc.  

I think it best to make a simple spreadsheet based on the main income and expenses such as the , downpayment amount, interest rate, projected rents to come up with a simple but more accurate figure.  

And then you'll find other ways of making things cashflow like other investors are using here such as adding an additional dwelling unit by converting a garage, adding a room, or adding another small unit on excess land on the property if allowed by the city.  Best of luck!

Theres a book here i just purchased.  Recession Proof Real estate investing..  It might help you develop a strategy instead of sitting on the side lines and waiting like i have been for years.