All Forum Posts by: John M.

@Daniel Dietz I agree with many of your points.  I am just learning about private placements and I am not accredited myself (although getting close), but I have a lot of years of investing experience including stock and options.

I personally think anyone should be allowed to invest in whatever they want.  Investors just have to be responsible and do the research and know what they are investing in and be willing to accept the risk of loss.  If the sponsor or the offering seems sketchy, or the investor is not comfortable with the risks, then don't do it.

I personally don't think the role of government should be to protect people from themselves.  Part of being free is the freedom to make bad decisions.  And why are we selective about it?  Why do we protect investors from themselves, but we don't protect gamblers and lottery players from themselves?  Any idiot is free to take their life savings to Las Vegas and put it on black, but if and educated professional who makes $150k a year wants to invest $20k in a private placement may not be qualified.  I don't get it.

And even with accreditation you can't prevent fraud.  Bernie Madhoff can attest to that. 

Anyway the rules are what they are, all we can do is adapt to them as best we can.

Congrats @Corby Goade !  I hope to have that same feeling as you when I quit my day job some day.

You said you used little cash - can I ask how you did that for so long?

To answer your trait question I personally think being a problem solver would be the most important because no two deals are ever the same and new problems come up all the time.  If a person doesn't have the ability to anticipate and mitigate problems, or come up with creative solutions to problems, they may never close a deal, or they may lose a lot of money by not reserving for future problems once a deal closes.  The ability to be a non-emotional a-hole at times if a situation calls for it doesn't hurt either, lol :)

By the way I am currently doing some research on the Boise area for possible future investment.  Would you mind if I PM'ed you with a few questions about the area?

@Mike Neubauer I haven't looked into MFH yet so I don't know what cap rates are like in the Vegas area.  

It's kind of interesting I think generally rents in Vegas are low relative to other cities of it's size, but the jobs also tend to be lower paying.  But on the other hand Clark County added more new residents in 2017 than any other county in the US other than Maricopa (Phoenix), according to the US census.  And I don't see that trend changing anytime soon, people are fleeing California for neighboring states and Nevada is very well positioned to capitalize from that.

The thing I like about Henderson is that it is it's own city so it has it's own police force and along with higher incomes makes it a desirable place to live for both homeowners and renters alike.

The one wild card is there is a lot of new housing development going on in SW Las Vegas (including SW Henderson), for both SFR and MFH and I believe the county was looking to further expand the area further south along I-15 by freeing up more BLM land to be sold to developers. So not sure if that might suppress rental growth as these new properties come online in the SW area?

Hi @Mike Neubauer I live in California but I own two non-MFH rental properties in Las Vegas and I know quite about the areas around where I own.  Area 1 within about two blocks of the Strip, and Area 2 Henderson.  I researched those two areas to death before I bought.  They are very different areas - urban vs upscale suburban.... but I love both and am glad I bought where I did.  Be careful with short term rentals there if you are thinking about it... not legal in Clark County and the city of Las Vegas allows it by permit only, which is very expensive and hard to get.  

@Kurt Jones @Scott Skinger @Dave Foster  Thanks for all your replies.

I think I need to just adjust my thinking since 5+ MFH there's a few more moving parts I wasn't taking into account.  With 1-4 it's not too complicated, I buy it myself, finance it for 30 years if I want, and I don't have to think much beyond collecting the rents.  If I want to keep it I keep it, if I want to sell it I sell it.   Even if I bring on just one partner that's another person I have to consider.  That does make an exit plan a bit more important, since one of us may want to cash out and move on to other investments.

5+ seems like a natural progression from 1-4 but need to get through the learning curve that is commercial....

My goal is to grow my rental property portfolio for long term passive income, and I am considering adding MFH to the mix as I see that there are benefits to MFH vs single properties with the economies fo scale that come with MFH.  

With this in mind it seems like a lot of the videos I have watched speak of making sure you have your exit strategy planned however does this pertain to buy and hold also?  Maybe this is meant only for investors who use short term financing while improving the property?   If my intention is to hold for an undetrmined period for passive income is an exit strategy even relevent?  I would want to use long term commercial financing or bring other investors into the deal who would want to hold for long term also.

Any insight/opinions appreciated.

@Ryan Picco Hey Ryan, that is certainly understandable I am in California so I know all too well the 1-4 market here is pretty insane.  I haven't looked too much lately but for awhile it seemed everything I looked at online was a 5 cap at most.  Some stuff it seems even if you put 30% or 35% down it still wouldn't even cash flow but yet prices still keep going up up up. 

Well it seems you have a good strategy in place and know where you want to go.  Since I had been toying with the idea myself of going for a MFH property next it's good to see other people with a similar mindset!

Hi Ryan, can I ask why you decided on 16+ unit versus a smaller deal?  I understand the economies of scale with larger deals, but it seems the learning curve to larger deals vs starting out small (like 1-4 units), would be a faster path to a closed deal and you may not even need to bring on investors?

I guess I am asking because I might be in a similar spot you are in, I have six figures to invest and will have more depending on the time frame, but I don't know if I should continue investing in 1-4 units or try for something bigger.  I'll be honest I don't like the idea of bringing in investors on my deals, although I am looking at the possibility of doing partnerships in the future with one other partner/investor. 

I do like your plan though, especially putting together a sample package for investors.  Do you have a template you are using for the sample package or do you have any ideas on what you will include (i.e. bio, experience, sample deal, etc)?

Hi Brian,

Your story is amazing and very inspiring!  Congrats on your success!

I actually found this thread by searching the BP forums for "cardone", as I have been watching a lot of Grant Cardone YouTube videos, who has stated repeatedly he doesn't touch MFH deals under 16 units.  While I understand his reasoning (scale), the impression I get from what he is saying to people like me (small investors buying 1-4 units) is if you can't do a 16 unit deal don't waste your time or money investing in real estate at all.   In other words "go big or go home".  While I understand smaller deals come with more headaches like tenant drama, vacancy, etc., and the inability to add value to generate additional cash, my thinking was he is Grant Cardone so of course he isn't going to waste his time on small deals that don't maximize is return.  I get it. But what about small investors that don't have millions of dollars or access to networks of investors, brokers, etc?

My thinking is that if you are a buy and hold investor and own 20 townhouses in different cities acquired over time in baby steps, while you still won't have the economies of scale of an apartment complex, you still have 20 doors, right? From a vacancy rate perspective isn't 20 doors still 20 doors whether they are concentrated in one building or disbursed geographically? And in theory you can still generate the same NOI (in total) and Cash on Cash return couldn't you?

The reason I thought I would throw this question out to you is that you have experience with both 1-4 units and large complexes, and I am really not convinced that if I can't do 16 unit deals I should sell my proprties, cash out and stick my money under my mattress.   I love real estate and if you are generating some cash flow and a 6% cash on cash return it's better than a .0005 return in a so-called "savings" account at the bank, right?

Thanks for your time!

Hi All, I am a small investor from Sacramento, CA and so far I own two townhomes in Las Vegas I rent out, one Class A in Henderson, and one Class B (urban), near the Las Vegas Strip.  These are long term holds.   I bought one about a year and a half ago and the other last year - I love both of these properties because I did lots of research and analysis and targeted the locations I wanted and waited patiently for the right deals.  I have a great property manager and great tenants so I couldn't be happier.

I am looking to grow my portfolio over the next 3-5 years and would love to find a partner or partners on deals.  I would love to try a multi-unit deal again looking to hold for long term.

What I bring to the table is a very good risk profile (800+ fico, stable high income, no debt except for rentals).  I also have a lot of experience in real estate (I used to sell luxury homes in LA and my license is still in good standing although I haven't been active). I don't have enough cash to do any more deals this year but next year I will have enough cash saved by next year, if and only if conditions are right (see below what I mean).

So what is my overall philosophy?   Might as well give you the good and the bad :)

I am very much a risk manager, I look at everything: the area, the economy, the ROI, the competition, the future, the demographics, what's my downside, what's my upside, etc. I don't have a financial model or anything like that, it's just taking the time to do the research, analyzing all the inputs and deciding if something is worth the risk.

I absolutely HATE debt.  I know it's unavoidable in real estate investing if you can't pay cash for everything, and I know sometimes it makes financial sense to use debt.  So although I hate it, I just deal with it for mortgages.  But personally I have zero debt other than the properties.

I don't own my home that I reside in, I am a renter.  By choice. I know I know some people think I am an idiot, so be it.  In my opinion the time to own your own home is when you buy in 2000, or 2012, not in 2006 or 2018.   Buying a non-performing asset (an asset that generates no income), that I am only going to sleep in that sells for 6, 8 or 10 times the average income in a particular area, is not something I thought was a good "investment" in 2006, nor do I think it is today.  So I rent, live way below my means and save as much cash as I can.

I also think the housing market is in another bubble.  Central banks whether the Fed, the ECB, the BOJ, the PBOC, etc have collectively pooled together their great wisdom and economics savvy and financially engineered a recovery by reflating old bubbles and creating new ones.  Thus, I think they have set us up for another crash of breath taking proportions.  Alrighty.  There's nothing I can do about that other than be there with plenty of cash ready to buy up the carnage. 

I love real estate.  However, not all real estate is created equal, and not all real estate is a good investment at all times.  

Ok so there you go.  The good bad and the ugly :)