All Forum Posts by: Jon Rood

I will go ahead and say that anyone that is reading this thread is WAY ahead of the game, whether your number is 3k or 20k mo., because most of our country is not on here learning about a second or new career in real estate investment. I think if you have/or are making a plan then you are on your way to success! This thread was not a measuring stick!! Comparing ourselves to others is a dead end street. We always compare up, we never look at those we are more fortunate than and say wow I'm thankful. I learned at an early age there are always others that are younger, more successful, better looking, what ever. I think there is a GOoD book that says we are to run the race that is set before us. Bravo Brian for your goals! I think the only person that should be embarrassed about their goals are the ones who have not thought of setting any.

Sorry if I offended you Rich by mentioning you, definately not my intention. I think when talking about our number it should be cash or cash equal (real equity in proerty,cash,paid for assets, ect.)My big number, 10mm, includes cash and invested money. Some of that will be in trust for my kids. My number of 20k takes a couple of things into account. Taxes and health care being the biggest two. I think (I know this is subjective) today, you need at least 10k per month to enjoy life. This could include and does for me the following: travel,supporting charities of choice, blessing a few people in need in your circle of influence.Like Rich said, I think due to our political enviornment, the biggest thing going forward will be taxes. I dont have much RE investment experience yet, but i read everyday to find "my program". This thread was for insight into how other investors view their end game.

Great replies so far, thanks guys. I really want to use this thread as information to the younger/newer investors on here. I think if the seasoned guys like Will,Jon,Rich with give these guys something to think about, it may cause them to PLAN. My thought is that after a few more post we willchange the question to how do we get there from here. Keep the the posts coming guys. This is such a great site for insight and information.

I have been following the "Is it possible to get rich" thread, and I got to wondering, "What is my number?" I think we all have or should have a number/goal in mind to think we have it "made". I know it is always said When asked how much is enough? Most business people will answer just alittle more...
So my question BP users is What is the number that you would feel you had it made? Please answer the following? This is no indication of where we are now. This should be informative and entertaining.
Age Now?
Age you want to retire?
Net Worth needed to retire?
Monthly Net Cashflow to retire?

Ill go first.
36 now
50 to retire
10 mm
20k month

I drive a 2011 Ford F250 King Ranch, and the wife drives a 2012 Infinity QX56. Both paid for. She had a 2011 Infinity 56 and we were rear ended by 18 wheeler going 55 mph. only minor bumps. she bought exact car again::0

He has alot of businesses from construction to game ranches, I havent ask for tax returns yet, but most people I know spend all they can, leagally of course to avoid as much as posible. I do think he has prob. paid some bills from his construction co. to get rid of income. I am trying to qualify the deal based on the 2% / 50% rules before getting in to deep.

I am looking at a portfolio that is mixed with commercial and residential. It has single family, commercial, storage complex, and even a car wash. I have reviewed the leases, deposit slips/bank accounts. Gross reciepts of 45000-50000 month. I also have known the guy for 15 years, he is an honest man with a great reputation in the community. I want to pay all cash, He is proposing $1mm down and owner finance $1.5mm @ 7% for 10 years. I am wondering what you guys think at first glance.
Come on Jon and Bryan, tear it apart. lol

jon

All of your points are valid, however there are no repos or screaming deals in our area. The overall rental market is at 97% occupancy. Our economy has never boomed so we never have had a big correction. I have been looking for deals for 2 months and found nothing that makes the 2% or 50%. At least with a new build I know what I have. The rent might do 950-1000 per unit as other 3bd/2ba go for 900-1200 but I am being conservative. If I say each unit would rent for 1200.00 then everyone would say it makes sense.
Thanks for all your input, it has made me think.

I am thinking about building a 6 unit building. Each unit is 3br/2ba and would rent for 850.00. This is a little below market to be conservitive. I can build the project for an all in cost of $385k. This would be a cash deal as I am trying to get away from cd's and want to put no more money in the market.
If I use the 2% rule the rent would have to be $7700.00 so doesnt look good.
If I use 50% rule 3400.00x.50=1700.00
1700.00/385000=5% cash on cash. not bad but not great.
My Question???
With a brand new bulding, would the 50% rule be used?

Has anyone on here built a new project that didnt fit the rule and was it a good investment?

Bryan:
First I have gotten super busy with two big jobs out of nowhere.I have saved you email so it stays in front of me when I can get over there.

GC/Sub relationships

Unless you have the time to devote to a project, (and I mean alot) hire a GC. 10% is cheap if you are doing other things making money. Also, make sure that the GC is responcible for self performing small items. This saves you money and keeps them paying attention to the bottom line and detail. There are SO MANY small things they take care of. They earn their money.

With GC's or subs, Document everything!! Contracts with clear scopes of work and pay schedules. Please require lien releases from vendors of sub provided materials, If they can't provide money to pay vendors then joint check them or ask for invoices and break up the payment labor/materials. You always get the best deals from the small guys who are struggling. If they say they need a down for material then buy the material direct. Never and I mean NEVER prepay for labor. If a guy does good work but is struggling offer to pay him and his crew after a couple of days to get them started. There is nothing more aggravating than getting burned on labor..yes I'm speaking from experience. If you are going the GC route or the Sub route, get multiple bids. This is how money is made building. Watch out for GC's wanting to build for % ir cost plus. May times they have a team of very good subs together who can build the project themselves, they cost a premium. If you are paying a GC it is premium in top of premium. NOT GOOD

I am looking forward to getting together.