All Forum Posts by: Jon Klaus

Here's an excerpt from his article "The biggest mistakes real estate investors make" on overstating your return:

"Your actual cash flow is what you put on Line 22 (“Income or loss from rental real estateâ€) of your Schedule E plus the depreciation you claimed on Line 20 minus the totals of line 19c and 20c on Form 4562, Depreciation and Amortization (“Basis of assets placed in service during the most recent tax yearâ€). It’s a big negative isn’t it? So stop telling others at cocktail parties, and yourself, that you have positive cash flow. In your dreams you have positive cash flow.'

While there seems to be some arrogance, he does seem to have a way of cutting through hype better than many. At the same time he is clearly promoting his own material throughout while criticizing others for doing the same.

He is prolific in his opinions of RE gurus on his website, but what about him? Anyone recommend his books? Which ones?

"Many people say they are happy if a book just gives them one good idea. For God’s sake, raise your standards. If an author only has one good idea, he should write a fortune cookie, not a book. One good idea might be worth the price of a book store book, but what about the value of your time? It takes many hours to read a book." John T. Reed

"what would be fair for just boarding and pasture access???"

Where your customer is providing the feed and labor (turnout and stall cleaning)? $100 to $200 here. You can check your market by googling your location plus "horse boarding" and find local facilties and their prices. Look on Craigslist, too.

Usually there is a horse person on site, not just to do the regular work, but for trouble-shooting too. For example, sick horse, aggressive horse, or one gets out or caught in a fence. There is definately a business aspect as well as an investment aspect.

What are you buying in McAllen? What do you think of South Padre Island? Or elsewhere on the TX gulf coast?

I'm thinking about doing this.
I have several stalls and 3 pastures on 9 acres.The market here is $300-$400 per horse, per month for full care. I'd like to hear from others who've done this too.

"5. This is one of my FAVORITES. Wholesale 5 and take the cash from there and pay cash for yours. After you own 5-10 free and clear now you can go to a commercial lender and get a 30-40% loan to value on 5 of them with tenants in them you are still cash flowing, picked up some cash to move forward and you still maintain the properties with low loan to values. This is the way that I find most profitable and more feasible."

Are you finding that you can only get 30-40% LTV on the commercial loans after you've paid cash? Why is that if they will lend 70-80% up front for a commercial purchase?

When you make an offer to a bank do you make the contract assignable? You have to, to wholesale it don't you? Or do you do a double close? Is it common for the bank to accept an assignable offer on a REO?

At $100K, you should be fine on location. I'd look at Garland, East Dallas, Farmers Branch, Carrollton, Irving, Arlington, and others.

You can get into some of those areas at $60K with $900 rentals and still be in relatively safe, working class neighborhoods.

If you are willing to rehab, you can buy for $25-45K, fix for 15-25K, and rent.for $850-$1100.

What price/rent ranges?

"just a side note on this post which got my wheels turning. what rei uses tax value to come up with a value of a home...
just a thought "

Quite a few when the valuation supports their position...