All Forum Posts by: Josh Rich

If you want to maximize your returns, I would use the cash buying advantage you have to buy off market undervalued properties that you find through your own marketing. Then cash out refinance, wash rinse and repeat as many times as you can while maintaining a cash reserve of about 10% of the amount you have to invest at all times for the unexpected. That will require a maximum amount of involvement until you develop processes and systems that allow you to replace yourself with someone else who does it "your way."

I would do a deal or two with my own cash, then put together a bank book (as recommended by Chris I mentioned earlier) go to small bank commercial lenders once you have a track record of results until you find one or two who will offer terms that fit your long term strategies.

A kind of in between version of this strategy would be to find a wholesaler who is good at finding good off market deals and take a couple steps out of your acquisition process. This approach will save you the learning curve of marketing, negotiation, and getting this type of deal under contract. This approach will cost you the ability to get the properties at the absolute bottom dollar. It's give and take.

Definitely want to take the approach of using a great wholeseller, since time is limited to make a go of it, and of course any good wholeseller should be compensated for their hard work. Know any great wholesellers to recommend?

How many deals need to be done before developing a "track record" for banks? You mentioned a "deal or two", is that all it takes? Which banks would you recommend? Perhaps talking to them would help to know how to structure now for success later.

For cash out refi's doesn't it take about 6 months post purchase for "seasoning" before being able to refi? This is fine, it just slows the process a little if that is the case. Thanks again in advance!

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Thank you everyone for your generous advice! Please keep it coming!!

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Originally posted by @J Scott:

Looking at your best-case numbers, you want $84K per year in cash flow on a $250K investment -- that's about 33% cash-on-cash return.

I don't know any low-risk hands-off real estate ventures that can generate that type of return (if I did, that's where all my money would be).

If you're willing to increase the investment to $400-500K or drop the return to about $40-50K annually, then there are options, including rental properties in very specific areas, hard money lending, diversified note investing (you'll have to have some high-risk notes in there), etc.

Wow, the Great J Scott!! You are someone I look up to and I appreciate you taking time to post.

The investment cannot be increased but the returns of $40-$50k/yr are desired targets over the near term. The larger cash flows are targeted longer term.

Where are the best areas you mentioned for rental properties, non- "War Zone" preferrably? Notes seem to be discouraged for the low-experienced, is that correct? What's the best way into hard money lending?

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Originally posted by @Justin B.:

So far I've been successful in getting about $300/month for every $100k I've purchased. I have averaged 10% down but let's use 20% for the sake of simplicity and be a little more realistic for those starting out. With $250k, that means I can buy 1.25 Million worth of property. That leaves us with $3,750 income monthly. Obviously this doesn't even account for all the other stuff that is great about real estate like appreciation, mortgage paydown, depreciation, etc. In fact, with Depreciation, if not all, most of that $3,750 would be tax free (especially if cost segmentation is used). a LOT of people could live on that kind of income (I personally couldn't but I live in the DC area). But to turn $250k into almost $4k/month is something you'd never be able to do with stocks. That's an 18% return on your money (and that income is potentially tax free meaning that if you compared that to something like the stock market, you'd have to compare the AFTER tax returns which no one ever does so you'd need more like a ~30% return in the stock market to compare).

The second piece is that even if you never invested more money, over time rents go up, you pay down mortgages and gain equity (which means you can pull out tax free money with refi's over time to add to your portfolio). Over the course of 10 years, I'd estimate that $3,750 could turn into well over $10k/month which 99% of people could live on.

This sounds exciting! Where have you been able to get those kinds of returns? (In today's market) Also, how do you average 10% down when most lenders want 25% down...through owner financing? Has that been more difficult now with Dodd Frank?

What is "cost segmentation"? That's a new term for me.

Your second piece of advice is the ultimate goal of getting to $10k/mo cash flow after some time. It seems highly unreasonable to expect that $200-$250k can generate that from the beginning.

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Originally posted by @Jeff Greenberg:

Originally posted by @Josh Rich:

Hypothetical Goal: Max Cash Flow, replace income, retire, invest/landlord FT

Your have a mix of goals, but you don't say if you would prefer to be hands on or more passive.

Notes either performing or non performing (cashflow)

Syndicated investments (cashflow and equity creation)

Capitalization for hard money lender (equity creation)

Capitalization for flipper(equity creation)

NNN lease property(cash flow)

MF property purchase(cashflow and equity creation)

More hands on involvement. After trolling the discussions on notes here on BP, many experts seem to discourage this form of investment for newbies, too risky.

For Syndicated investments, do you mean to create a syndicate, or invest in one? If it is to simply invest in one, where can these opportunities be found?

Great insights! Of these, I think MFR is most attractive.

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Originally posted by @Robert Leonard:

For a hands off approach, if you have the credit, I would look into MemphisInvest.com or DallasInvest.com with the objective to buy as many SFR turnkey rentals as you can with 20% down payment. I would also keep about 10% of that amount you have to invest as a cash reserve.

Robert, thanks for your advice. This is a great option for low level of involvement, and it has been considered, but I think more involvement is desired to maximize returns.

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@Gautam net income around $7-$10k/mo

@David Lee sounds interesting. Although B neighborhoods are preferrable, where do you find those deals you mentioned? MLS, wholeseller, other?

Thanks guys!

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Hypothetical Goal: Max Cash Flow, replace income, retire, invest/landlord FT

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Hey BP experts, here's a question for the those of you involved in notes (NPN and Performing), apartments, SFR, and multi-family investments.

How would you invest $200-$250k in today's TX, TN, NC, and/or CA real estate markets? Assuming that you have some decent REI education, but no real experience.

No, this is not me; nor is it for an African Prince who needs your bank account number to liberate his cash ; )

Ready, set, go! (thanks in advance)

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Hello sophisticated buy and hold, apartment &/or Multi family investors! One LONG question for you... is it possible to acquire MFH (2-4) or apartments (8+ units) that could use some basic rehab updates (floors/walls/appliances/fixtures) with 10+ CAPS and 20+% Cash/Cash ROI to buy/hold in B+ neighborhoods? (Wow! That was a mouth full) One more short question... where? Yes, I've been reading Wm Nickerson's book =)

Thanks in advance!

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All Forum Posts by: Josh Rich

Josh Rich has started 14 posts and replied 82 times.

Post: Putting Money to Work

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Post: MFH/Apartment deals