All Forum Posts by: Jeff Wallace

@Alex Shin

Hey Alex,

I have only invested locally and now I only buy in my immediate local area - The woodlands, TX (which has an amazing hike/bike trail system- I can now ride my bike to all but one of my properties and never have to ride on the street)

but

I didn't really have much money when I started investing, so I would buy whatever I could afford as soon as I could afford it - which just happened to be in the worst areas of Houston (I do not advise doing this). Everything I bought needed rehab, so I was able to force appreciation - I moved from very low income and challenging areas to a slightly nicer locations and then to solid blue collar neighborhoods- always taking my equity from a sale and moving it to the next property (never taking profits from the sale for personal use)  as I was able to invest in progressively nicer neighborhoods, I eventually moved my equity to class A and B neighborhoods.  

After I had been buying rental property for about 5 years - and about the time I had moved most of my properties to solid blue collar neighborhoods, I was able to resign from my 9-5 career - However, the income I was able to create only accounted part of the equation that allowed me to leave a very good career with a great income and incredible benefits - The main reason I was able to walk away from a great job was because I had reduced my personal monthly expenses to a manageable monthly obligation - I lived well below my means and invested every penny that I could save over those 5 years.

Leaving the 9-5 allowed me the freedom to focus 100% on real estate and not worry if the electric bill would get paid and if there would be food on the table - we continued to acquire additional properties and we flip several houses a year - but most importantly, I spend every second of my valuable time doing whatever I want to do -

It just so happens that one thing I love spending my time doing (real estate) also creates amazing wealth building opportunities.

Good Luck and Happy Investing,

jeff

@Engelo Rumora

since I will NEVER buy a turnkey property, I will leave that out of the equation and look at the comment "why you shouldn't leverage when investing"

- First - as you understand, Leverage is widely understood in the REI community as a HUGE benefit that (along with many other benefits that have also been mentioned) propels real estate above many other investing options. I agree with this .... the math is clear and you can't argue with the numbers. But we don't live in a perfect world - as has already been mentioned, an economic downturn, vacancies, property damage, and evictions can change that math quickly and when a new investor is walking a tightrope because they are highly leveraged, it is nothing more than a role of the dice if they succeed or fail.

- I began my investing career using leverage because I had no other option - as @Jay Hinrichs mentioned - as soon as I had $20,000 in my pocket, I went out and bought a rental property - My goal was financial freedom and Leverage was what allowed me to get the ball rolling....

- About five years later, I was able to resign from my career of 15 years - I had built a modest portfolio that paid my bills and replaced my salary - 

- I recently decided that I would reduce my portfolio and sell a percentage of my property to get rid of ALL my debt-

- Now, I receive fewer rent checks, but I have fewer vacancies, turnovers, insurance premium checks to write - I receive fewer calls and have fewer headaches - and my net income actually went up - Of course I am missing out on the appreciation of the properties that I sold

- Why did I personally make the decision to reduce ... Because MY goal for MY real estate investing was never to build an empire - but only to keep as much of MY valuable TIME to use as I choose - (no 9-5 job)

I have "enough" - My income from investment property is enough to support my life and build in the future - 

Leverage was a tool I used during my growth phase, but I feel much more comfortable now that my debt is gone .... (notice how the word is LEVERAGE when used in a positive context and DEBT when used in a more negative context)? 

- The beauty of real estate investing (or investing in general I guess) is that even though my primary growth phase is over, I couldn't stop the growth if I tried - the investments have taken on a momentum that will continue - I still buy additional rental property if I find something I like - and I don't even bother running the numbers to see what the return will be - 

Good conversation for the weekend - Thanks for starting it.

Good Luck and Happy Investing,

jeff

@Frank Crianza 

The BEST advice/tips/tricks I can give - I have already given ... research is one thing, but obtaining the financing is another - I have a boatload of assets and a ton of net worth but obtaining "good" financing is a challenge without a paycheck from an employer ... you can find short term financing with higher rates and costs based on the value of the property you are buying, but you will find it difficult to obtain good long term financing for long term long term investments while self employed.  

- I'm sure you will be successful ... my advice was intended to reduce the difficulty of your journey .... to put it bluntly, without employment you will have an uphill battle acquiring property - A job makes that task EASY (maybe your wife has a job) .... sacrifice your "lifestyle" for a few years and then live however you want when you no longer need any income beyond your investment income - for me that was a 4-5 year process

On the multi-family, I say if you like it buy it --- As for the specific numbers on the 4plex.... I am no help - I stopped evaluating properties beyond (1% of value in monthly rent) years ago - If I like a property and I like the location .... and I am CLOSE to 1% of value in rent, then... I buy

@Frank Crianza

Congratulations on jumping into real estate full time - 

My advice - go back to your oil and gas job!!

It is incredibly easy to get started investing in real estate - when you have a w-2 income ....

You can build sufficient investment income to quit your 9-5 job within about 5years - if you have the w-2 income to acquire the investments with financing...

Unless you are cashing out a 401k to buy real estate (which I highly recommend) go back to your oil and gas job and use that income to buy your investments.

Good luck and happy investing,

Jeff

there are very few multi-family options in the woodlands - a few areas in tomball or conroe

@Jeremy Mahan Since you said you enjoy your investment property and you are interested in buying more ... If I were in your shoes, I would do two things -

Thing #1 - Make sure you and your wife are on the same page - You will have an uphill battle if you guys want different things out of life - BUT if you are both working towards the same goal, it will be a fun ride!

Thing#2 - Use your owner occupant status to its full benefit (Low down payment-Lower interest rate, etc) and buy your next rental property now as an owner occupied home and live in it for a year or two while saving for rental property number three - Buy rental number three as an owner occupant and live in it for a year or two while saving for rental number four .... and so on.

You see that your wife will need to be onboard for this to work out - You will be buying a home that is possibly not quite what she may have in mind for your "forever" home and there will be occasional moves as you acquire new investment properties - Eventually, you will not be able to continue this technique and you will get to buy that "forever" home.  It will be a bit of a hassle with some sacrifice, but it is the easiest way to buy rental property and when you look back, you will likely feel that the sacrifice was minimal and you should be in a better financial situation to buy a nicer home for your residence than you are able to purchase now. 

Good Luck,

Jeff

@Mike Landry what ever happened with this property?

Aren’t we all ....

 It is my understanding that a quitclaim deed does not transfer ownership in the state of Texas – but  if the transaction from LLCX to man B was conducted through a title company, they should have caught that at that time

Of our most recent 4 purchases - 2 have been MLS buys and the other two were from neighbors of projects we were working on