All Forum Posts by: Kai Van Leuven

@Marcus Auerbach

Snohomish. By far the best area in Snohomish County. Nice down town and surrounding hillsides (Dutch, Lords, Fobes). City and county has curbed growth and lots of houses outside city limits are on acreage. I love living here...

@Nicole Heasley

Pay taxes.

After reading a few of these posts it’s interesting that people will go through great lengths to write off everything, create entities, use hard money lenders, ect. When they could have just paid XXX in federal taxes and been able to buy whatever they want.

How much are you saving? What hassles is it creating? How much would one hard money loan cost in comparison to paying some income tax?

@Christian Walker

The best way to keep a good relationship with your family is to not do deals with them. I have done 2 deals with family and the only way I did them was because our rolls were very defined.

Deal #1

Dad- Me: My dad was pretty seasoned investor and I was 18. I didn’t make any decisions just worked like a dog. We were unequal partners and I was ok with that. I would rate it a 6/10. I gained some experience but had little control over the process and there was no exit strategy. I talked my dad into buying me out.

Deal #2

Brother and Me: I have been investing a long time. I told him that this is my project and if he could provide some capital and labor that would be great but I make all the choices. My brother is a very successful dude but I made it clear, “this is my project and I am the boss.” When push came to shove he understood the relationship and we made it work. I would rate it a 8/10 for a transaction. We both were paid well and so there really can’t be hard feelings.

My point is that doing deals together can be a negative in relationships as well. If you are losing money or didn’t plan for an unexpected cost, how would you or your dad react?

My family is very close. We get together, all 15 of us, every week. We talk a lot of real estate but mostly we are there to bounce ideas off of each other.

@James Edward

My new hack is getting a mini Excavator and a 40yard dumpster. You can take down a 600sq foot building in a day.

I will go through stuff to a point. I am really picky and know that collectors really only want stuff in perfect condition.

Sometimes I will make “lots” of items like tools, bikes, furniture, ect. So that I can sell 20 items to one person

I just feel like I make money on houses. Not on the junk people leave behind. If I can make $500-1000 in a few hours, great! Otherwise, this stuff is just in my way.

@Alberto Nikodimov

The only reason I wanted to do the partnership was because I knew it was a short term flip (3 months). If you are looking at how long it will take to get paid on a BRRR to me all of my "equity" is pretty illiquid. Also, alot is out of your control (Sell, refinance, buy-out, ect.)

I would try and get paid as much as possible up front (commissions, acquisition bonus, ect.), be smart with my money, and do my own thing. That way you have complete control over the process.

Lets say you are crushing it, at some point you will look at the "contributions" of your financial partner and say "I am literally doing everything, I am out". I would rather you figure that out before you start than years into the relationship. Just my .02c

@Alberto Nikodimov

From my perspective there is a reason these partnerships are not common. The only thing that is absolute is the purchase price. Everything else is TBD. These are the questions that remain unanswered at the time of a partnership agreement;

-How good of a deal is it (will find out after appraisal)

-How hard will the renovation be (after it’s done)

-How hard will it be to manage (after a renter is placed)

This is where the relationship is important. The first deal one of you is bound to get hosed but then I would come back and negotiate something that is fair on the next one.

I recently did this with a partnership. I totally undervalued what I brought into it but the project was way easier and more profitable than I anticipated. My partner did super well, I did ok. He said “anytime you want to do that again, I am game”. I would probably make some tweaks but you can’t know that, without doing the deal.

@Macintyre Braun

When I feel like the discussion gets too one sided...

Yes, get a degree! Only if the degree pays (anything with engineer, stem, teaching, ect.).

I am a little shocked by the no education people. I chose not to get an education and go full time into investing. It is very very challenging. I will sum it up like this.

——————————————————————

The Tale of Two Brothers; a cautionary tale

One brother dropped out of college 4-5 times. He was constantly chasing the buck, taking crappy jobs, and buying real estate. After working every second of his life (100 hours per week) and using all of his vacation and sick time to buy property. He finally was able to quit his job. Lives a great life but would not do it this way again...

The smart brother busted his *** in college. Graduated with honors from a private college, no debt. Went on to get a Juris Doctorate, Magna Cum Lade (or something like that). Started pulling in tons of money. He did this while not working that hard after college and having a nice home life balance. He casually buys property and has a nice little portfolio. He enjoys his 5 kids (not a typo).

———————————————————————

This is my point. I see my brothers life as so much more pleasant. I was completely absent because my value per hour used to not be that high. I simply had to put in more hours to make up the difference. I told myself that when I dropped out each time.

@Joe Villeneuve

This discussion has left me less informed than before. I have a little “princess” that needs a canopy bed put together and then after that I will probably stare at the ceiling...

I am out on this conversation

@Matthew M.

Joe really does not know what cashflow is. There are so many responses on this thread to show that. If he doesn't know the answer, he will either not respond or post what he found from a quick google search. Look at how he explains IRR... you think he has any idea?

There is a reason all these markets in the middle of nowhere are going up in price (I can’t even say value). Folks are chasing terrible deals, based off of poor analysis and information.

What understanding cashflows does is help you look at the entire cycle of an investment. Most of these areas that “investors” are getting the 1% rule are areas where a property has depreciated in value and is currently selling for less than replacement cost. What does that tell you? The property value does not even keep up with inflation. I get someone else is paying for it but it has to be worth it as an investment.

@Matthew M. This is probably one of the most frustrating this about this site. People throw out terms that have gained traction through BP but there is not an underlying understanding of the concept, in this case cashflows. I would love to have in-depth discussions that move real estate forward but this site is stuck on 1%, monthly cashflow, and mythical cap rates. It is all pseudo- financial analysis. If @Joe Villeneuve doesn't understand what a cashflow is, how he educate others on it. All he can do is regurgitate "group think knowledge" and dogma. 

@Joe Villeneuve

What does the statement "Debt service is one of the most important parts of cash flow." mean to you?

What are your "off the chart" returns, based on IRR?

How would you classify my refinance? Is it a cashflow or not?