All Forum Posts by: Des Shei

for most of my rental units- if the cabinets are structurally sounds. i almost always do a spruce up- I have a standard paint that i use, then visit my local homedepot and pick a nice set of contrasting hardware to match. Depending on the condition of the countertop and sink faucet, i may spruce those up as well or replace as necessary. Doing this typically costs about 10-15% of a full replacement project. 

For a flip, i typically do a full replacement unless the cabinets are in very very good shape. If the cabinets are in good shape and the property is in the lower tier of the price range, i may lightly refurb and update cabinets, hardware, countertops and faucets. And don't forget the stainless appliances for flips :-)

Des

While i can certainly understand the urge to jump in with both feet now, i can speak from personal experience when i recommend you- complete your education, get a good job, save massively for a few years and then plan to systematically build a buy & hold portfolio after that (at least in my case). Keep doing this until you reach a point where you have sufficient semi-passive (landlording is not all passive if you self manage) income and know how to allow you to then venture into other R.E investment arenas; such as flipping. If you planned to venture into flipping first, the change to the strategy above would be to save massively for a slightly longer period after college to self fund your acquisition + rehab costs(repeat X amount of times) and reinvest portions of your gain into a buy n hold fund (which you can then decide to use toward down payments on a loan-assuming you hold on to your job or pay cash for rental properties). Hope this gives you some perspective.

Des

I plan to show up to this get together as well.

R,

Des

My rule of thumb, if the numbers work and it's a good deal, pull the trigger. You'll never reach your goals, if you're waiting on the sidelines for the homeruns, there are alot of "first bases" in today's market.

Huggy Baird
There are few people in your shoes, myself included that make enough to be comfortable, do both because we ENJOY it and can handle the load . But the reality of the matter is this, the vast majority of folks contemplating the decision to move into R.E full time are in jobs very well south of the 6 figure earning threshold. In in that case, my suggestion is one to protect those individuals from premature failure in this business. This business is not forgiving if you don't approach with a robust structure.

By the way this is a universal consideration for anyone that is considering breaking away from your career/job in pursuit of any business venture. Some will go cold turkey, and summer for a few years before getting to the 2x or more of your prior salary benchmark, but ideally i would recommend people make the switch under these condditions...

I'm really surprised at some of the responses....
to do this full time i'd recommend people consider having 6 months reserves of living expenses and another 2x of what your monthly gross is before you go fulltime.

So in that case someone with monthly expenses of 3000/month would ideally want roughly 18-20K of reserves before they even THINK about going fulltime. That takes care of the stress of not having to worry about the bills, food on the table etc so you can focus on your BUSINESS.

The next challenge is generating cashflow, and maintaining that influx of revenue. For that:
Assuming again you made 5K/month, 3K monthly expenses, and you lived a comfortable life. You would want your real estate business to generate an average monthly revenue of 1.5- 2x what you were making before, in this case 7500-10000. I say average to account for the flippers who get their pay day in chunks as opposed to month by month. The reason for 2x buffer in monthly revnue is simple, for the Buy&hold invester, a series of evictions, big ticket repairs etc can be detrimental if you only match you monthly salary, and likewise for the flipper, longer hold times, unexpected issues can cause your profit to fluctuate. So having at least 2 times, buys you peace of mind and detaches you somewhat from the volatility of the R.E investing arena. Some people might be able to cut it a bit closer, but like everything in life, you have to personally evaluate the risk and rewards of that decision.
Hope this helps someone :)

Happy investing!
Des.

i usually buy these stocks when they are in sale because my apartments usually have 3' doors or 2' doors for closets etc. so last time HD had a sale on these doors were about 24 bucks i think, and i bought a crap load. They add A LOT of pop for not a lot of money, it almost makes no sense not too unless you are in a really dumpy low end neighborhood, in which case you really shouldn't be buying in that locale anyway. I say do it. Your buyers or tenants will notice the different as they've probably seen it in all the other 'rentals' or sub 100k homes in their price range. There's value in being different :)
happy investing!

Ps:
learn to replace the doors yourself and save even more.
Des

If you're trying to have us justify why you shouldn't get a CPA and do it yourself you wouldn't get it... you know what the right thing is to do :) if you truly have the burning desire wish to learn and understand more about the tax code and implications/deduction etc, there are a lot more avenues available for that both on the forums and on the greater web instead of crap shooting on your investor tax return. Remember... "don't jump over dollars to get to the pennies" ... happy investing!

shop around for local brokers and small banks. The fact that you are not working will definitely hurt the process...banks are still very conservative these days. They will consider some of the rental income. since you're just doing rate and term as opposed to cash out, they might be able to work with you but your local broker or small/regional bank mtg rep will be best to coordinate the details with. Start researching :)