All Forum Posts by: Lee Reeves

@Kate Kedenburg A couple of preliminary thoughts and questions for you:  1.  The expenses seem very low for the amount of income.  Would expect something closer to 50-60% of income.  Hopefully, he's including labor costs for work orders, management fee, materials cost, marketing costs, landscaping costs, licenses/permits, office supplies, bookkeeping and accounting costs, etc.

2. You mentioned some of the neighboring rents, which is helpful, but what are the cap rates for recent sales in the area? It's not always instructive for a smaller property such as this one, but if the NOI is correct, he asking for a 7.5% cap rate, which is low for my area, but may not be for yours.

3.  A $165 to $215 gap in rents is exciting, but you'll need to likely do some renovation and curb appeal to the exterior also - have you thought about that?  I typically get outside financing and roll the rehab costs into that financing.  That leads me to...

4.  Why are you thinking seller financing?  Do you think you might not qualify otherwise?  Or that the property might not qualify?  Or is it about the down payment/equity cost?

Ah, I think I'll just bask in this for awhile.  And since this horse is almost beaten to death, hopefully I can put aside my keyboard and agree to disagree with any others.

And I won't even bother to quarrel with @J. Scott's assertion that a refund request rate is the same as a success rate of applying his book to investing.  That would almost be like saying that the number of Better Business Bureau complaints divided by the number of members is equal to a success rate.  But like I said, I'll let someone else take that up.  ;-)

Big of you, Greg, and apology accepted.  For the record, I was not implying that you did not go to college (it was my assumption you had) - I was only making the point that you paid to go to college to learn what they taught, notwithstanding that the knowledge itself was available elsewhere, and likely for less.  

The big diss on BP against LU is that LU costs something and BP doesn't, so therefore LU is either inferior or for inferior people.  

I just couldn't disagree more.  One of the things they advocate is to learn more from other people's successes than from other people's failures.  Put another way, do what successful people do.  Every month, I get to meet a couple single family investors who present their successful deals and at least one multifamily investor who presented his/her successful deal.  I'm sure there are many successful people here on BP too, but meeting and talking to someone face-to-face who just talked in depth for 30-45 min about the details of their last transaction cannot be (in my opinion) be replaced by interacting in an online forum.  

Is experience the best teacher?  Yes, I actually agree with you on that.  But my experience has also been that by imitating the successful behaviors of people I have actually met and know to be successful (versus sorting out what works/doesn't work, what's real/not real, which is the best of a multitude of opinions - and which are qualified opinions or unqualified opinions), I am also more successful and avoid some of the "muck".  LU puts me in direct contact with other successful people and that is one of the primary benefits I've derived.  (I avoid the opinions of hanger ons and wannabes that are also members of LU, BTW - they are often more easily discerned in person).

PS - As an aside, I admire UT and have many friends who went there, though my alma mater, Emory University, is still undefeated in football (no football team).

@J Scott If my experience here has been any example, I think those who have been asked about their training program and actually responded usually get the street gang "knockout game" treatment here on BP.  

Maybe because it's human nature to deride those who have made a different choice than the one you (royal "you") have made.

I could've gone on with my life and my REI after my first post on this thread and been just fine. But I think that would have just fed the bias.

I do think that most others make the opposite choice - what do they have to prove here anyway?  If they are an active member of LU, you have plenty of positive interaction and don't need BP (where negative interaction seems to be the norm), unlike those who only join BP and may need or want to be on the forums.  Not knocking it, only explaining it.

Why do you have to be like that?  It wasn't me who wondered why one would pay for something he could get for free with all the information out there in the world.  Is it not true that you can access all the information that a university teaches - for free?  Way to avoid answering the point of my message.

@Tyrus Shivers I think you make a solid point.  I have learned so much from my friends (who I happened to meet through LU), but one-on-one with them.  That is the true strength - finding people who have done what you want to do (this is the key) and doing what they do.  Better altogether if they teach you directly.  Giving back and paying it forward is the real deal.

@Nick B. , thanks for the linking tutorial!  Sorry to hear about the SF presenter.  I haven't encountered anything like that in Houston.  I'd have to assume that is not typical in Dallas either and am amazed that they would put someone up who took 3 months in rehab and hadn't rented it out.  Rehab should take no more than 2-3 weeks and should be rented before the first month is up.  On the MF, I guess I would ask what you would expect to be the case?  If they purchased it themselves without partners, you have to come up with all of the equity.  If you don't have the equity yourself, you can take on investors in your deal (all subject and in line with SEC, of course), but your share is diluted.  I think the real question about that deal is what their return was, both cash flow and any increase in value.

@Hattie Dizmond I'm not sure if the "you" in your post was a royal "you" or if you were referring to me directly. If the latter, all I can say is that REI is very entrepreneurial, but there are best practices. And I'm not the first to have encountered whatever it is. If you're up for the trial-and-error approach (and consider that part and parcel to being an entrepreneur), no slings from me. But learning from others and copying their success seems like a better business model to me. And I learn just as much from other members of LU who do MF REI as I do from LU at this point. That's one of the real values of that group. Of course, I have no experience with FortuneBuilders and sounds like you have no experience with LU, so I can't draw a parallel between them at all.

@Chris K. With respect, have you purchased anything yet? Your profile says you're seeking properties. I hate to be a defender of LU here (nobody has asked me to be, certainly), so I guess I'm really just defending my choices and my experience with them - BUT, I talked to a couple members before I joined. I asked them what their experience was and it was a good one. So, I didn't jump blindly. And I think I've even heard them say that there are no secrets in real estate. They don't claim that, but they do claim to have one of the best business models out there, which I have personal investing experience with and think is true. If there are 100+ different ways to do SF and MF REI, do you think they quantitatively are all the best approach? Of course not. How can you sort through that on BP? LU might not have any proprietary information, but by teaching their business model and then supporting it through their vendor list, mentors being available, further classes by vendors, and networking with other members, what they do have is very powerful for any buy-and-hold investor looking to do it right.

One last point and then I think I'll put down my mantle here (I have properties to run and this is a time-suck!): LU has produced the National Apartment Association Independent Owner of the Year for 9 of the last 9 years. I had dinner with the 2013 and 2014 award winners last night (who have also won Houston Apartment Association and Texas Apartment Association awards) and discussed what they are doing at their complexes that I can think about or borrow for mine. That's not an atypical meeting or conversation. And these are serious businesspeople that have done tremendously well for themselves and their investors. I'll put my lot in with them any day. When a trainee or paid member of BP wins a national award for implementing what they've learned here, I'll certainly listen to those who think I've overspent on an REI education. But probably not until. ;-)

@Nick B. (I have no idea how to actually make this link correctly), my feelings weren't hurt, but I am big on integrity and it did feel like a set up to question my integrity.  If I misjudged that, you have my apologies.

I know a good number of members, both basic members and MF members. One guy who has become a friend of mine recently retired from his job (he was an engineer) because he earned enough cash flow from his 5 single family houses and several investments in MF deals. Most of my friends are either full time real estate investors now or are in between - they earn quite a bit of side income from their SF and MF deals (many at over 20% COC), but still work their jobs. Many SF deals that they purchased over the last few years particularly, return over 100% when they sell. I know several that are in MF that have had a 100% return when a refi is done.

Another friend joined a year ago as a basic member, didn't do anything, and a few months ago (May?), got back involved as a SF ("Challenge") member and closed on 2 SF purchases and is in contract on a 3rd.  

I don't know how many people join, but never do the 2-day class.  I also don't know how many join, do the 2-day class and then never do anything.  Though I can't answer those questions, I'd imagine that the 80/20 rule probably applies, which seems like it would be normal.  To be fair, how many join BP and don't do anything?  How many join ANYTHING and fail to take full advantage?  The people I know who have joined, learned the business model and applied it have been able to successfully purchase SF or MF and make a nice return.  Though it's anecdotal and personal to my experience, success is completely dependent on your taking action than it is on whether the business model works or not.

About me personally, I have a small investment in a larger property and funds into two value play properties purchased this year that are just getting to a stabilized point (i.e. no distributions on those two have been made to the partnership), so clearly, there's not much cash flow at this point (my passive investment is cash-flowing at around 12% annualized, but I had a smaller investment, so they're not huge dollars).  I should note for whoever is keeping track that while cash flow IS the ultimate goal, my net worth has increased by $375k+ (a 300%+ unrealized return) as a result of those MF investments (Increase of property value * my ownership % - original investment), so I'm happy with that.

Basically, Nick, you have no REI experience, but are doing an extraordinary amount of due diligence before you attend a free case study - where you get to meet actual members and ask them about their experiences, listen to members present their actual deals, and talk to LU mentors directly. Why don't you do that? What's holding you back? That's probably a better source of info on LU than posting on BP, frankly.