All Forum Posts by: Lucas Mills

Just looking for opinions from other members. I am considering the pro membership primarily for the deal calculator, so I am particularly interested in how well this calculator performs. Thoughts?

Originally posted by @Frank Gallinelli:

I agree entirely. In fact, back almost 45 years ago we sold our little single-family cape cod and bought a 3-family, which we lived in for a number of years. It's a good way to learn some landlording and property management skills, too. 

A bit off-topic, but I have a couple questions if you have the time:

1. I work a full-time job and can't leave in the middle of the day in case an issue arises. First, in your experience, what are some issues that may arise which might require one to visit the property, and secondly, what is a cost-effective and reasonable way to handle these things if I, personally, am unable to? I don't think I have any friends who I could recruit for this kind of thing, either.

2. One issue that concerns me are "threat to life" situations; for example, if the heater goes out at 8pm in the dead of winter, what would you do? Call a 24/7 service and eat the cost?

Originally posted by @Frank Gallinelli:

from the horse's mouth...

@Lucas Mills

Q1: I should have opted for clarity instead of sound bite. What I meant is that one will usually buy a 2-4 family property at a price that is based on comparable sales (similar to single family) rather than being based on the value of the income stream (specifically, the NOI).

Q2: I've also spent those same 40 years writing and teaching about that topic. If I get too specific (and rhapsodic) here about that and about my CV, I'll probably end up breaking forum rules against self-promotion. But feel free to contact me directly if you're so inclined.

Best,

Frank

Hi Frank - thanks for the reply!

As it relates to my first question... So you're simply talking about how people evaluate those mutli-family properties - not necessarily saying that they're a bad way to "produce income" for the investor - right? In other words, as someone with maybe 20-30k to invest, do you think this is the way to go in the beginning?

It would potentially eliminate my rent payment of $600/month and potentially provide additional cash flow on top of that. But even if it just saves me rent, that's $7200/year that I just saved from moving to a multi-family property, which I can then put back into investing into another property. Am I thinking about this correctly?

As it relates to my second question, I have actually stumbled upon your site already, in which you offer online courses which (I think) cover this issue. I am currently considering this.

In this podcast, Frank says the following:

"People don’t buy a single family house or even a duplex for its ability to produce income. They buy it as a place to live and maybe they get some income besides. But people buy the larger properties, the five and greater, for their ability to produce income."

It seems to me that a popular strategy of BP members is "house hacking" or, buying a 2-4 multifamily property, living in one unit, and renting the others. To me, this seems like an obvious choice to make if you are currently paying rent (why not move out and get your tenants to pay rent for you?). Additionally, I know that people work from there, continuing to buy and rent multifamily properties with great success. So, I was wondering what forum members think of this statement by Frank, or perhaps I'm misinterpreting it?

Furthermore, Frank said this:

"In forty years of dealing with real estate investors and ten years of dealing with grad students who are learning this sort of thing I think I find the one issue they have the hardest time wrapping their head around is the notion that a property, if it’s a true income producing property, its value is based on its income stream, not on comparable sales."

How do I determine the income stream of a property?

Originally posted by @Deanna McCormick:

kind of like asking how many kids should you have.. 

Lots of factors, any family or friends to help in emergencies,, how flexible is your current job if you had someone you needed to meet can you leave work for hour or 3.. with short notice...some issues can wait others can't, usually things go well but be prepared for the unexpected. 

Do you think you'll be doing the cleaning, painting, lawn mowing,, or are you planning on someone else..

I managed 3 properties 1 br units, total of 15 apartments and had full time job, 2 kids at home, but help from my brother, and knew when to hire help to paint and turn units,, I could leave my job at the drop of a hat so any emergency stuff wasn't a problem for me, and buildings were in decent location so I wasn't more that 15 to 20 min away. 

 These are the things that concern me. I most definitely cannot leave work at the drop of a hat - any issues would have to wait until either after I get off (~5pm) or on my days off (Tues/Wed).

But I'm assuming this isn't good enough for emergency situations, so what then? At this point, am I forced to hire someone who CAN respond to situations at the drop of a hat, or are there alternatives?

As far as mowing, I haven't considered this. I assumed this is something that is determined in the lease agreement. Is there a general rule of thumb as to who should take care of these kinds of basic maintenance tasks?

Originally posted by @Account Closed:

My wife and I work a full time job and have 7 rented units and 2 in the pipeline.  This question is 100% answer by the systems you put in place.

 Hi Mark -

Thanks for the answer; there's some good information here. Other than the semi-annual inspections/servicing that you mentioned, would you be able to go into any detail about these systems that you refer to?

Also, if I may ask, what kind of cash flow do you have coming from the 7 rented units after mortgage/expenses? I think that this is close to where I'd like to be in 5'ish years. Does this seem realistic?

Does bigger pockets recommend any payment method in particular?

I have a full-time job that I would like to continue working while getting started with real estate investing.

My short-term goal is to replace my currently monthly income of about 3k/month (after taxes) within 5 years. Based on what I'm reading, this should be feasible (but please let me know if this is not the case).

I plan to start with a "house hack" - purchase a multi-family property with an FHA loan and live on the property for x amount of time. Ideally, I will make at least $100 each month after applying the 50/50 rule. After some cursory searches on zillow last night, I almost immediately came across a property (a 4-family property) which is very close to fulfilling this goal.

My questions are as follows:

1. If I'm working an 8-5 job Thursday - Monday (Tues/Wed off), how many tenants can I realistically maintain, if any? Or must I step down from my job in order to pursue this?

2. Along with the first question, do I have to be available 24/7 in case there are issues, or is there an understanding with the tenants that issues might have to be resolved after 5pm each day or on Tues/Wed (when I'm off)? How is this best approached?

3. A bit unrelated - what (if any) are considered "emergency" issues that I absolutely must resolve ASAP or within a certain time frame? For example, I know that if my hot water goes out in my apartment, they will get someone there after hours to fix it. So do I have similar obligations with certain issues? This is one thing that is someone daunting to me (e.g., heater goes out in the middle of winter -- how does this get fixed?) I assume that you hire someone with the knowledge to come in these fix these issues, and I assume there are people that will do this at any time of the day?

In other words, what issues must I pay the most attention to and how do I resolve them (considering I have no HVAC knowledge, as it relates to my above example).

Originally posted by @Matt Mayotte:

facebook allows free payments through messanger if you connect it to a bank account.  I setup a fb landlord account and only use it for this specific purpose.

This is an interesting idea. How though do you track payments each month and make sure that you didn't miss one? If you only have a couple of properties then it's probably much less of an issue, but I would think that once you start getting 10+ tenants this may become somewhat of a chore to make sure everyone has sent you money on fb vs some kind of automatic tracking system which I assume other software has (such as venmo?)

I do not in any way think I deserve anything. And if it comes across that way, that's simply because I'm ignorant as to what's realistic, and what's not, given a certain time frame. For example, how long might it take on before I get to the point where I'm getting 3k each month, after paying the mortgage(s) and all other associated expenses? I know the answer is probably, and hugely, "it depends", but maybe you could give me a conservative estimate? I ask because I currently make about 3k/month after taxes. I know this is no great amount. Due to poor budgeting, I spend about half and keep half (I could definitely save more). How far away might I be from reaching this point with real estate investing, using more passive methods which currently appeal to me, and thus, being able to replace my income and essentially switch jobs?