All Forum Posts by: Paul Tan

@Dante Barnes I've got a calculator I've been creating. If you want, send me a DM and I'll shoot you a link. I think it could help you on running your numbers.While it's still a Work In Progress, I've got charts, an Amortization Table, and some extra costs accounted for. Maybe you and I could build it out together!

Finally got my headshot uploaded so I no longer have to lurk around the forums! XD

What are your thoughts on Starting Small (Cashflow) vs Going Big (Equity)?

Since I will invest in the Augusta, GA, I'm trying to figure out what strategy to take for the next 3-5 years. Here's the facts:
- I'm pre-approved for $330K but I can push it to $450K if I really need
- $10K-$20K Saved for down payment. $10K Saved for renovations
- Saving $800-$1400 every month
- I have access to the VA loan

(*preferred) Strategy #1: $100K-$200K purchase. ~$1000 Mortgage. Rent for ~$1000. Rinse/repeat once I can ReFi for 75% ARV. 1031 in 5 years.
Strategy #2: Buy a SFH in a subdivision for $300K+, waiting until I have enough cash/equity and buy again. HODL.

Here are my pros and cons for each:

### $100K-200K ### <-- More Active Investment
Pros
- Higher Price to Rent Ratio
- Fast turnaround to purchasing next property (6 month before ReFi)
- Value Add repairs can improve house value a lot
- 3-4+ purchases in 5 years = More Learning Opportunities/Networking

Cons
- Higher Risk of Bad Tenant
- Maintenance Repairs
- Lemon Purchases

### $300K+ ### <-- More Passive Investment
Pros
- More equity to draw from down the road
- Good Neighborhood
- Family Tenants are safer

Cons
- Higher Operational expenses (Taxes, Insurance)
- HOA Limitations
- Typically recent builds/renovations so not much room for Rehab
- 1-2 purchases in 5 years = Fewer Learning Opportunities

I know that there is no one solution. Also, specific advice depends on me providing more details. But I always like to hear more new perspectives! So hit me with everything you've got!

Congrats Jack! You're definitely on the right track.

You and @Kerry Noble Jr are definitely right with doing an master-apprentice model. You'll learn the most there. But forewarning:

There was one BP podcast I listened to where David Greene said a lot of rookies approach him looking for help but they have nothing to offer.The people he's taken under his wing say "Hey David, I'm good at doing X. Let me do that for you if you've got some time to chat"

But I recommend making sure you have a good RE knowledge baseline! If a high schooler asked you for Stock Market mentorship, how would you feel if the first thing they asked was: "What is a Bull Market? What is Day Trading?" Real Estate agents can be busy so you can have better chances if you come prepared:

- How many homes are considered multifamily

- ARV, LTV, Cash-on-Cash Return

- All the steps for closing on a home

I don't know how well studied you are. I'll give you the benefit of the doubt that you know your basics. But at the very least, keep reading BP Blog Articles, listening to BP Dailies or their main podcast. Heck, go watch This Old House! 

Best thing for your scenario, is to identify what the real estate agent needs. It's not easy to think about what tasks to delegate to other people on the spot. Trust me, I've been there. Maybe you're good photography. Do Flambience Photography for them for free. Or you can approach them with some Deals that you've analyzed and found online. Saving people time with free leads is something anybody likes.

Hit me up if you want to chat more!

One small consideration you might consider depends on if you have a LLC.

From what I understand, if you operate a company, there is a higher chance that the IRS will audit you. So if you put your first property under the LLC's name, you will probably fill out a Schedule C (Profit/Loss). Maybe even a Form 8829 (Expenses for Business Use of Your Home) if you are an Active Investor in the eyes of the government.

If you get hire a CPA, they can fill out your taxes easily. So make sure to use a good accounting software to keep track of your finances! A CPA will file your taxes on your behalf, putting their weight and credibility behind your return - making an audit less likely. That way you can keep the IRS at bay for as cheap at $100!

It's not completely necessary if you're starting out, but I'm someone who prefers to be safe than sorry.

(P.S. Someone fact check me if I'm wrong. I'm always to updating my RE/Business knowledge XD )