All Forum Posts by: Matthew Perry

My advice would be to figure out what direction you want to run firs- though your comment about wanting to achieve passive income might be the answer to that question-do you want to go the buy hold or fix and flip? That is the first question to answer and then dictates the answer to everything. Your right to keep building income that is not a bad thing, but what are you doing to educate yourself as when the time comes you know how best to deploy that capital you have saved up? Spend some time reading investing books, get into the forums and discussion, and go to your local REIA meetings and surround yourself with people like you. You talk about your goals and that's great now figure out a game plan as to how your going to get there. Have you thought about a partnership with someone in the area for your first deal? You talk about not wanting to divest yourself of your capital- working with someone who is established that you can bring a portion of that capital to the table and work with is a great place and amazing way to go about doing your first deal. If even you go at it alone do not expect to make a killing on the first one, remember this a marathon not a sprint, and be happy with something small in return. You mentioned that stability is what you crave so you could do the house hack of buy hold live and keep repeating that process over and over again, but I do not think you would find that very stable for you or for your son and that regard you right to think about having that stability locked away in a bank, but do not be afraid to risk a little of that capital to start just figure out what your comfort level is and work from there, and of course do not be afraid to reach out.

@Michael Fratalia what do you see the biggest reason at this point for the low inventory? Buyers are flooding the market are sellers just being scared off?

I'd like to say the answer is dependent on size, but to me I do not see it as a such. Use a project manager. I doubt you want to be a site for the majority of the time. Leadership is more often times delegating to someone else is may cost more in your pocket but save you in the long run. I spend more time talking to my project managers than I do anyone else. I talk to them four to five times a day. Are they sometimes just status updates? Absolutely. But they provide a peace of mind that cannot be gained otherwise. I have used a project manager on a project as small as 500 sq ft condo and found that he got the project done faster, more organized, and with cost savings that I could never have accomplished. Your time in real estate development is by far and way the biggest opportunity cost and every time you are called out to a site or dealing with something else that is silly is less time your spending on finding your next project or networking to try and sell the project your currently working on. If feel like you want to be in total control than yes you probably are not in a place to hire a PM, and if you feel like the money is better suited in something else- i.e paying off a larger piece of the down payment, paying the interest on a HLM loan, or whatever the case might be ask yourself what happens when things go south and your tied up doing something else. A leaking pipe or electrical issue waits on one.

Boston is one of the highest and toughest markets to do a house hack in let alone real estate investing. Your ear has to constantly tuned into hearing every little thing imaginable and continually be talking to everybody about what they know and what they might now about what is available in the area. I agree with @Account Closed as well that you need to be aggressive start small the area you mentioned from Quincy to Boston is a massive area and a very expensive area at that. I'd narrow that down to a small portion of Quincy (avoid Southie that is a circle of hell in the world of real estate investing) and market heck out of the place. Let people know what you are looking for and if they even are considering selling their first call should not be a local realtor they know but to you and you alone. Shout it from the rooftop if need be. Letters are great- personalize them make the first ones about you and your family and what you are looking for, and then keep pounding them and when your done with that pound again and harder than before. Nobody ever said this was going to be easier, but it is fun. If you are not having fun your doing it wrong. Always do not be afraid if you have any questions.

Consider it if for no other reason to be safe a duplex. Yes if/when you go ahead and purchase the property then you go ahead and apply to get it zoned as however you would like it, do the extra electrical work to add the extra measures. Inspectional services loves nothing more then to find apartments like this, so it is better to go ahead and count it has you know it and as it is to start and spend the money to do it the right way.

So this is my take coming from someone who works for a private equity fund and is responsible for the real estate side of it. We believe that there is no one set answer as what the portfolio. We have been as high as 33% invested in real estate and as low as 20%. That is not meaning that we play the market by any means but we are seeing various market trends right now that we are trending right now back to the higher end of where we envision our fund sitting. I am going to take a contrarian prospective here and say that basically your client more or less fell into it. In this case it is the true definition of passive income, until he/she needs or decides to work on it. If you are truly worried about our mentality would be a 3-5% tweak in either direction on the bond side, and the allow the rental income to fill that void on a monthly basis.

The answer depends on what side of the HML spectrum you want to exist on. Yes, to drill down to the simplest form have an attorney draw up mortgage documents that would protect you and given you the first lien in the event that things take a horrible turn and you are left not only holding the bill but also a half finished product that you can turn and sell to someone else or finish yourself to recoup your money. Are you looking for share of profits? Interest only? Combination of both? Are you charging origination points upfront? Is there a balloon payment or are you allowing everything to be rolled in at once in terms of payment back? As I said the thing about HML is trying to decide what side you want to spectrum you want to be on and how creative you want to be-

A good negotiation in my eyes is like a rally in racquet or paddle sport- if it the current owner is willing to "give it away" then you either paid too much or could have gotten more. How complete of an inspection have you looked to? Are their liens on the property? At its face value that is a good deal and that always makes me a little cautious.

My soul job is to help my PEs firm overall be diversified through real estate. That said a company and a single individual are looking at night and day differences. In this situation my suggestion would be to start talking to a CPA yes the bill is going to be heavy but your savings in the long run are going to much higher with working with someone who knows how to trim your costs and one building can play off into another. Think of it simply you are looking to build wealth and not income as the US we tax on income but not wealth. Continuing that line of thinking you will better served.  

@Michael Fratalia what are your thoughts on the market in your area? How much stock are you putting on inventories going into the spring market in your corridor?