All Forum Posts by: Matt Maurice

@Tim Swedberg FI, similar to life, is not a destination but a journey (you can probably find a poster of that with a cool sunset on @Brandon Turner's bedroom wall).

FI gives you the ability to work on what you want, when you want to.  Want to start up a new business (which I tend to have an addiction to), then go for it!  Want to pursue a career that you never otherwise would have?  Give back to the world through charity or philanthropy?  The options are literally limitless when you no longer are beholden to debt and can put food on your own table.  

"F you money" is not a bank account balance, it's a passive income status.

Long term real estate wealth building is great, and ONE of the best ways to achieve early financial freedom.  Another great option?  Starting a business.

Having a strong liquid position when starting a business can be extremely important, not just to your bottom line but to your stress levels.  Building a business can be stressful enough, don't make it worse by stretching it thin.  Be disciplined to put aside the reserve cash and NOT spend it in the business as well!  Damon John (FUBU guy and Shark Tank investor) has some great content on how money can kill a startup.  There is a lot to be said for an entrepreneur that has to hustle to pay the bills, you want to create that level of scarcity without actually being broke.  Almost every business doesn't need a big marketing budget when starting out (or any, really).  Usually they need an innovative founder with some sales skillz and hustle.

So pick the option that will provide you the most security, lower cost living and more cash in your pocket.

Financial Freedom.

Now, you can achieve FI plenty of different ways than real estate investing.  So why real estate?

Control.

I can't control whether or not the CEO decides to sleep with his secretary and the stock price plummets. I'm a self-proclaimed YouTube certified anything, and in some circumstances was just young and dumb enough to be ambitious. I was able to significantly increase my ROI and ROE (return on education) with every deal I bought. I now have a portfolio of cash flowing properties, and never need to call a plumber/electrician/HVAC/handyman or roofer to handle anything at my personal residence.

MOST PM's are likely not going to be great at running a rehab, it's not their area of focus and expertise.  Companies that are positioned to do this as part of their offerings can be the best option, primarily because they do have vested interest in a quality rehab.  Do you think that contractor you hired 12-months ago cares about a lipstick job?  Nope... but the manager that is till managing the house and has a long-term relationship with you does (well.. assuming they are a good manager, to the point of @Kevin Nickerson).

Now if your PM isn't staffed for this of management, then don't attempt to force them to do it.  Additionally, make sure you are evaluating the true cost of managing a project.  A good PM costs $45k / year in our market, or roughly $22/hour before taxes, insurance, travel and overhead.  If you want regular updates on progress, pictures, multiple bids, QA then hold the PM responsible for warranty and/or financial risk... don't expect it to come cheap.

Long story short... hire & manage the contractor yourself, have your PM inspect before releasing the final payment.

I bought my first duplex when I was 18, second when I was 19 and third when I was 22... and NONE of that matters.  Unit count is only useful at the bar, the best time to start was 20 years ago, the next best time is today.

You have a TON of stuff going on between different debts, kids, full-time work and vacations.  Daycare expenses will go away, but other hobbies and expenses creep there way in real quick!  

My suggestion?  Make your goal a financial one, not a door count one.  If you are using real estate to become financially independent, your bank account won't care how many checks get deposited just how big they are.  Additionally be patient, do your research and find the right deal.  The absolutely WORST thing that can happen is sacrificing family time because of a property purchased unprepared (the wholesalers on BP would love to buy it when you are fed up).  I beleive real estate is the best way to build wealth and achieve financial freedom, but it's far from the only way.  Also, make sure you are allocating your capital to the right places, sometimes eliminating high-interest debt can be more impactful to your financial goal, not to mention gratifying.

There are a ton of posts on 15 vs 30-year amortizations, and they can get pretty heated!  I'm in the 15-year camp and beleive the only real way to live stress-free is to not owe a nickel to anyone.  Leverage up to grow your portfolio, then aggressively and unapologetically pay off that debt as fast as possible.  

Uh oh... you must not have read Scott's book "Set for Life" yet, you'd get eternally mocked for pursuing financial freedom and not putting down the video games.

Be patient with out of state deals and setting up your network.  I'd recommend only working with companies that have a track record with OOSI's, plus always always always have your future to be property manager look at the deal pre-purchase.  Your agent will be done with the property at closing, your inspector doesn't care about the quality of residents the home will attract, your PM owns the deal for the long haul and is stuck with it once you buy it.  Good PM's will charge to do this inspection, pay them, it will be worth it.

Oh and never say "oral offer" ever again, folks may get confused about what type of currency you are using.  Go with verbal offer ;-)

When you have $200k cash, how can your local market be "getting too expensive?". I'm sure what that actually means is the cashflow or COC return is lower than what you find ideal, but personally I think folks jump ship from their local market WAY too fast. Syndications can be great & passive, but there are a ton of people doing them these days and I'm inclined to think not all are qualified. Any development deal is inherently risky and should have an appropriate upside to account for the risk.

Now back to the backyard piece... there is no market that you will ever know better than the one you live in. There is no property manager that can do as good a job as a professional self-managed investor. Even if you don't intend to manage it yourself, being local gives you a lot more control over repairs, maintenance and setting cap-ex expectations. Expensive markets tend to get expensiver (ok not a word, but roll with it). A low COC can be incredibly insignificant to the power of appreciation & leverage. All those folks that bought $400k properties 4 years ago that are now worth $500-$600k are taking their appreciation to the bank... to buy more property.

Hey @John Paniagua, welcome to BP first of all!

Secondly, have you tried reaching out to local property managers yet?  If you can find the right local agent, they can be very helpful BUT oftentimes don't have the full story; they work with clients up until the closing, not during the day to day management like the PM.  PM's are also generally forthcoming with where, or where they won't, manage properties which can be extremely helpful.  

When you reach out to PM's, find the reputable ones that have been around 3+ years.  Also, I find it helpful when folks are upfront with their intentions, don't dangle a carrot of potential business until you have business to be had.  Keep it simple "I am trying to evaluate a couple of properties in XX area and trying to get more information on the types of residents you typically see there".  Can follow up with "where do you prefer to manage?" or "where are your clients currently purchasing properties?".  

Welcome to BP Jarrett!  

Time on BP > Cheesy infomercials... glad you found where the REAL value is!

When you say no personal income, what are you doing to pay the bills?  My initial thought was going to be a house hack, but that, of course, wouldn't work if you don't have a steady income.  Furthermore, with only $1,000 / month of passive income, I'd be more concerned with steady income replacement and using your $30k as an emergency fund on your way there.  Any investment you can do with $30k will likely be riskier than most, leaving you potentially in a tough spot down the road.