All Forum Posts by: Michael Norwood

@Michael Norwood my ideas for simpler investment ideas are not earth shattering - low cost index funds or some of the ideas mentioned in other posts. Compound interest is magic. Just buying assets that appreciate and spit off cash (in the form of rent, yield, or dividends) and then holding those assets for a long time is the game. Your income, which appears to be solid, is going to be your biggest wealth building tool. Keep buying assets and you'll get to that $20k per month goal whether it ends up being real estate or not. 

If you've not read either of Morgan Housel's books (Psychology of Money and Same as Ever), I'd suggest picking them up. With your income and regular investing, it's gonna turn out okay financially. Figure out what gives you the best life. If that is real estate, go for it. 

Quote from @Nicholas L.:

@Travis Timmons

what you said 100%.  the best returns right now are in hands-on, creative, high time intensity activities.  those with high 'hassle factor!'  or, spending tons of time building up a network that can get you access to deals and opportunities.  if we could all go on Zillow and push Internet buttons we'd do that.

@Michael Norwood

all of the things you listed are viable options, but some of them are at opposite ends of the spectrum in terms of time and hands-on-ness.  STRs and REITs, for example.  and creative finance is great right now, but you can't just go on Zillow and find those deals.

direct ownership of RE, AND low hassle: turn-key, low-maintenance, break even properties in great neighborhoods.  but cash flow on those will be 0.

i'd start going to all of the REIA meetings near you. if you're going to do this as a couple that's great, you get more bandwidth. you can alternate one a week. start with whatever is near by and then expand out until you find ones you like. then ask everyone there what they're doing.

hope this helps, I don't have a specific asset type recommendation for you at this time =)

Cash flow will be negative.

That's why I suggest the low leverage in great A neighborhoods. Rather than buy 10 B properties with this capital-- if you really want hard RE exposure, buy 2-5 properties less levered and have way less of a headache. You'll get higher quality properties(likely better tenants) and less physical exposure, but still enough if that's what you want.

But think about it, if that's what you want. Lots say they do, but don't really. 

@Travis Timmons

what you said 100%.  the best returns right now are in hands-on, creative, high time intensity activities.  those with high 'hassle factor!'  or, spending tons of time building up a network that can get you access to deals and opportunities.  if we could all go on Zillow and push Internet buttons we'd do that.

@Michael Norwood

all of the things you listed are viable options, but some of them are at opposite ends of the spectrum in terms of time and hands-on-ness.  STRs and REITs, for example.  and creative finance is great right now, but you can't just go on Zillow and find those deals.

direct ownership of RE, AND low hassle: turn-key, low-maintenance, break even properties in great neighborhoods.  but cash flow on those will be 0.

i'd start going to all of the REIA meetings near you. if you're going to do this as a couple that's great, you get more bandwidth. you can alternate one a week. start with whatever is near by and then expand out until you find ones you like. then ask everyone there what they're doing.

hope this helps, I don't have a specific asset type recommendation for you at this time =)

If you don't want to take on time consuming projects, get your hands dirty, or self manage, you're going to get a better return from lower maintenance investment options.

Funny thing just happened here - I'm betting that you posted this expecting a litany of real estate investors telling you to invest in real estate. You've kind of - not completely though - received the opposite of that. It's a great business with outsized returns, but those outsized returns require a level of specific knowledge/expertise, time, and a real hassle factor.

Quote from @Michael Norwood:

Quote from @Jay Hinrichs:

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional. 

Thanks for the tips on maximizing cash flow @Jay Hinrichs! We're particularly intrigued by your mention of NNNs – the hands-off aspect is definitely appealing. Could you tell us more about how you leverage NNNs in your portfolio and what specific types of properties you find most effective for this strategy?

We're also open to exploring creative financing techniques to "be the bank" for extra income. Any insights you have on those approaches, like seller financing or joint ventures, would be hugely valuable.

Ultimately, we're looking for the best mix of passive income, appreciation potential, and tax advantages. NNNs seem like a good fit on the first two, and your mention of creative financing piques our curiosity about tax benefits as well. We're eager to learn more and make informed decisions.

Thanks again for sharing your wisdom!

notes or be the bank as it were is simply:  Lending money to flippers or bridge loans for buy and hold or you can do medium term  2 to 5 years.

you find these potential borrowers at REIA's dont lend to anyone you have not met in person and checked just like your vetting a tenant.  Same rules apply.

Only do First position there is a lot of noise in the Pace Morby world about gap funding or Gator funding this is highly risky.

Once you find a few good RE entrepreneurs that you like they will stay with you for years.

u can expect 10 to 15% interest rate on the note with 2 to 5 points on top..

this is just the simple version but I have been putting these types of loans together for myself and clients since the mid 80s.. Like any RE investment nothing is Risk free but this is a pretty good way to go without the TTT adventures with SFR rentals.

Of course there are note funds as well.. but those you lose control your trusting someone else there are threads going around on BP about a company AHP which it seems is melting down so you lose all control.  When you are the SOLE lender your risk is your borrower and the project you get lenders title insurance etc.. If you don't want to try to do this yourself every market will have Brokers that specialize in putting these deals together .. Generally they take the points and U get the interest on the Note.

There are books you can buy that will go into great detail how to safely be the bank.

Also, I don't know where $20k/mo is coming from but if it's a number out of the hat or a hard number to meet your desired living standards. Then please realize every 12-15 year, you will likely need 40-50%. So if this is a 10 year goal, it should be higher if $20k is what you need today.

With that said, chasing strictly cash flow may be missing the forest for the trees especially with a decent time horizon. 

Why do all the work when you will be busy generating this amount of funds.  You should invest in others syndications as an Accredited Investor. You will get to $20k/year no problem and have equity. The 20k just being the cashflow.  You could still do a couple small deals on your own because it will be fun and good experience. But I think it's a no-brainer to be an LP in some very professional syndicated deals.

• Time constraints: We have busy schedules, so low-maintenance options are preferred.
• Cash flow priority: Our primary focus is generating steady monthly income.
• Open to possibilities: We're receptive to various models, asset types, and strategies that align with our goals.

Ok, then don't get your hands dirty with too much physical assets. If you want exposure, just buy enough to get that then buy the reciprocating notes behind it in the short-term.

Buy great property, moderately low leverage once in 4 years. Put reserves aside, the rest in a debt fund that can you pay the 6-10%. 

Year 5-10 buy 1 to 2 in STRs with low leverage, in different years, get the tax kickback and (volatile) income, and 1 LTR with low leverage and the rest in debt fun or equity fund that can get 6-10%.

You will have 2-4 low leverage, excellent properties making you very good cash flow & sizable capital in debt/equity that will give you 6-10%. 

But really, if you're just looking for steady income and don't want to deal with this. Buy the notes, buy debt, buy equities. This is a commitment. 

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional. 

2 mill will get you about 200k a year, with 10% net caps, so just start buying rentals. 

Yes, its that simple, though many will make it seem more complicated. 

All the best