All Forum Posts by: Michael Zuber

Thank you, Step 1 and 2 are often ignored or not respected as critical

Having reached Financial Independence via Buy and Hold Rental Properties I am often asked by new Investors “What would you do now if you had to start over?”

The following is my 6 Step Plan if I had to start over, it might not be sexy but I know it works.

• 1) I would immediately look to understand “Need” verses “Want” in my families monthly spending. When I started all those years ago we were spending 100% of what we earned and over time we got it down to 50%. If I had to do it again I would be far more aggressive and cut faster and deeper as this game is won by Earn, Save and Invest. Step 1 – Lower Required Monthly Expenses
• 2) I would look to increase my income from my Day job. If this meant changing jobs so be it. I need to focus on raising my Earned Income so I can Save and Invest more. For me this would mean getting a highly leverage sales job and crushing it by working 60+ hours and aiming to be the #1 sales person year in and year out. Step 2 – Earn more Money
• 3) I would wake up early and learn my market of choice. I know that I must learn what a Bad, Average, Good and Great Deal are in my market of choice. This could take 90 days or so but I would spend 1-2 hours everyday reviewing and learning my local market. Step 3 – Learn my Market
• 4) I would look to grow my Network and Get my Down Payment and Credit Right. I would try and meet 2-4 New people every week in my market, ask for referrals and make sure I am setup to get good rates on my first 4 investment loans via down payment and good credit. Step 4 – Get ready to Make Offers
• 5) I would start making offers on Good and Great Deals in my market. By executing Step 3 I will know what 1% or 2% of listing are not Bad or Average Deals and I would start writing offers that make any yes answer from a seller a “Great Deal” for me and my buying criteria. Step 5 – Start Executing
• 6) I would keep looking to add One Rental at a Time for as long as it took to be financially free again. Step 6 - Repeat

In the end this 6 Step process is not revolutionary, keys on living below your means, working hard at your day job, getting after your side hustle and holding on for as long as it takes.

You can do it!!!

Michael

Don't Drop Out that is just silly as everyone I know who ever dropped out has regretted it.  

Instead take on a challenge and see what kind of Entrepreneur you really are.

 I challenge you to Build a Side Hustle Business while maintaining an "A" average in school where you make more than your teachers the day you graduate.  So how can you hustle and grind for the next two years and make more than your teachers part time???

I promise you it is not being a Labor jockey for GC's. You do not want that life.  

I believe if you invest the next two years learning and building something that you could be off to the races by the time you are 18.  However, if you drop out now you have put a ceiling on your life and I promise you it is much lower than it could be by simply finishing High School.  Note we are not talking about college here we are talking about High School.

I have to tell you part of the real estate market is starting to feel like 2006 all over again.  If you look back at the charts 2006 goes down as a pretty good year.  That is until you see 2007, 2008, etc.  So what am I seeing this time that freaks me out and scares me to my core?

I see a "Herd" of new real estate investors rushing into a part of the market just like 2006.  You see in 2006 everyone was buying Residential Properties as anyone could get a loan and shoot multiple loans as it was so easy.  This easy financing drove prices up 20-40% more than they should of been.  But hey when DEMAND sky rockets prices have to go up.

So what am I seeing today?  Well today the asset class getting extra attention is B Class Apartment Buildings with Value Add Opportunities.  You see over the last 5-8 Years so astute investors have made an absolute killing in this space. They are sharing their stories and the large returns are driving more interest.

This interest has been spiked with the notion that anyone could be a Syndicator or General Partner, all they need is to go raise money via their network and boom they have LP's.

This increase demand is occurring on a much smaller supply size and thus Prices have raised, cap rates have lowered and suddenly what was a C or D property is boom a B- Property with upside.

If I am right the Lenders won't lose much if history repeats itself instead the LP's will be forced to hold on a lot longer, take a discount to get some money back or lose it all if the GP's can't manage the property.

In the end for the first time in 15+ years I am not in the camp of bigger is better as I am getting better returns on Single Family Homes.  

I think 2019 will serve as a Top for Multi Family units much like 2006 was the last good year for SFH before the last crash

I suspect a lot of folks who come to BiggerPockets are like me a Busy Professional who works 60 Hour Work Weeks, has a growing Family and is Desperate to find some type of Side Hustle that can over time establish Financial Freedom.

As real estate investing comes in vogue again I am seeing lots of excitement around buying units and big units as a first investment.  I get it, owning an apartment building is exciting, the value add possibilities are outstanding if purchased correctly and the cash flow can be life changing.

However after 15+ years of investing and owner of small apartment buildings I can tell you the excitement is getting a little a head of itself.  Frankly I see a possibility if the trend continues that Multi Family Properties will be over priced but still purchased by new investors (Think Single Family Homes in 2008).  This will lead to 1-2 years of hard lessons learned before investors either give up and sell at a loss or give it back to the bank.

Running Apartment building in C class areas is hard work and you should never pay A price Cap Rate is C Class Areas.

In the end run your numbers, don't get excited by Excel cash flow and please don't over spend because of bidding wars. Sometime losing an over priced property is the best option.

Remember: One Rental at a Time only works if you can hold for the long term through any market gyration 

Z

@David Moore - Like the way you think.  Thanks for taking the time to write this as it did help me expand my thinking and more importantly how I will address the question next time

I am looking to interview 50 People in December from all different experience levels and segments of the real estate investing world.  If you are game to have a short conversation and share some thoughts and answer a few questions please let me know via Direct Message or comment below as I am looking to expand my experience out side of simple Buy and Hold Land-lording in a single market (all I have done for 15 years).