All Forum Posts by: Michael Swan

Hi Justin,

Those were two separate issues. I was talking about how the IRA and 401K path to financial independence is flawed. There was a period of 10 years where I put away $6,000.00 a year into my tax deferred IRA and after 10 years the balance was the same as I started with 10 years before. Of course, I am pretty old (50 years old) and had been contributing all along since I was 25 years old. I liquidated everything and refinanced my personal residence and pooled my money together with my parents to accumulate those original condos in San Diego over a 3 year period. So yes we were all in with my parents on down payments about $400,000.00 seed money in those 3 years. Then at the end of 2014 and the first 6 months of 2015, started to use most of our cash reserves to invest in single family in Euclid Ohio. That was about $250,000 all in and cash purchases and rehab for those 8 single family. Then at the same time was getting educated on the 1031 exchange and exchanged our first pricey condo in San Diego for a 10 unit complex in Cleveland Heights, Ohio. Then, we sold another pricey condo and 1031 exchanged it in for a 15 unit in Painesville, OH. Last, we 1031n exchanged another condo for an 8 unit in Shaker Heights, OH. Now we are trading in another condo for a 12 unit in Euclid Ohio. We also did a straight sale on a condo we only owned for about 18 months to increase our reserves.

The map is there for everyone to follow.  Keep trading up, until you have two or three large complexes.  That way we go from our current 46 front doors and soon to be 57 or 58 front doors and 1031 exchange 4 or 5 more condos this upcoming summer and buy 4 more apartment complexes and have about 90-100 front doors minimum.  Two or three years after that have about 200 front doors. Two or three years later 400 front doors. Three years later, 800 front doors.

Ultimately the goal is to have $50,000,000.00 in property value and $16,000,000.00 in net worth and $1,000,000.00 in yearly, tax deferred cash flow.

This will not be easy.  Imagine if a lowly paid teacher with combined family taxable income of $80,000.00 living in pricey San Diego could make tax deferred even half this amount.

Again, what a country!!  AMERICA!!!

Swanny

Right now trying to stay away from section 8.  CMHA is horrible.  They owe me approximately $2,000.00

Hi Christopher,

I am pretty hand on right now. My single family property manager their in Ohio is growing with us and managing my apartment complexes too. Brokers I have created connections with are now sending me pocket listings and my property manager scouts the property for me and then I negotiate an LOI and Purchase Sale agreement with the my Attorney's help. My attorney takes over and protects me from there. I then do the financial due diligence from afar and then I travel to the property to do the property inspection with my property inspector and my property manager. If we find anything dramatically out of order with financial and physical due diligence, we renegotiate or walk away from the deal. It is soooooo, exciting!!!!

Swanny

Thank you all for your replies,

Here is another interesting trend I have discovered through all my education and experience.  For every area that is beginning to peak and be the end of a phase 2 selling market like San Diego, there are other area that are in a phase 1 buying stage.  The people in these particular areas (Residential and Commercial brokers, residents, etc...).  Don't even see it because they were hit so hard and haven't noticed the jobs, downtown building, Big events, airport restoration and modernization, occupancy rates, sports teams building state of they art stadiums etc.  They can't see it rights in front of their eyes.  All of this is occuring in the area I am investing in right now.  I couldn't believe it when I was lounging at my hotel in North East Ohio and I told the people about my acquisitions so and they couldn't believe what  I was investing in and where.  

They talked to me about how low the prices  have  tumbled since 2004.  They couldn't fathom that their part of the country could be an emerging market.  They talked about how a large (20%) Mexican population had migrated.  They were not happy. I informed them that the mexican families I rent to in San Diego are hardworking and paying their rent is a high priority. I also tried to educate them that I am purchasing apartment complexes and I want to rent to such hardworking people that are not likely to buy a place of their own and rent from me.  They could only see difference in these people and had trouble understanding me.  I then talked to them about the National Republican convention coming to Cleveland in 2016, the associated boom for businesses, the modernizing of the dungeon looking airport, Cleveland Heights Coventry area, Ohio City, Shaker Heights, Eastern expansion, the amazing hospitals and top of the line clinics, numerous universities, jobs associated with the building and service industries that benefit, Lebron James, sports teams, hall of fame and the list goes on and on.  

I am excited out of my mind about all the signs I see of an undiscovered emerging market.  Sooooo,  I choose to invest in a buying stage phase 1 I would much rather be a little early in identifying this market, then way too late.  That is what places like San Diego are currently positioned.  This is the beginning of a stage 2 selling phase. 

Swanny

Hi Patricia,

Georgia area should be a nice emerging market now.  How many properties do you have so far?

Swanny

I listen on Tunein Radio App.  The latest one on that app is Nov 9th.  The last one before that is Nov 6th, 5th, 4th, 3rd, 2nd.  Get that app.  I believe it is free.  I have had it for at least 3 or years.

Swanny

I just had someone contact me and wonder what kind of money I make at my w2 job.  I make, with 8 years of education after high school at my daytime teaching job about $46,000 and my night time adjunct professor job another $15,000.00.  My wife makes $20,000 as a part time special education assistant about $20,000.  A few of you I have talked to make over $100,000.00 and are dead broke.  Your car payments are over $500.00 a month and you need to first get your financial life in line first and get as far away from "0" as you can. I don't believe in instant gratification, something for nothing, basically mentally diseased, GARBAGE!!!  I am not a big fan of Dave Ramsey regarding his take on NO DEBT is good debt.  However,  if you are making over $100,000.00 a year at your w2 jobs, you need to get some help to slash your expenses.  Dave Ramsey is just the guy to help you get far away from Zero.  Again if a guy that only has a family combined income of approximately $80,000 can do this in an extremely pricey area of the country can do this, SO CAN YOU!!!

Good morning by the way!!

Swanny

Hi Ken,

Remember,

Only purge that retirement account for downpayment on cash flowing real estate.  You will only clear about $40,000, after taxes and penalty etc...  You have to pay taxes anyway, no matter what your age.  Sooooo, $6,000 would be your 10% penalty.  Happy rental property hunting!!!

Swanny

Hi Bill,

Thank you for adding your wealth of experience to verify the points I have made.  I really appreciate your thoughts here.  

Have a great day!!

Swanny

Your welcome LaTrina.  I'm glad I can help.

Swanny