All Forum Posts by: Michael Swan

Hi Nathaniel,

I have been purchasing using a buy and hold strategy in Santee and Lakeside since 2011.  It has been an incredible ride.  Right now I have over $60,000.00 cash flow and between $1,200,000-$1,300,000 equity sitting in these properties.  I have invested $680,000.00 in total down payments and rehab expenses. Two of our ten properties are paid off and 8 have mortgages totaling approximately $700,000. My lowest cash flowing property cash flows $400.00 before taxes every month.  Not to mention the equity in my primary residence.  That equity is around $150,000.00.  We amassed all of this based on a simple goal.  That was Cash Flow.  Our goal in the next 5-10 years is to replace all our W2 earned income with cash flow.  I don't think I could risk on speculating that prices will continue to increase.  I have lived in San Diego since the 1970's and have seen the dramatic changes up and down and up and down in price values.  With your strategy,  what is your fallback?  Do you have a significant emergency fund or reserves.  I'm not into speculation.  If the deal doesn't cash flow, Murphy will inevitably rear his head.  Water heater busts, AC goes out, unit has an expensive plumbing problem.  I didn't see anything in your posts about reserves.  That worries me. This $240,000-$260,000 paid off rental property, where is it located?  You may want to call me for advice.  858 722-7377.

Swanny

Let's look at this deal from investor B's perspective.  Investor B is in for let's go with 50-60 percent of the seed money. Investor B has extensive knowledge of the rental investment business and is clearly not a beginner.  We are assuming that investor has had no connection with investor A, except research online (BP), phone/text,and email communications.  Investor B by proof of 10 rental properties can bring quite a bit more than simply money into the deal.  Two heads are better than one head type thinking.  Think about the risks investor B would be taking, being so far away and visiting once or twice a year to physically assess situation.  This investor B has also performed extremely well with rentals  many many miles away.  Investor B is clearly bringing much more to the table than may be seen by the naked eye.  

Albert Einstein once said, "nothing of great significance was ever accomplished alone."

From what I have been reading here, is that investor A is taking all the risks.  Right? With investor B being so far away, what if investor A makes a mistake and someone takes both partners to court, the risks are the same right?  They are both liable. Right?  Investor B is taking a significant risk not being able to monitor rehab, tenant evaluation, Tenant placement, tenant service once in the property etc... From what I am reading hear, investor A is THE management company and will be getting at least 10% or more to his/her management company fees plus half the tax benefits, cash flow, and what else?  Most of the deals are found on the mls right?  Of course if investor A has a proprietary wholesaler for all the deals, investor A should work out a deal with the wholesaler, that allows him a little more back in the deal than usual and lets investor B know what he will get for saving investor B sooooo much money as his part for finding a deal that investor B couldn't possibly find himself.  Don't you all think that investor B has done his/her homework and is a little more seasoned than the investor Joe Blow on the street.  Of course investor A would get a fee for being the general contractor on the rehabs.  Investor A has also stated he gets one month's placement fee too for finding a tenant too.  Just playing Devil's advocate hear.  Let me know your thoughts.  Anyone out there in investor B's shoes?  We haven't heard from that perspective as of yet.

Swanny

Welcome Ryan!  I'm in San Diego.  Listen to the podcasts.  They are extremely helpful.

Swanny

Thanks Brandon and Dave for the info. Sundeep the HOA fees were calculated into the total numbers. I purchased most of these properties for such low prices primarily in 2011 and 2012 for cash flow!! This incredible equity or appreciation was not a factor. It was way back in order of significance when completing these deals. I personally appreciate them. I don't have to worry about outside maintenance at all. When HOA fees go up, I just increase the rent and the tenants absorb this. This way, I just worry about the inside of my place.

Swanny

Thank you for the welcome!!  I will be looking in other states for single family homes and apartment complexes.  

Thanks Christopher.  I'm looking forward to discussing real estate with you in the future. 

Swanny

My name is Michael Swan and have been reading info and listening to the Podcasts for a while now. I just recently became a basic member here.  I have 10 condo rental properties in a suburb of sunny San Diego.  I have acquired these properties in the last three years.  I really enjoy being a landlord and I manage all the properties by myself.  I also am a full time teacher and a part time adjunct professor at Miramar College.  The appreciation that happened in the last few years is remarkable.  I now have way too much equity in these properties.  I'm a little worried that this equity will be a mirage.  I have seen this before in San Diego.  I have lived in San Diego since the 1970's.  Apartment cap rates are way too low and cash flowing Condo business model I started with isn't appealing any longer.  We have approximately $60,000 cash flow right now.  We invested approximately $600,000.00.  The outstanding loans are approximately $700,000.00.  The properties are worth approximately $2,000,000-2,200,000.  I am researching areas of the country that have excellent rent to value ratios.  BP has already been extremely valuable in narrowing my search based on past podcasts.  I look forward to contributing on the forums.  If anyone wants to pick my brain, feel free to connect with me on BP.  My nick name is Swanny.

Take care,

Swanny

I personally never commingle funds from my general account and my security deposit account. My tax guy let me know that. I'm also beginning to have all my tenants make checks out to my LLC, instead of my personal name. The bank was wondering why we had a general account in our LLC name and having the tenants make out the checks to us personally.

I hope this helps,

Swanny (Michael Swan)