All Forum Posts by: MATT WARDEN

For what? You need to know this first.

Your website will not advertise for you. You will just end up advertising your website. The only thing your website does for you is provide a place for individuals you've already advertised to to get more information.

A basic web site should not cost you more than $10/month. This includes hosting costs and domain name registration costs (annual). I am not including development costs in here, as I'm assuming after initial development you won't need more.

If you do it yourself, it will look like you did it yourself. If you use Word to do it, it will look like you use Word to do it. I develop web-based software for a living, and there is no comparing a Word or FrontPage (or any other WYSIWYG editor) developed website and a professionally created website.

I may be biased given that I work in this field, but if your site looks like you did it yourself in Word, I wouldn't take you seriously. How successful can you be if you aren't willing to shell out a few hundred dollars for one of your primary marketing tools?

Do the blog thing. The single best way to drive traffic to your site is to have good content. And the single easiest way to quickly and easily develop content is to develop a habit of blogging.

Yes, unfortunately there are a lot of people who will never actually make a purchase. But, I haven't even made my first purchase yet, and I'm pretty sure I can tell who these people are after only hanging around here for a month.

See, this is where you lose me. In every other venture I have ever been involved in, whether it be technology or neuroscience or career strategy or whatever, I have always had people more or less approach me to be my mentor. Now, I don't mean they come to me and say "let me be your mentor." But they position themselves in such a way that I naturally would go to them with relevant questions. They make it clear that they would get some benefit out of contributing to my growth in the area. (And I have experienced the mentor side of things as well, and it is indeed rewarding.) Point is, I have always had a mentor of some sort completely naturally and with minimal effort (and certainly without paying).

Having a strong psychology background, I have been trying for the last few weeks to figure out what is different about real estate investing. There is no shortage of pay-mentor relationships available, which is something I have rarely ever come across.

Is it simply the entrepreneurial spirit required for REI that causes a would-be mentor to realize his or her mentoring is a marketable product and therefore should not be given away? (I think if that were really true, we wouldn't have this forum.) Is it a fear that one would be increasing competition by passing on one's knowledge? (I think if that were true, you wouldn't find generativity in any other market or career.)

I am not saying a mentoring relationship is not valuable. Of course it is. And I'm not saying it's not worth money. Of course it is. I'm just trying to figure out an explanation for why the mentoring relationship in REI is a business transaction, whereas everywhere else I've seen it, it is just part of the education cycle (you are mentored, you grow, you gain experience, and then you mentor someone else).

This is great advice. I have an amazon wish list full of REI books recommended by various people here and by other books I've read. I happened to check my local library online, expecting to maybe find 1 or 2, and I had > 80% hit rate. (And for those 20% that I couldn't find, I couldn't find them at Borders either! So, it's probably just because the books are not mass market.)

Why? You are thinking short term here. Most every other market, there is sort of an unconscious realization that no one learns what they need to know all by themselves, and therefore information is shared freely (in the sense of no restrictions, not necessarily in the monetary sense).

Interesting to think about, if nothing else.

While I have no experience with REOs personally, my understanding is that banks are pretty firm on their list price and have no problem sitting on properties for months.

I have been searching for a contact to get involved in the Butler County, OH group, and this is my second-to-last resort. I know who the president is (or at least who it was a year ago), and I have a some what recent address. Sending a letter to that address is the last resort.

If anyone on this forum is involved with the Investment Property Owners Association of Butler County Ohio, please contact me. Also, if you know how to contact one of the members, please let me know that as well.

If not, then I'll give the letter a try.

Thanks.

There are a bunch of due diligence "checklists" out there for rental properties, but I was wondering if someone with experience in this area would run through a typical sale scenario and what they do and when they do it (ie, before contacting seller, before closing, etc.).

Any takers? I trust the people here much more than some random google result.

Thanks in advance.

It's some, not most. And if you are in one of those markets, why are you investing in rental properties?

Of course it isn't. You could pay way too much and just get lucky with zero repairs, no eviction costs, no vacancies, huge appreciation, etc. But the idea is to minimize your risk, because you are investing a lot of money.

Self-management really doesn't make a difference; it just means the money is going to you for those services rather than someone else. You save on profit margin only. And of course the expenses are dependent on a number of variables. The 2%, 50% and other calculations are heuristics to help you quickly determine if a property is likely to cash flow. Even if these heuristics say a property will, it may not! Again, it all depends on how much risk you are willing to tolerate.

I doubt this, but if it is indeed the case, then I would suggest you either invest in meth houses or stay out of rental properties.

Why? Seems to me you either (a) don't like dealing with tenants, or (b) mistakenly believe this is less risky. If it's option (a), then your other comment completely puzzles me:

How long have you held this property? I ask because there are a TON of expenses that are in that 45% or 50% ratio, only a small portion of which is maintenance. Property taxes, eviction costs, advertising costs, legal costs, entity structuring costs, insurance, etc. etc. etc.

This maps to MikeOH's cash flow item.

Mortgage paydown thanks to tenants.

I assume you are referring to the fact that if you do a repair yourself for $x, it may increase the sale value of the property by $x+y, giving you a profit of $y. Do you have an example of this? I would think that many repairs would have the car purchase model, where day 1 after the repair, it has a lower resale value.

However, if you are mixing in rehabbing with the rental business, I think you have to be very careful about the types of rehab that is done. For example, if you go from carpet to all wood flooring in your rental to increase its value, you're kidding yourself. That floor will be destroyed in 2 years.

Equity at closing.

Can you explain the tax benefits other than depreciation of the property?

What do you mean by this?

This one puzzles me. How do you profit from inflation? Yes, salaries would increase (theoretically) which would likely drive up the housing market which would likely drive up the value of your home. But this only mitigates or eliminates a loss, and I wouldn't expect to profit off of it. Is there something I'm missing?

Thanks,

Carlton Sheets is the only "guru" I have seen recommended by people I respect here. As with any guru, though, I suspect you need to filter out the overoptimistic spin on his advice and take in only the facts and strategy elements.

Others may know different, but as far as I know you would have to prove you have equity in the home before you can take out a HEL or HELOC. That would mean lying one way or another; either lying and getting the hard money lender to write a letter saying the money was a gift (no way (s)he'll do this), or trying to keep the second lender in the dark about the hard money lender altogether.

You might consider rental properties and using a property management company. You would likely be able to keep your current job without issue. At some point, you would amass enough properties to quit your job, fire the PM company, and manage the properties full time. (Of course, I would make this change from property manager to handling it yourself gradually, property by property.)

Just an idea. I am in a similar situation, although earlier in my career.