All Forum Posts by: Neil Henderson

@Wendy Carpenter that sounds like an awesome facility! Not joking at all. Kind of like when a house flipper walks into a house that smells like cat pee, "Mmmmm, money." ;o)

Personally, no way. 

In my humble opinion, cash flow is the roots of the tree that keeps your tree standing when the winds blow. Time is the best friend of the investor, both in real estate and stocks. 

In real estate, it's the positive cash flow that keeps you standing when the market shifts. If you are cash flow negative and the market turns south, you're stuck with an "asset" that's taking money out of your pocket and losing equity. If your equity has gone negative as well, you're stuck with a negative cash flow asset that you'll be forced to sell (never a profitable position), keep losing money or lose it all to foreclosure.

If you're making positive cash flow, you can wait out the market corrections and sell when it's profitable, not when you're forced to.

You'll almost always make more money on appreciation than cash flow, especially if you're forcing it, but you should never count on it to keep you afloat.

Cash flow is the roots, appreciation is the fruit.

I found it to be a great resource and well worth the $100ish it cost at the time.

Welcome @Steven Snyder. Have you attended any of the local REIA meetings in Allen? That would be a great place to start.

@Maurice Lightner It depends. All things being equal, I would go with the separate living arrangement of a duplex, but I'm almost 50 with a wife and child. Some things to consider with house hacking. Don't discount short term or executive (30 days or longer) rentals of the hacked space. If the area you live in allows it, it can be very lucrative and not as much work as most people think, once you get your systems in place.

I always like to break portfolio deals down into the separate properties. Sometimes it can be a major headache if the owner hasn't been keeping separate books. Then you get into ball parking, rules of thumb and calculating per square foot.

Always begin with the end in mind. What do you want from the money. Have active do you want to be? The peace of mind of having no mortage payment? A cash flowing asset with built in management efficiency and vacancy risk mitigation? Potential high growth returns but likely more management headaches?

 1) I always struggle with this myself and I lean toward no. The peace of mind is great and it has the potential to ramp up your savings rate, but the interest rate on my mortgage is 4%. Put the money to work earning 12%.

2) I would lean toward this option as it gives you some level of managment efficiency, plus income security with the multiple doors. Although, the downside is small multfamily can be harder to sell sometimes as the potential buyer pool is smaller.

3) Better cash flow but use caution, also a potential management nightmare.

Good luck!

@Ron Rohrssen Definitely

@Dymond Shafer

1. Resist the urge to chase the shiny object. You've just had a VERY successful flip and probably learned more about how to do it than 50 hours of training with Fortune Builders. Why not work on getting even better at doing that? Work on building systems that will allow you to scale by having other people take over the low value tasks that you're having to do now.

2. I agree that, buy and hold is where it's at for the long term. House flipping is a transactional business and even the best flippers are going to either burn out or hit a threshold where they can't grow any more. Use the flipping to build up a war chest that you can deploy when it's sufficient to buy you some scale. See multiple doors below.

3. As far as losing everything, I think there are a couple of things you should remember and a couple of things you can do to mitigate your risk as best you can:

A. Remember that there is no national real estate market. Just because your market is over valued, doesn't mean Omaha, NE is overvalued. 

B. Never bet on appreciation. It's the cherry on top. 

C. Cash flow is your foundation. You'll almost always make more money with appreciation than with cash flow, but if appreciation is your sole play, if your margins are so thin, or non-existent, you're on shaky ground. Time is the investors best friend in Real Estate and Stocks. If you can wait out a market correction, you're in good shape. If your property isn't cash flowing and the market goes south, there's a good chance you're going to lose it or be forced to sell, which is where you'll get to see what it's like to be on the other side of the flipping business.

D. Multiple doors helps mitigate some risk. Four doors (Fourplex) or more gives you a small measure of stability. If you lose a tenant, you're not 100% vacant, you're only 25% vacant. It only gets better as you grow the number of doors. 100 units, one vacancy is only 1%. 

I'm going to go against the grain here and recommend one non real estate book. 

If you're looking to buy multifamily, you're going to need capital, unless you're already loaded and even then you'll need MORE capital to grow faster. Some of the best advice I ever got was, don't wait until you have a deal before you start looking for money. Jumping through all the hoops for financing and due diligence PLUS raising capital is like trying hold your drink without spilling while dancing with the Tasmanian Devil. TM Neil Henderson - 2018

Never Eat Alone, Expanded and Updated: And Other Secrets to Success, One Relationship at a Time by Keith Ferrazzi

Best Real Estate Investing Advice Ever, Volume 1 by @Joe Fairless and Theo Hicks

...and I second the recommendation from @Alina Trigub on David Lindahl's book and @Spencer Hilligoss recommendation of Crushing It in Apartments.