All Forum Posts by: Phil Bottfeld

Welcome! Love your ambition and I like the fact that you have a goal and plans. Here's a few things that might help and perhaps put a wrinkle to your strategy.

1) Buy and hold is generally the most successful path (and longer) to creating long term wealth through passive income. But  here's the catch. If you're limited in your own funds and don't have a good nest of people who want to invest in you, if you invest the $12,000 you have now into your first buy and hold, you are probably not going to be able to get much out to put to use since it's generally hard to pull all of your money out. You may be able to buy, rehab, rent, refinance (as the guys on the podcast like to say), but with $12,000 only I'm not sure how far that will go (not trying to burst bubbles, just putting perspective).

2) I currently I have only one buy and hold property and although I got it below market, I still have a significant amount of cash tied up in it. My remaining funds I teamed up with a fellow investor and we're in the process of flipping condos in order to build up enough cash to start putting into Buy and hold rentals. Our plan is to flip four condos a year and buy two rental properties with the profits. I think it will get you where you want quicker.

Best of luck,

Phil

Hi Alex, my recommendation in terms of order would be the credit card first as it probably has the highest rate. I agree with the other posters to try your best and knock it all out but if I were to pick, I would choose the credit card. -Phil

Originally posted by @Vincent Crane:

Those HOA fees are brutal...

 Agreed, the rec lease is the largest contributor to the fee being so high.... then again,, the property would have sold for an additional $20K-30K without the rec lease.

Originally posted by @Meghan Reed:

Our SF is a B property in a town with great schools so we went on the high end with rent.  It's been super easy to manage thus far as it was our starter home and we renovated/upgraded a lot in the 5 years we lived there.  I'd say we're looking at class B's for the next one(s) as well.  My husband and I both work full time and we have a 15 month old son so we want to avoid the more management-intensive C/D properties.

 I agree, the C/D properties are for certain people. There are not for everyone, but that does not mean someone can't make a good profit in them either. But I generally stay away from those properties as well. I like the idea of what you did with your home, my wife and I are considering moving into our next home as our family continues to expand, the question keeps popping up... should we sell? Or should we be landlords? I guess time will tell, we have a 13 month old too so I can very much relate to your situation.

Phil

Originally posted by @Meghan Reed:

Hi Phil,

Yes, I'm a buy and hold investor searching for my second property. My husband and I currently have only one SFR in addition to our home. We're doing a second viewing of a duplex this weekend so if all goes well we should have a couple more units soon. I'm trying to turn our snowflake into a snowball as well and hoping to pick up at least 3 more properties next year.

 That's great Meghan, I think SF offers an ability to generate a greater spread on profits that do my condos of South Florida. Each SF can essentially be reshaped with more/less bed and bath that provides untapped potential. What class of property do you generally go for? Is the duplex in that same class?

Originally posted by @Account Closed:

Hi @Phil Bottfeld the first deal is always the hardest making a $15,k profit is a really good start. One thing that I have noticed is that HOAs in condos and townhouses eat at your profit. 

I agree, the HOA is really hurting my overall cashflow. The reason I was able to buy on the lower end was largely due to the fact that I was buying the property from an out-of-town/recently inherited heir who just wanted to get rid of it. On my future B&H deals, I will be more critical of what my realistic rents will be, I thought I was going to be able to get $1350/month.

Originally posted by @Meghan Reed:

Great job for a first investment @Phil Bottfeld.  You've gotten your feet wet, gained experience and you made some money on this one.  Keep rolling the snowball.

 Are you a cashflow investor with B&H investments or do you prefer other methods of investing?

Originally posted by @Meghan Reed:

Great job for a first investment @Phil Bottfeld.  You've gotten your feet wet, gained experience and you made some money on this one.  Keep rolling the snowball.

 Thank you Meghan! That's the plan. Little snowballs now will make avalanches later.

Originally posted by @Sam Valme:

As of right now we have completed a CMA on the home. My wife and I will have enough for the deposit in Feb. So realistically we probably won't close until March. We are rent hacking right now. 5 bed 2.5 ba. we live down stairs while renting the three rooms up stairs. We agreed with the seller we would pay slightly below market value because of renovations needed for the house.

They they are going to "gift" us back cash in their equity payout for those renovations. After that we're going to keep managing the house but now we'll be gaining the equity. Once thats complete we are looking to acquire more property to rent out. Currently we're looking in the greater Atlanta area. Our end goal is to begin investing in vacation homes. 

What are your next steps?

 That's an interesting way to generate some income! It's interesting you mention the Atlanta area, I'm considering my next B&H to be there in one of these suburbs…

1) Marietta

2) Snellville

3) Ackworth

4) Douglasville

But I first want to flip a four properties annually for the the next five-seven years and generate enough capital since B&H generally require to have capital tied up for an extended period of time. After a year of flipping, I plan to purchase my second B&H and continue purchasing at least one per year on a roll forward basis. (Goal is to have $10K+ of passive income monthly).

My niche is senior housing. Down here in South Florida, Seniors and housing for them is plentiful. They make great tenants and are good for a comical relief when you need it.

Originally posted by @Vanessa Vandervalk:

I have a friend who rents a cheap apartment on the west side of LA but owns two condos. The second one is in Hollywood and she bought it via probate. She fixed it up with another $25k and rented it out for negative cash flow. But, it has appreciated $140k in under two years. So she still feels like she is ahead and plans to sell it. This can be how it is in LA. But I don't believe that kind of appreciation is continuing for the next couple of years. 

I am with you Vanessa, while I am not certain that appreciation will or will not occur, I think the key to keeping volatility low is cash-flow. I'll take a cash flowing property that appreciates 1% a year with a 9% cash on cash return versus a negative cash flowing property that may or may not appreciate 10-15% in a year. Those large movements (10%+) are hard to catch and it's almost speculating. But each person has their comforts and that's what makes REI so exciting, it can be done in a numbers of ways, and wealth can be generated from numerous avenues.