All Forum Posts by: Alex M.

Great question. Wish I could be more helpful...but I'm responding to this mostly because I want to keep tabs on the convo and see what others say. I use saleforce in my day job, but it is a cumbersome and expensive beast! I'm looking at zoho and insightly right now. I've not explored podio. Curious to see what others recommend...

Congrats on going it on your own! As @Chris C. asked, I would love to hear how you pulled of 4 flips a year working similar hours as I do. I'm hoping to buy and hold four this coming year with 60-70hr work weeks and weekends with my kids. Flipping a home is a stretch goal for me with this schedule. 

Congrats! That does sound like one heck of a year...I'd be really interested to hear more about how the 50/50 equity partner split was proposed and structured. I do have a private investor who is asking to have more of the deal aft funding 100% of my first buy and hold at 4.25%. Understandably, my investor would like to make more next time.  Financing a flip or structuring shared ownership in a rental property is what I am evaluating. Any good recommendations for reading on how best to structure these relationships? 

@James Wise  Thanks! ...and thanks for reading through the whole thing :)

There's a part of me that hopes that in writing this, it will somehow make it much more real - so here goes:

My five year plan in action (2014-2018) - what's yours?

• 2014
  • The plan: Fix credit (destroyed from divorce and stupidity of a youth misspent). Build a small amount of capital and buy first investment.  Learn. Keep full time job.
  • Results: Kept working my full time job. Credit rose from 500s to 700s (cost $$$s). Attempted to buy a small 4-unit MF with FHA. Failed. Hit a zoning impasse and backed out of the deal (lost $1200). Switched plan to working with my partner (my girlfriend and REALTOR) to purchase (house hack) a single family in her name with FHA at a great price ($63k). Put ~$35k into it and fully gut-rehabbed it (mostly ourselves) to make it an awesome home at ~$500/month mortgage. Estimated value now = $160-$180k. Placed offers on a number of other SFRs in the same neighborhood. Landed one a few weeks ago! Rehabbing as I type. Purchase price of $66k. Rehab budget of $10k. Anticipated rent of $1000-$1200. PITI of $400. Education = Took a class on wholesaling (cost = $400); read a lot of BP forum topics; listened to as many podcasts as I could. Attended a few local REIAs. Results = I now know how friggin little I know!!! ...but I was motivated to take action by hearing over and over that that is what you need to do. Thanks.

• 2015
  • The plan: Fill my first property with a (good) tenant. Buy 4 more properties - one approximately every 3 months, based on the following logic = always fill existing property with a tenant prior to moving on (I'm new, and this is my way of managing risk); build resources to purchase next property (I have pretty decent purchasing power right now through conventional lending with my current job, and I also have a private lender ready to loan on my next property, and I also get a quarterly commission check that provides a nice financial bump every 3 months); finding a property takes time, but it is worth it to find the right property in the neighborhoods I want to invest in, at the right price. Stretch goals for the year include: getting my partner started with a flip and providing support as needed - she's a REALTOR, works in property management, and is interested in flipping; begin a marketing campaign to test out wholesaling as a deal-generation strategy. Keep learning and keep working my job. Goal of 6 properties in total (including personal home)
• 2016
  • The plan: Ramp up my purchasing schedule - having built more resources, developed a level of comfort and understanding of the processes of deal finding, purchasing strategies, and other aspects of buy and hold investing. I aim to purchase 12 properties this year - approximately 1/month. Each of my properties should cash flow at a minimum of $100/door, with $300/door as an ideal. Some may be small multis. Keep learning and networking with other investors, and begin to explore more partnership-oriented investing. Have a wholesale and flipping process more firmly established (albeit still low-key) in order to keep a cash-generating engine in place. Goal of 18 homes in total by end of year.
• 2017
  • The plan: Really ramp up my purchasing schedule at this point to 3 properties a month. I am making a huge assumption that I will have figured out access to finances and have a pretty good team in place to be able to move at this pace by then. It's a lofty goal, but I believe achievable. I also am making assumptions that by this point, not all purchases will be one home at a time - I'd like to explore purchasing in bulk from retiring investors, or other strategies to get a number of properties at once. Obviously, this plan will include a significant focus on networking and education. I expect to still be working full time at my current job. By the end of 2017, I aim to have 56 cash flowing properties. 
• 2018
  • The plan: By now, I anticipate that I will have joined the ranks of those who have learned the game - I am sure there will be many mistakes along the way, but hopefully all recoverable. I plan to pace myself at around 1 property per week (still assuming some bulk purchases and some down times), for a total of 52 properties that year. 

• End result = 106 properties. $127,000 in cash flow per year - not enough for me to want to retire from my current job, but enough to know that I can if I need to, leading to the most important results: Personal Freedom; Time to spend with my kids!!!; Ability to travel; Long-term financial independence/stability/security; Happiness!

...now I just need to make it happen :)

(crude math below)

@Alberto Artasanchez  I just listened to a really good podcast (#28) by Dave Van Horn (same guy that @Doug Smith recommended) - he's on Bigger Pockets. In the Philly area, and investing in second liens. The podcast details what he is doing through his company - sounds like they now have over $500M in investment dollars going through their company. Definitely an area of REI that I am going to keep exploring/learning about.

Hope to hear how things go for you if you head down this path. Good luck!

Great advise all. I am seeing a common thread here in that it looks like getting through the first few homes is a major hurdle (financially), but once you get up and running, it becomes easier to ensure you have enough reserves to cover unforeseen expenses.

Great post and sage advise. For those of us, though, without the benefit of hindsight and experience in the industry, and without existing wealth or rental portfolios to build reserves to cover future unseen costs - can some of you please expound a little more on the following:

1. 1. how much is enough to get started? 
2. 2. what did you  do to build these reserves?
3. 3. for those out there who are getting by paycheck to paycheck, but wanting to get started, do you really recommend not just jumping in at the first opportunity, but instead waiting until you have a pot of "reserves" at whatever level you recommend (see answer to question 1.).

Thanks all.

Great question - I'm not anywhere near the point that I am considering LLCs, let alone multiple LLCs, but you have me wondering about insurance needs for newbie investors. I was just speaking to my neighbor - who owns the duplex next door and rents it out. He purchase the property from another investor who was sued by his previous tenant for slipping on the stairs with a railing that did not meet code. Have you kept yourself "protected" the whole time you have been investing?

As an "investor" with my first rental just purchased and undergoing rehab right now, I just managed to solve that equation (for one property - I'm sure I will have to figure it out again soon for the next). I originally was going to go the FHA route - as that required only 3.5% down, but due to seller issues I ended up fortuitously stumbling across a private lender who was willing to finance 100% of the property - with the expectation/requirement that I build equity in the next two months through improving the property. This was definitely a non-standard approach through an acquaintance, but from what I am gathering, non-standard approaches are fairly frequent in this industry. Good luck figuring it out - I'm a firm believer that if you just focus on educating yourself, while at the same time taking action (even if you don't yet know how to do it properly) results will happen. Definitely look more at FHA - even FHA 203k. 2-4 unit MF properties, living in one and renting the other seem to be a proven strategy for a low-cost entry into this business.