All Forum Posts by: Matt H

Visit the dog pound and bring a flee collar

Invest it all into getting an apartment building. That will set you up for life. When you add cash flow, appreciation and mortgage paydown you're making a ton of cash every month. Way more than what you're probably paying in bad debt servicing for your loans. Then use the apartment cash flow to pay down your loans. Never ever ever ever use what principle you have to pay off bad debt when you can instead put that money to work for you in a rental property then you the liquid cash flow to pay down bad debt.

The building is worth 2.2m so at 5% appreciation that's $9100 per month.

Looks like an interesting situation you have on your hands my friend....

Listen, the key to flipping is going cheap and getting back on the market asap. Like in 1 week have it back on the market. That way you turn your money around quick. Here's how...

You only do two things to the property which are:
Flooring and Paint.

So do cheap carpet and lino on the floors, don't try to install it yourself. Get an installer to do it. You can't afford to screw it up. Then you and your buddies paint the walls and paint the ceiling white. That covers like 95% of the house cosmetically. Then you clean and mow the lawn and get it listed back on the mls asap. Do not try selling it yourself. You've watched enough "flip this house" episodes to know that doesn't work. So get a good realtor in who will get it listed and sold for you.

Also for your supplies go to Home Depot or any other major home renovations store and get a Home Depot card. Then put your paint and carpet expenses on the card. That means you don't pay for six months. That means you can reno and flip the home with no upfront costs. You'll need your couple grand for other expenses that are bound to come up.

So that renovation of paint and carpet could be done in 1 week. Carpet takes like 1 day to install. Paint can be done by you and a few friends in less than a week. Then relist it and flip it for perhaps that 30% you suggested, plus a little extra since it will appear as a completely renovated home, so that should command a little extra as well. So who knows you might make as much as $36k on it, minus expenses and realtors commissions you'll be left with perhaps $25k. But then you repeat the process five more times each time trying to find a flip that you can make at least $50k if not $100k on. In no time you'll have your deposit money ready to buy your first apartment building.

Remember the key is to turn it around quick. Floor and paint ONLY!!! Your not living in it so it doesn't have to be perfect. You're "flipping it" remember. So get it back on the market because time is money. If it were me I'd have it relisted the very same day I buy it. I honestly would find a realtor prior to taking possession, and write up the contract to relisting it for the same take I take possession of it. Then rehab via home depot card doing paint and cheap carpet and lino. Have that all done in 1 week, and then that way hopefully have it flipped the very first month, so I wouldn't even incur 1 mortgage payment. Then while it's selling already be looking for the next flip so that once that one sells you already have another house that you have in your agenda to buy. And just keep repeating the process. Remember doing one flip will not do a thing for you. Like if you're thinking of doing 1 flip, well why even bother? You have flip quick and repeat the process many times. Doing that will make you flithy rich. Good luck.

It's based on income of the building.

Look for more units. I think you said you own a restaurant. That means you're established to some degree. So you can do way way way way way better than buying a fourplex. Completely dismiss the idea of buying something that small with that little cash flow.

Here's what you do:

Take your $40k and also try to add to that whatever you can, such as getting a home equity line of credit, liquidating assets, (except the resturant) and trying to come up with as much as you can.

But lets say you only have $40k. Using that you should try to look for a building that has a lot more units, here's how...

Try to find a building with say 30 units.

Say you could find one for $800,000. It might not even be in your area or your city. It might be somewhere else in your state, or in a different state for that matter.

Purchase price: $800,000
First mortgage: $600,000
Seller second: $160,000
Downpayment: $40,000

Now you'll have $800,000 of good debt working for you. If your building is even just making $500 per unit that means you'll make 30 x $500 = $15,000 per month in gross income. After debt service and expenses you'll probably be left with about $4 thousand. Plus about $3500 in asset appreciation, plus about $1000 in mortgage pay down. So you'll actually be making about $8500 a month in total. And if you were able to increase the rents by $250 over the next five years which is only two $25 dollar rent increases per year, that means you're monthly cash flow would be: $250 x 30 = $7500. Minus say $500 for inflating expenses could likely bring your total monthly income up to $16,000. Only about $11,500 would be spendable cash though.

So try to really put that money to work for you. Don't just put it into a four plex. That's like choosing to buy a headache. Put it into something that will actually make you money. Don't look for anything under 20 units. Try to pull off something were you get at least 30. In no time you'll start reaping the rewards. Good luck.

If you buy an apartment building you could afford to retire literially overnight. So here's what you do.

Do a home equity line of credit.
Add that to whatever savings you have to invest
Liquidate all other non essential assets and investments
Put all your funds together and start looking for an apartment building to buy. The more units the better.
10% down buys you a building so 100k buys a 1m dollar building any day of the week.
But try to stretch your money as far as possible. ie: get a first and a second mortgage and then your down payment all combine to purchase the largest building you possibly can. That way you can retire.

I don't know why more people do this. I know so many people who could do this and retire overnight, but the fear and what they don't know holds them back. But by simply putting your money to work for you, and then getting a huge mortgage which is all good debt working for you, all that money working for you means you don't have to work. All you do is manage the odd issue that arises with the building which might take up 2 or 3 hours a month at very most. I have 1 residential manager that deals with everything in the building. For that he gets a 80% discount on his rent. But I don't have to lift a finger. On average all I do is talk to the guy for about 5 minutes once a month. Plus mailing off perhaps 1 letter a month to pay for a carpet cleaning or some small bill. It's ridiculous how much time it actually takes to maintain the building once you got someone in there running it for you.

That way you have all the free time in the world to travel, stay home, do what you want, spend more time with your family, work on more apartment deals and the list of benefits goes on and on. Then once a month watch as you get a big fat rental deposit go into your account.

For example:

On one 48 unit apartment I have the monthly gross income is $35,000. After all expenses I'm left with $10,000 Liquid spendable cash. Plus I'm making $10,000 per month in asset appreciation, plus I'm making $3000 per month in mortgage pay down, and I haven't factored in tax depreciation. So in total I'm making at least $23,000 per month on that building.

You can go out right now and do this too. Just buy a building using a 1st mortgage, a seller 2nd mortgage and whatever you can put together. Because once you have one you'll no longer have to work if you don't want too.

Think about, this is not rocket science. I didn't even graduate from high school. So what's stopping you from doing it? My brother works in IT which he had to study for years for a degree to get into. And the amount of knowledge, effort and work he has to put into that to make just $70k per year is crazy. Plus taxes must kill the average person who end up paying 1/3rd of that in taxes. With a building in a corporation you only end up paying about 18% on your net profits.

The alternative is that you go on working 40 hours per week plus commute time until you die. Man that does not sound very attractive to me. Unless your job is like giving back rubs to Pamela Anderson then how could you love your job that much? I just don't see it.

And buying a building is easy too. It's gotta be about as easy to do a learning to drive a car. And if you've bought a house well then you already know the process, so what's stopping you.

One last thing...most heart attacks happen on Monday morning between the hours of 6am and 9am. That's the time that the alarm clock goes off to start the week at jobs people absolutely hate going too. But they're literally slaves to their jobs because they don't know any other way of making a living. When infact by simply putting their money to work for them, they wouldn't have to slave away anymore. It's just sad how uneducated about the power of money and leverage most people are.

Anyway good luck to you.

Don't ever by a basement condo. Worst case, you buy one that's ground floor with a patio instead of a balcony, but if it's basement, stay away. Never fall in love with a property either. There's lots of other condos that are not basement level out there for you.

At least you seem to now have the right idea about money, in terms of getting it working for you, instead of you working for it. Keep reading Robert Kiosoki, especially "Retire Young, retire rich" and "cash flow quadrant".

Don't worry about pledging your personal guarantee. Lenders require that all the time. That simply means that if there's a foreclosure that they can come to you if they can't sell the asset for at least the amount they have in it. The likelihood of that actually happening is minuscule. Because it would have to go to foreclosure first. And how's that going to happen very easily? If the investment for some reason is really that bad that you can't turn a dime, which is unlikely, then you can easily sell the property and get out before it ever gets to the foreclosure stage. So don't worry about pledging your own guarantee, that' very common