All Forum Posts by: Joe Villeneuve

Market Analysis i critical.  It's more important than doing individual property analysis, because when you do a proper market analysis, you are analyzing ALL of the properties in any market(s) at the same time.

Now, one of the analysis "pitfalls" is not understanding what defines a market, or more importantly, a Micro-market.

Another problem is focusing on one strategy, and trying to fit each market/property. this will lead to a lot of rationalization of bad deals, into perceived good ones. Knowing how to use many different strategies allows the REI to take advantage of markets/properties that are available, but that other REI's can't make work. A deal is really simple. It comes in two parts. Part one is the lowest cost to the REI. Cost to the REI is ONLY the cash that comes out of their pocket. Part two, is how someone or something else pays for everything else. This is where the strategy comes in.

Quote from @Treza Edwards:

What expenses are included in determining cash flow?

I factor in these:

1. Mortgage- PITI

2. Vacancies

3. Repairs/Maintenance

4. Pest Control

5. Capital Expenditures

No Property management because I manage my own. Am I missing anything?

Property management.  Just because you're doing your own now, doesn't mean you will always.  Most likely won't as your portfolio grows.  If you don't calculate it in now,...?

Quote from @Dalton Dillon:

Thanks for your response @Joe Villeneuve Possibly my question could be more specific but maybe instead of a response like that, you could ask questions to help narrow down an answer? Thanks anyway. Hope you have a better day. 

My answer wasn't aimed at an actual answer, that would be impossible.  It was given to you to make a point.
OK.  Here are just a few questions you would need to answer in order to clarify a little more what you are wanting to build:
1 - How big, in square ftg?
2 - How many floors?
3 - What type of construction will you be using to build the shell?
4 -  What type of exterior finishes will you be using?
5 - What will the quality of the exterior finishes you will be choosing?
6 - What type of basement will you be using?
7 - What are the ground soil conditions?
8 - What type of natural drainage will there be on the site/
9 - What type of water supply will you be using?
10 - What type of sewage system will you be using?
11 - What type of roof will you be building?
12 - What will the roof pitch be?
13 - What type of plumbing will you use?
14 - How many bathrooms will there be?
15 - How many half baths will there be?
16 - What will the design of the kitchen be?
17 - What type of cabinets?
18 - What will the length of cabinets be, upper and base?
20 - What will the countertops be made of?
21 - What will the appliances be?
22 - What will the floors be?
23 - What window company will you use?
24 - How many windows?
25 - What material will the windows be made of?
26 - What door company will you use?
27 - How many doors will there be?
28 - What material will the doors be made of?
29 - What type of insulation will you use?
30 - How high will the ceilings be?
31 - How will the walls be finished?
32 - What paint will you be using?
33 - What type of base trims will you be using?
34 - What type of window trims will you be using?
35 - Will you be using any crown molding and how many feet of?
36 - Will you be using any chair molding, and how many feet of?
37 - Will you be using any added trims, and what length of?
38 - What type of electric system will you be using?
39 - How big a panel?
40 - How many outlets?
41 - How many switches, what kind?
42 - How many lights, what kind, where, what manufacturer?
43 - What type of HVAC will you be using?
44 - What type of ductwork, and what total length?
45 - Will there be any fireplaces, how many, what type?
46 - What type of flues?
47 - What type of landscape (this offers as many questions as I have listed already)?
48 - What type of parking, and what size?
49 - What type of driveway, and at what length and width?
50 - What is your budget?
...I'll stop there, because 50 is a nice round number, but only a fraction of the number of questions/decisions you have to make before and during your construction.

Quote from @Don Konipol:

Quote from @Estela Legaspy:

Beginner investor here. I started with a 17dll course on facebook for women than then hustle hard to sell me a 10k + mentorship. I didn't buy it but I was sooo shocked that out of about 1000 women who joined that weekend 17 dl class which runs non stop all year (1000 women was just for that class), several women went ahead and bought the 10k course. Instead, I just plunged and bought the first property. 4 years later I have 2 LTR, 1 STR and one living flip that I'm not sure if I'll make STR, LTR or stay in it since I love the neighborhood . I'm all over the place and overwhelmed AF as I also have a w2 and I'm a solo parent. I would love mentorship but plunging in and doing something with the little money I had saved has been a great teacher. I could have spent even more on mentorship and done nothing. Eventually I would love to be generous with what I learn and help people achieve their goals which is what I love about this forum. Yall are so incredibly generous and helpful. I am a firm believer the sun shines for everyone so thank you for all you share and also thank you for bringing awareness about the pitfalls of these mentorships.

You do NOT need a mentor.  You just need a good real estate oriented accountant. 

That helps, but then all you're doing is what that accountant tells you to do.  Education teaches you to think for yourself, solve problems, and be able to understand why, and what, that accountant is telling you to do.

Quote from @Joe S.:

Quote from @Joe Villeneuve:

Mentorships are a form of education, taught from those with experience.  When you go to formal school, for any profession, you don't take one class, or series of classes.  You take English, Math, Science, etc...  Plus, you take specialized classes that line up with the profession you have chosen.  In Architecture you would take Structures, Electrical, Plumbing, HVAC, a variety of Design classes, Art History, etc...

Saying someone should not do a Mentorship program because the program and strategies taught might not work for them is true, only if they take one program.  I would be a terrible Architect today if the only set of classes I took was a series of Design classes.  It would be a waste of time, and money.  Much like taking only one Mentorship class and expecting that one set to be the end all.

Over the years, especially in the beginning, I probably took at least 10 Mentorships, or seminars.  All teaching many of the same thing (called reinforcement), all teaching something different.  All had value.

 Joe,
I like the fact that you encourage someone to get additional training. If a person keeps learning and growing, even a weak program, can actually pay off. I think we’re many students go wrong is that they feel like they are buying a training that will be their silver bullet and no further learning will be needed after that. Of course we both know there’s many people posing as teachers/coaches that is basically repeating what they have heard someone else say, but they’ve never done it themselves.

...or, they stop with that "repeating" and never really understand the basics that make up REI.  This means they never go beyond what has been repeated to them.
Mentorships/training is school.  Just like school used to be, the most important thing you learn in school is how to learn, and how to develop, and how to solve problems because school should give their students the tools to solve problems.  RE training should do the same thing.  Unfortunately, school today does none of that.  If anyone thinks I'm wrong, I'll give you a test that will prove I'm right.

That's like asking how much a car costs.

Mentorships are a form of education, taught from those with experience.  When you go to formal school, for any profession, you don't take one class, or series of classes.  You take English, Math, Science, etc...  Plus, you take specialized classes that line up with the profession you have chosen.  In Architecture you would take Structures, Electrical, Plumbing, HVAC, a variety of Design classes, Art History, etc...

Saying someone should not do a Mentorship program because the program and strategies taught might not work for them is true, only if they take one program.  I would be a terrible Architect today if the only set of classes I took was a series of Design classes.  It would be a waste of time, and money.  Much like taking only one Mentorship class and expecting that one set to be the end all.

Over the years, especially in the beginning, I probably took at least 10 Mentorships, or seminars.  All teaching many of the same thing (called reinforcement), all teaching something different.  All had value.

This depends on many things specific to each investor. Every REI has a starting point, a build up phase, and an exit phase (this doesn't have to mean out of REI...it refers to cash).

The key to determining this is based on an investment plan, and where the REI is in that plan. The Plan should be based on moving cash through investments. Using percentages as a guide to success tells you nothing of value. I think too many REI focus on either CF or equity, which is a mistake. They need to focus on both.

Focus on CF only and you will be frustrated in trying to build up and grow. There's no cash available to do this, without waiting for CF to build up to use as DP's. Negative CF is foolish. As the NCF accumulates, you are paying more an more for that property. The goal of CF is to recover the cash the REI puts in. Until this happens, the REI is on the negative side, and NCF just increases the amount of Cash needed to recover, and if the NCF continues, that recover will NEVER happen.

Focus on equity growth, is just as foolish. (See California for an extreme, but realistic, example). Equity is just cash that's frozen, and useless. I've seen many REI have a ton of equity, but can't pay their bills, and lose a lot of it, or even go bankrupt. Negative CF makes it worse.

You must have both.

If there were in fact permits pulled, then the city still has records of them.  They don't get rid of them usually for decades.  they might archive them in some basement somewhere though.

Quote from @Thomas Jay Bledsoe:

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $110,000
Cash invested: $60,000
Sale price: $225,000

This property has 2 units and 2 storage units creating 4 income streams. It was a great investment. I used the proceeds to start my business.

What made you interested in investing in this type of deal?

It was obvious that this would result in a positive cash flow. I found a way to get it financed.

How did you find this deal and how did you negotiate it?

Through realtor.

How did you finance this deal?

Top secret

How did you add value to the deal?

Added fencing and power to the garage for garage door openers. This was a big deal to the tenants.

What was the outcome?

Positive cash flow for years.

Lessons learned? Challenges?

I learned how to manage rental properties well with this property.

Top Secret Financing?  Was it illegal or something?