All Forum Posts by: Sam Yin

Btw, @Mark Cruse, looks like you are in the MD area? I lived there briefly when I first came the to US. I was there again for a brief stint when I was in the Army.

I will be there later this month. I would love to buy you a cup of coffee and chat if you are still in the area and allow me.

Just like most things in life, if you know, you know... And it's hard to convince people otherwise.

@Alan Asriants I feel you have not/will not try lower quality and will focus on higher quality assets. That's cool and it is good strategy. Keeping your buy box black and white is commendable. But I feel you may have missed out on some positive qualities of lower class areas and higher door counts.

@Mark Cruse I totally understand your philosophy. I agree with your evaluation of quality, quantity, and potential of greater gains by leveraging management experience to maximize profit on greater door count. I am not only convinced, but I KNOW the outcome is astronomically greater if you can operate well.

I have operated in both A, B, C, and D areas. I can tell you that there is more value to C and D areas than you think. It is directly tied to cash flow, which is what the end goal for most of us. I would like to believe that I am not a collector of properties, so having a few trophy class A properties will not do it for me. Appreciation in class A is not going to put food on the table right away. The lower cost to entry in C and D areas can jump strat your journey with higher door count and better leverage. If management skills were equal, you would build value much quicker in a class C and D area because you are able to force appreciate more units for trade into more or better quality quicker.

For reference, without going into exact door count, I traded a few A and B assets for C and D assets to expand door count. It allowed enough cash flow to take on more risks and expand even further. I now have mostly B and C assets, with a light sprinkle of C- and may be a D, that I recently acquired in an area that will surely gentrify quickly. Its an additional influence that will more than likely multiply it's value, above and beyond what I can do with management experience. The move from A and B to C and D using leverage to expand door count allow for FI from a six figure job and six figure pension in just a couple of years. And as Mark stated, you can bring that higher door count in the lower class area from $100 to $500 a month cash flow with the right management systems. 

I'm a father of 3 young kids, and I did not make that decision lightly. But the stability from door count gave me the confidence to make that move. It's not as management intensive as many would make it out to be. It got me to the point where I could take risks in other people's start up ventures, think about a second home, dabble in outside of apartments and into strip malls, etc... It does require some management/operation skills to achieve that level of passivity. When I look back at the time freedom I have gained from leaving the workforce, I keep on kicking myself in the butt for not figuring it out a few decades earlier. Because had I focused solely on quality and closed my buy box in a black and white fashion, I would probably still be forced to keep working even after 10 years of investing. And forget about syndications... With the amount of income from working, I would still be working if I went in to syndications and those door counts are meaningless.

This is a healthy exercise. Discussing door count as a conversation piece has opened the door to much more nuances that is very educational. I hope that people who are following the thread get a good taste of operators from both sides.  Thanks @Dave Meyer for rehashing this conversation piece.

 Best post on this thread!!! Hands down. You put into words what I could not.

DITTO!

@Theresa Harris

You said it best. It doesn't matter. If the owner is good with it, stay with it. Don't let people undermine your efforts and your methodology. Be comfortable with you and be open to other strategies.

There are so many paths to REI and wealth, but there are also so many different individual circumstances that they cannot all fit into the same hole.

Great discussion. So many different ways and so many different settings for how a door count discussion and lead. It will depend on whose asking. But let's keep it a great discussion and not a personal insult to those that do not agree with a perspective. It's just a perspective.

@Mike Dymski

I strongly agree with your statement.

There are those that are vain, and it doesn't matter what metric is used, they will make it a vanity point. There are those that are not vain, and the same applies. I feel it's inappropriate to get anymore specifics, because then THAT would be vain/smug.

Example, for those that really want to judge or compare or even just converse with others beyond door count to get an understanding of their portfolio... Is it better to say "I have 50 doors" or "I cash flow $50k every month"? Where do we draw the line? I NEVER bring it up, ever. But if asked, I just say I have a few properties. If pressed, I'll say somewhere between 50-100. Only when I'm with someone who I have vetted and we are diving into details for our mutual benefits do I begin to reveal other numbers. I'm not comfortable telling people it's 8 figures or what ever... Because that not proper.

Depending on the environment, I might just say "I have a few apartments that have big loans on it. I'm about 65% levered and my margins are around 30%." Those that understand it will understand will respond appropriately and those that don't will show right away.

Without knowing your full background, I will give you my take, since I am choosing to go into a similar scenario. This is just a different perspective that aligns more with my situation and may help you decide if your situation is similar.

I spent a day last week in NV to look at several homes as a possible 2nd home. I will use max leverage if possible, regardless of interest rates, to preserve my capital. It will likely carry a $3K-$4K mortgage. I am buying the home for possible future relocation/frequent retirement visits, new residency/tax filing, and because my sister lives there. I don't want to always stay at her place since my kids are all teens now. The reality is I will likely use it 3-5 times a year, 2-6 days at a time. I was not planning on renting it out. It will carry a net loss of about $4k/month, or more, to keep the lights on. But I will register a car, a bike, and an RV at the address. Eventually, I may move my LLC over. And if I change my mind later, I'll just sell it, or keep it, and look for another in FL, WY, or TN.

Here is how I justify the net loss: the tax savings from CA's 13% to NV's 0% on my income will more than cover the mortgage. Although I have plenty of carry-over depreciation for now, if I decide to slow down in the future, it will help offset my taxes to a significant degree. Additionally, in my case, there is a good chance I could call it my future primary and then find another secondary elsewhere. I could also begin to exchange some assets out of CA to NV if the opportunity should arise.

Just my 0.02

 I have run into something similar in the past. It turned out that the tenants did not ventilate the apartment while they did their living/business. The tenants never open their windows, ever.

When it happened to me, I ended up replacing ALL the drywall and insulation of the apartment at first. But it happened immediately again. After some investigating, it was the last of ventilation PLUS moisture retention under the house.

Give that a shot.

@Ed O.

I think there may be another side to this story that even you may not be aware of. Your contractor may not have a good history with BofA. he may not be disclosing that part to you, which would likely impact the long holds.

BofA, CHASE, Wells, etc... are large institutions that have giant businesses portfolio and are very aware of the importance of timely fund clearances for small businesses. Additionally, ZELLE is instantaneous. I have several reoccurring direct deposit ZELLEs that I send out monthly between $2 to $20K with zero hick ups.

After some of the other responses, I think it's fair to say that it would NOT be prudent to suggest to newer investors to avoid this large bank. I think it would be in the best interest of newbies to establish an account with BofA or other large institutions because they are so resilient and offer great products.

On two occasions last year, I wanted to pool funds to one account in order to send just one wire transfer to avoid confusion to the recipient. I wrote out a few checks to the bank ($15k, $20k, and $20k), that would required a week or more hold. I just asked if they can release it immediately because I need to make the wire cut off in the next 30 mins. They call over the supervisor, she OKs the release, and BAM! Done. The wire sent out and the funds were drawn from my other bank accounts several days later.

It doesn't hurt to ask. But if there was a not so reliable relationship (on the account holders part) it may cause some pause by the bank.

In the end, there is always CASH. It is still king and will have zero hold time for either party, if one refuses to use electronic transfers like Zelle or Venmo.

@Jake Andronico

I have been keeping an eye on the NV market. I may make a move within the next 12 months. This is more for future financial planning, but it will incorporate REI for the meantime.