All Forum Posts by: Scott Krone

@Travis Cripps @Ryan Collins  I just received an email from a lender who is promoting a program for doctors.  Here are the terms:

The Latest Rates

• Self-insured and PMI available over 80% LTV
• No cost option available with higher rates

Thought you would find it of interest.

@Ryan Collins  Lots to answer.  First, allow me to clarify a major point, our firm does not  build out dentist offices.  We have a retail division that builds sf home, church, commercial etc for our clients, and 2.  we convert distressed assets into self storage for passive income and asset growth.  We have developed sf, mixed use, mf, commercial, retail, and now self storage.  We do have investors, but we are not active in the products you are seeking.   

A colleague of mine does specialize in this product type.  He does build them turnkey for the dentists.  With respect to the demographics, again, not my words - his.  I trust you have a good perspective on your colleagues.

Agreed - practices should be based upon the EBITDA. They means to evaluate the purchase is completely separate from the real estate. Also agree the bulk of your time should be on enhancing your practice. In theory, you could buy the practice in one LLC.

On the other hand, you could buy the property in a separate LLC, with a loan supported by the "rental" income of the practice as well as other potential tenants. I state "rental" because you would be paying yourself a rent check from one company to the next. If you maintain the building, etc, in theory the real estate appreciates and grows in value without a whole bunch of input by you, especially if you hire a property management company to manage the asset. This could lower your over head because you don't have to pay yourself a profit on the "rent".

Hope that clarifies the comment.

@Travis Cripps @Ryan Collins  - I appreciate the same goals you both have but coming from different perspectives.  A family friend has specialized in developing medical dentist suites (dental condos) and then selling them to dentists.  He loves this business because (his words not mine):  "1.  Dentists are flush with cash, 2.  They are good at dentistry but not at business."  His points echo yours Travis.  It sounds like there is a place for education within the dentist industry with respect to general business practices including real estate.  For instance, the majority of McDonalds value is not in the business but in the real estate.  The business provides good cash flow, the real estate provides the wealth growth.  So it is good to buy the practice and the building?  There certainly could be if you can acquire both at the right price.  Prior to prospective investors working with us, we go through a webinar with them to show them how we have developed our model, and what is involved.   We discuss a historical deal.  If you would like to this example, I am more than happy to share with you.

@Clayton Cook   @Jay Hinrichs and @Brian Burke bring up two great points under one question:   What level of investment do you wish to participate.  Based upon my involvement with professional athletes, the focus during the season is a very hard job, especially with the length of the baseball season.  

If you want to be an active investor, then I would suggest using the season to study and prepare for your second career - real estate.  During the down time you can study the different areas of real estate and strategies.  There are many great programs that can help you prepare for the next stage.

If you wish to be more of a passive investor, then syndication appears to be the better avenue.  This to requires preparation on the product type, single family turnkey, multi-family, self storage or commercial.  If your objective is more long term, then these types of vehicles tend to perform at a higher rate of return due to the appreciation as well as tax shelters.

@Ryan Truong - I will first preface this as I am not a tax accountant.  You should consult with one as everyone's tax situation is unique.  That being said, based upon my experience, first you will not be taxed on the full $80k.  Worst case it would be $10k as your cost basis was $70k.  Another question would be, have you spent any additional money to improve the house which will increase your cost basis?  How long have you lived there?  Are you married?   Is this your primary job?  What were your property tax expenses?  You should not have any problem depositing the check at your bank.  

These are all factors to be discussed with your tax accountant.  

If you close next month, you have 11 more to talk about it with your accountant.

@Aneury Evangelista  We recently purchased a building in MKE to convert into self storage.  We got connected with a good group of investors in the MKe are.  Brew City Real Estate Investments on FaceBook run by Nicole Pettis

@Will Rodriguez - @John Casmon @Brie Schmidt and others are very experienced rental investors in both the Chicago market as well as the Midwest.  The key word of Chicago caught my attention.  There are many good points for either investing in or not investing in Chicago.  Personally, it is not a sub-market we have chosen to pursue.  However, are their are opportunities.  We look for those areas which are supported by demographics and statics.  Those are all good underlying principles for your investment strategy.  We rely on those for our investments.  In Chicago, we choose the supporting market of self storage - even then it is dictated by specific locations based upon supply and demand.   Do we avoid neighborhoods - yes, because the demand does not warrant more product in the market place.  

So, to answer your question, you have heard from some leading investors in Chicago - I think we all agree that due diligence is the underwriting most important factor.  Know your strategy, know your product and follow the research.

https://www.biggerpockets.com/users/MichaelK307. Michael it is great to see enthusiasm for investing and an entrepreneural spirit.  That being said a few comments.  First, if you truly want to be an entrepreneur - education should be your largest focus.  Study in school, study successful people, and study successful systems.  Study both success and why people fail.  Most successful people have failed.  They became successful because they learned from their failures.  Second, when you ask for advice, don't turn around and explain why you don't want to listen to the advice.  It communicates a lack of willingness to learn.

There have been many great comments for you to apply.  Why do people suggest cutting lawns - because it is starting a business.  It is being an entrepreneur at it's core.  Learn marketing, advertising, sales, customer relations, AR and AP.  Another option is Fortune Builders has a great program for teenagers that teaches how to be an entrepreneur in real estate.  Go to it, meet successful people.  Impress them by being willing to do anything (that is legal of coarse) to learn.  The greatest capital you can build right now is relational capital.  Don't under estimate that!

My mentor began as a Sunday School teacher, turned that into selling Sunday School material, turned that into motivational speaking, turned that into real estate, turned that into banking, turned that into owning corporate 500 businesses.  Start small.

Best of luck.

@Anne T. Your analysis looks well done. From a CAP perspective, it looks in line with the apartment market as a good buy. As our main investment strategy is self storage, we focus heavily on the demographics and supply vs demand. The new 200 unit building and the decrease in enrollment would be two major concerns. I would see where the rental demand is in relationship to the supply. I would also suggest studying the zoning code to determine if the city performs annual inspections. If they do, and they have seen it, you are on safer ground.

I was in a similar position with my company.  I realized I needed better systems.  I felt there were two choices: 1.  Take the time to develop them or 2.  Buy them.  I chose to buy a real estate system based upon the E-Myth.  The provider is Fortune Builders.  They have a great educational platform your son could use.  I know it's not for everyone, but it transformed our company.

@Than Merrill