All Forum Posts by: Scott Trench

@Niranjan P Ghate You will go through several PMs in a career I believe. 

I have. 

Today, I use James Synder at Steadfast real estate. Small local company here in Denver. Jim, as he goes by, is a property manager and baseball coach. He handles everything with grace, and when tough issues come up, owns the rare mistake, communicates promptly, and continuously improves. Couldn't ask for more. 

The projected NOI is $52,800 in this example, or in other words, the cap rate is 5.28%.

 The interest rate on your debt is likely much higher than that cap rate. If you are bringing this much down ($770K), I'd only do this deal closer to the $800K price point range, personally, bringing it to a 6.5% Cap rate (on projection). Vacancy assumption at 10% is pretty high. 

However, if I insisted on going through with this purchase, despite the cap rate lower than market interest rates, and I brought this much down, I'd hope to get much more favorable debt terms, including a lower interest rate, from seller finance for the remaining $330K.

Welcome, Jason! Are your goals to build your agent business, invest in real estate, or both? 

If the former, consider setting up some keyword alerts, and then attending a few local meetups. Greet every new investor and get lots of coffee. 

If the latter, I'd suggest forming a first "bad buy box" - a first hypothesis about where to invest, bringing that to other agents and investors, and refining it over and over again. 

@Tanner McCalister Welcome to BiggerPockets! We are also located here in Denver, and I actually know your special teams coach from last year, Ben. 

Some thoughts on private loans: 

1) They are a great way to generate simple interest - but, as an NFL player, that will be tax inefficient. You will pay at the highest marginal tax bracket. But, as you likely have already figured, this tax inefficiency may be well worth the peace of mind if you can develop this skillset and turn the (ideally) several million dollars you may make in the NFL into (ideally) five figures in passive monthly income whenever you retire. 

- Note - you may find, in today's environment, that a paid off, old school rental property produces about the same amount of income, after tax, for you, in Denver, right now, than the yield on private notes. Worth at least exploring whether that is accurate for a few days this offseason - a paid off property with a property manager in place will have the advantage of rising, long-term, in value with inflation, while the loans of course, can at best yield their interest and then mature.

2) You are likely finding that you have to cycle through the loans fairly quickly. 

3) @Devon Kennard is a wealth of knowledge for real estate investing for NFL players. 

Let me know if you ever want to meet for a coffee or beer! I live in Highlands Ranch.

@Steve K., for clarity is proposing the following three step plan to become a millionaire in just a single year:

Step 1: Start with $2M in real estate equity.

Step 2: Sell it and exchange it for crypto.

Step 3: Wait 1 year, become a millionaire.

I think that "dabbling" out of state is the mistake. That's a recipe for disaster. No matter how good your guy is, if you own one property, you just won't be a meaningful part of his business. 

But, we have heard countless success stories that seem defensible from folks that invest out of state. Typically, they go fairly big, build a team who depends on their business for a meaningful part of their livelihood, and they don't chase the most extreme yield scenarios (though they seem to find outliers anyways). 

The other way to be "successful" is to just go with a reputable turnkey provider, and accept much more modest, lightly leveraged returns. This may not pace the S&P 500 over the long run, but it can provide diversification, and for a very high income earner, placing 5 properties in a midwestern town with average yield with a property manager with light leverage can provide a reasonable amount of diversification. 

It's when the expectation combination of a low capital investment, very high yield, excellent service, and minimized costs come into play that investors are meaningfully disappointed. 

If you want a shot at all or most of THAT combination, you better be plan to be on site. And it's still hard.

I mean, if you go big enough, someone may eventually write a book about you. 

The risk is that the cover looks like this:

Congratulations on 1,000 posts @Michael K Gallagher, and thanks for all you do for these forums! It's awesome to have hybrid agent/investors on the platform like you, and to see the value that you add to the forums gives back to you, in turn, as an investor and as an agent. 

Keep it up, and look forward to the next 1,000!

@Shiloh Lundahl - The real estate investing ecosystem seems to have been hit very hard, in terms of interest in in-person events, absolutely. But, we at the same time made the experience of finding meetups on our website way worse with an update a few years back. We need to bring it back, but are, for now, prioritizing our mobile app and a new listings product to help investors find cash flowing deals.

Following - good question, and the way you posed it shows that you did your homework. I don't know the answer here. I'm curious as well.

But, I am sure that one of the CPAs, enrolled agents, or Tax professionals on the forums will be able to answer this question now that I have summoned them with my keyword stuffing.