All Forum Posts by: Bill Goodland

I understand where you're coming from @Joshua Johnson, I jumped right into reading all the books, listening to all the podcasts etc. It's very easy to get excited when you hear about all these successful people, then get discouraged when you talk yourself down for not having this or that edge that so and so had. We all have a competitive advantage, and if you don't think you have one I'd start looking. I understand RE can be pricy in certain areas, but as its been said 1000 times on here, theres definitely cheaper markets within a 2 hour drive that could can begin to make connection through BP, calling agents, contractors etc. to get some boots on the ground of people that might be willing to work with you before making the trip and start making offers. 

In the richest man in babylon, they talk about the 10% tax you have to put on yourself in order to save enough money to invest. Pay yourself first model. It sucks, but if the government magically came out with a new 10% on everything you earn, I'm pretty sure you'd survive. Once you have your nest egg to put down on a property, I would argue you have to budget your time and effort the same way. Could your family possibly be upset if you decided to dedicate 10% of your free time to RE? I'm sure they could. But if your full time job suddenly said, "you have to work 10% more or you're fired", I'm sure you would manage. Just keep in mind and communicate that this time, money, and effort is all an investment to get the snowball rolling to build wealth, and ultimately freedom to spend more quality time with your family in the future.

Lastly I would add, invest smartly, but don't wait on the sidelines forever waiting for the unicorn, home-run deal that may never come. For example, putting down 20%, on a 100k property that rents for 1k a month, 5% 30 year note allocating 40% for expenses still provides you with a 10.4% cash on cash return and much higher overall return when factoring loan pay down, appreciation, future rental increases, tax benefits etc. By no means a home run or the benefit of low money down or cash recycling with BRRRR, but that simple classic 1% minimum deal is still a much more solid return than other investment vehicles or dead money in the bank. Best of luck.

I think it should really depend on your current experience and exit strategy. I know some wholesalers have systems to shoot out low ball offers with boots on the ground and a large buyers list. I know some buy and hold guys at auctions or even MLS will make an offer even without knowing all the specifics at a price that 9 Times out of 10 will work out in their favor. If you don’t have that experience, or can’t afford that 1 out of 10 chance that you get burned on one poor deal, I would recommend a much more thorough due diligence process by qualifying leads first based on what you can see from pictures or gather from the seller/agent. A quick and dirty rule I’ve heard is $5/square foot on a touch up paint and carpet rehab, $10/sq. Ft. medium rehab and $15-20/sq. ft for a total gut job. Once you’ve qualified a property you’d be interested in, I’d then go see it and bring someone that can better estimate rehab costs and of course your agent to determine ARV, rental estimates etc. So like most questions asked on the forums, it really depends. But keep us updated on how everything goes. Best of luck!

Originally posted by @Angela Jossy:

@Bill Goodland That's funny you said that because I literally just downloaded that book this morning! I like your idea about the Airbnb business. I'm going to give that some thought. The one thing about wholesaling that deterred me was that it really felt like learning an entirely new profession. Its not that I can't do that, as you can see from my background I've mastered many careers in my life, but right now I just kinda want to focus on being the best property manager and real estate investor I possibly can - while putting away as much money as possible. 

I was thinking earlier that if I wait one more year, my IRA/401K will have 10k and I can probably save at least another 5k from my various side hustle jobs. At that point I think I could probably get into a househack situation with a duplex/triplex/quad. Maybe I should just spend another year learning, looking at properties and running the numbers so I get a good sense of what's out there. I remember someone saying that if the deal is good enough, there's always someone who will fund it for you. Maybe if I keep looking that will end up being true. I wish I had a friend who was currently doing BRRR on small multifamilies so I could just kinda ride along and learn by watching and asking questions.

 One of the things that helped me to save the majority of my income was the idea that you put a personal "pay yourself first" tax of say 20%. Now I know that can be tough for anyone and the exact amount depends on your personal situation, but you'd be surprised how achievable it is to save a good chunk of money in a year once you make a budget and stick to it.

Going back to the Airbnb business model, lets say an apartment normally rents for 1200, but you think it could bring in 2000 on airbnb, I don't see why theres any reason if you were transparent and brought up to a landlord that you would like to partner with them and pay them a premium of 1500 lets say for furnishing it and allowing you to profit off of it. Win win for everyone.

And just my 2 cents with IRA/401k, they're great for the average person, and if your employer matches any 401k contributions, obviously contribute and take the free money. But if your goal is to maximize the return on your savings to build wealth now, I personally would sacrifice the tax benefits for the flexibility of the capital.

My best piece of advice on this topic is look at your return on your equity. I understand the reluctance to take on more debt, but really sit down and run the numbers with a spread sheet to compare what you're currently getting, and what you would get for example if you leveraged your current equity via cash out refi or 1031 into a cash flowing property with say 12% COC returns. I would also check out podcast episode #238 with Michael Swan. He had a similar dilemma of having equity in high valued real estate, however with low returns. He then essentially traded those for cash flowing assets that will continue to grow your equity and cash flow well into your retirement without sacrifices much cash flow currently. Best of luck.

Have you considered starting a Airbnb management business? You're already managing a 49 unit so I don't think it would be out of the realm of possibility to manage Airbnbs or at least the turnover of them. You network with local landlords willing to Airbnb your property and you split the profits with them as you coordinate the turnover. Obviously getting them furnished and hiring people to do the turnover would be a challenge but definitely scaleable. Once that is up and running and you have your stable W-2 I would recommend house hacking like I recommend it to anyone. Wholesaling can be a great way to make some cash, but from what I've seen. People underestimate the amount that truly goes into making wholesaling a good use of your time so if you're going to do it, fully commit. If you don't have the money for a downpayment currently I would check out Scott Trenchs book set for life and see if you can take some of the bits and pieces from that book to see if you can cut some expenses and build that financial runway. No matter what you choose, taking action of any short is a step in the right direction. I wish you the best of luck!

I'm from long island and have analyzed a bunch of towns for buy and hold but it seems you'd be lucky to find a 1% rent to value anywhere besides a war zone, and even if you do, I'm pretty sure the taxes will eat up any cash flow. If I was still living there, I might consider a house hack and flipping but would probably look out of state for buy and hold personally.

Congrats and great job! Looks like you must have a lot of equity or ability to pull significant amounts from your LOC. Can you elaborate a bit more on that? And without significant track record, did the bank have any issue with using the LOC as the downpayment on the loans? Is this where the partner helped? Did you use the same bank for everything? Thanks in advance.

I am currently beginning PA school and thought about doing the same. The issue I came across was even though I had good income, credit and savings during my gap year, I was attending school out of state and lenders told me that in order to buy in another state I would need to show that income in the state I'm moving to for school(and will have very limited time to work some per diem stuff). Rent where I am is pretty cheap and not many small multi unit house hack options so for me, given that we're at the top of the market right now and my program is only 2 years; I decided that it made the most sense to continue learning REI, but focus on school and wait to invest once I have the time, money and flexibility to really devote a lot of effort to without the risk of cash tied up in a property near school that I probably wouldn't normally buy as a buy and hold cash flow property. Best of luck whichever route you choose!

No offense, but people asking for a mentor and advice on here are a dime a dozen. I'd recommend educating yourself with the multitude of resources BP provides such as the ultimate beginners guide, podcasts, blogs, searching forums about BRRRR, networking and analyzing specific deals that you may be interested in before bringing it to someone with more experience looking for something in return. People are more than willing to help, but you're way more likely to get some help by asking offer something specific of value in return(secret apartment shopper, painting, marketing properties and/or future leads etc.)

Seems like it might not be a bad deal from a rent to value perspective. I do have a few questions however, like are you sure that those taxes and insurance estimates are correct?

I am used to most people accounting for no less than 8% or one months rent to be conservative but that could completely depend on what type and location the rental is in. I am fairly familiar with philly and live right outside of it now. If its a well located student rental I think that is conservatively fine, however with only 2 units in a less desirable neighborhood that could be too optimistic in my opinion.

Lastly and what I believe to be most important, how much money are you putting down on the property? As that could greatly affect your COC return; and would you want to and enjoy living in this property with the class of tenant that will now be your neighbor? I think you're on the right track, I'd just consider a few more things before pulling the trigger.