All Forum Posts by: Chris F.

inkster is a war zone. Good luck collecting rent.

NPV analyzes cash inflow/outflow at a high level-nice for companies and stock picks, not as helpful in real estate-or more specifically, to be considered as one of many calculations in analyzing real estate, not the de facto.

the 50% rule (which has been discussed ad naseum) states that 50% of expenses will go towards capex, vacancies, taxes, and insurance, and the other 50% will go towards your debt service and any profit. this is an estimation of expenses against gross income. The target is at least 100/door profit. Using your example:

1025/2=512.50-250.50=262 or 131/door, so this would be a good investment.

2% is not a hard and fast rule, and in fact is reduced to the 1% rule in many places now, but it states that rents should be 2% of the purchase price. so if you pay 50K for a house, you should be getting 1k/month(roughly) in rents from that property.

These are back of the napkin calculations, and should only serve as a general guideline not a sole basis for buying. If the property meets one of these, you'll need to get the actual numbers to have an idea of actual expenses.

There are other calculations such as cap rate, IRR, which can also be used to get an idea of profitability.

Brandon Turner I think that works to a certain point, if you own large commercial real estate, but if you own many MF properties or SFHs that could get expensive. I was thinking more of someone to take over what you would do-handling the property managers, putting out fires, etc.

For those of you who own significant quantities of units, how do you handle scaling the business? I imagine once you own a significant number of properties it becomes a logistical issue for 1 or 2 people, and will require you to bring in an assistant. However, do stay with the LLC entities, maybe with a managing LLC, or do you incorporate at some point? I'm wondering if that ever makes sense.

Just wondering if there's still time enough in the day or if you just pass it off to someone else to handle dealing with PMs, maybe focus on acquisitions, your golf swing, etc ?

Jay Dao That's an impressive goal. I've actually been toying with walking to work myself as I live pretty close to my day job.

Mark Ferguson saving for real estate is the best kind of savings, IMHO.

As far as a home, I've recently relocated and sold my primary. I'm holding off on buying a home I'll stay in for a while until I've reach specific income goals. Even then I'll likely buy a smaller home than I can afford as I'm interested in owning homes in multiple locations. This way I'll have "vacation homes" I can nest in. And renting those homes out when I'm not using them will help offset cost. Owning a mcmansion isn't one of my personal goals, but then I like to travel.

This goes to the heart of RE investment. The first step in investing is the ability to manage your money properly, so being able to save a portion of your income is key for the financial house to be in order. There is a lot of focus these days on "extreme savers": folks who save more than 50% of their income. I count myself in this category. I did some calculations recently and though I was targeting a dollar amount, I realized it amounted to about 60 % of my net. It's a personal choice, and I'm able to live comfortably, without sacrificing anything "essential." Of course "essential" to me may not be what is essential to everyone else. While I think that this is works for me, it doesn't necessarily work for everyone, and it depends on many factors such as income, financial obligations, weather or not you have a family, etc.

So in that vein, assuming you have a set amount or percentage of your income you save, how much is it? Or if you reinvest your income back into your RE business, what percentage?

The first thing you should do is forget everything you learned from Carleton sheets;)

Exactly. This is just handing over the keys to your retirement, and most people don't even realize how much they're loosing to fees.

Even if you're knowledsgeable many times the options offered by your company are subppar. I had a CFP take a look at my 401K plan some years ago, and he laughed and said there was nothing he could do.. all the options were horrendous.

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

Amazing what a difference the 2% fee average fund fee makes over a lifetime. More evidence that the only way to ensure financial security is to control your own destiny, not leave it in the hands of Wall Street.

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

Amazing what a difference the 2% fee average fund fee makes over a lifetime. More evidence that the only way to ensure financial security is to control your own destiny, not leave it in the hands of Wall Street.