All Forum Posts by: Steve Olafson

@Jay Hinrichs

I make close to that amount on a retail strip center.  I also make money with a couple of apartment buildings but they are much more work.  The apartments are on the market for sale.

There is a ton of money in turning poor performing apartments into efficient machines but you need to buy and sell to realize that upside.

Agreed!  I have my last two apartment buildings up for sale now.  I have already sold most of them during the past year.

I have had great success without ever applying a 1% or 2% rule.  You need a plan.  My plan was to buy underperforming properties and make them perform.  It works if you can formulate it. 

Those little percentage rules will take a long time and headache to make any real money.  I would rather make 400K in a year than 20K in cashflow.

Your questions can only be answered by you.  Don't fool yourself into thinking that your prime years are only in your twenties....  Your entire life is what you make it.  You are the creator and designer of your life.

It depends on what kind of investor that you are.  Will you buy and hold? Use a property management company? Add value? 

There is a process in Arizona where you post an abandonment.  The tenant has a certain amount of time to respond.  It is much quicker than an eviction.  Check to see if you have something like that in your state.

Here is an interesting article.  It matches what some of us have been saying for a while.

Article

I set them up with an operating and subscription agreement.  This is the key to the foundation of the deal that spells out the terms.

The terms that I use are basically an 8% preferred return on their invested dollar.  This is typically paid from cashflow.  If cashflow is not sufficient meet this amount, it is accumulated and paid out on sale.  After the 8% is paid, the sponsor and investor split the remaining amount.

The profits are split 80% for the investors and 20% for the sponsor.  I usually put a waterfall into place that allows for a more favorable split once certain returns are made for the investor.  For example, once a 20% annualized return is achieved, then all proceeds after that are split 50/50.

 Yes, mostly small mom and pop but not always.  I bought an 87 unit with partners from a non-profit that went belly up.  It was in bad shape.

For the most part, I pay 4-6% commission for the sale.  The larger the project, the smaller percentage for the commission.