All Forum Posts by: Sunny P.

If you have a good relationship with a property manager, that may be able to offer what they do.   My new leases have an automatic renewal written right in the lease, unless notice is given.  I have one very long term tenant that I do a yearly extension for though - and it is a simple one page document indicating start and end dates, the new rental rate, and that all other terms of the original lease remain the same.

We don't necessarily do no money down and so let me give an example of what I mean. I'll do a 4 urban Townhome development deal and put in $140,000 for the acquisition downpayment on a HML and $45,000 in soft costs like site plan, survey, geotech, engineering, working drawings, permits, etc. I take the risk and spend the 9-months getting the permits. On a 3500 sq ft lot in Seattle zoned LR3 in an urban village, you maybe able to squeeze in 4 townhomes that have 3-stories.

Once it's permit ready, I will bring a partner in who wants to get a good return on their money. So I might bring a partner in for 60% equity in the project to the partner who brings in $300,000 cash.  At this point, I got all my cash back and in the deal no money. 

I'll make 25% mark-up as the contractor building he project, which is a substantial sum when you are doing $34 million in construction. I get my 40% equity. I also get 4 listing commissions on 4 townhomes. My partner gets an excellent return on his money.

But real estate markets go up and down and so you have to know where you are in the cycle. We're probably heading for a 2 to 3 year slowdown and so one has to be careful at this point in the cycle and have multiple exit strategies.

Ok, here's my take on it. I own 8 Subways and use them to generate my livelihood. My excess income is then poured into my real estate business. Eventually I will use the RE for my retirement income and put the money from selling the Subway biz in the market to diversify.
NOI on the Subways is around 15% so the earlier poster's net of 18k for a Subway or Taco Bell is way off. Trust me we earn the 15%. I had hair 24 years ago when I opened my first store. Employees are the biggest problem like any business. Thievery, not showing up, etc.
After I had reached the number of stores that I needed for the lifestyle I wanted, I started buying RE. Instead of toys (I have a few) I bought something that would generate more income.
Best advice I could give anyone is not to put all your eggs in one basket. Diversify. I've seen a lot of people zoom past me financially. I also saw them on their way down (remember 2007?). I guess it puts some credence in the saying "slow and steady wins the race".

Sunny P. Am I reading your post correctly in that you are comparing investing $200,000 of capital (leveraged to $1M) in real estate vs investing $1,000,000 of capital in small businesses? If true, it hardly seems fair to compare the expected cash flows of each against each other.

 In your example, your talking about passive investing only. Real estate is unlike any other wealth creation vehicle being an active real estate investor.

In the last 12-months, I have used none of my own capital but yet have increased by net worth by $22 million dollars.

In the past, I have been an angel investor in Hollywood companies, software tech companies, and CleanTech companies. I am still waiting for the day I get paid. In 1999, I built from the ground up a brand name (not that well known) company in Korea. The company did well for 10-years. In 2008, the market crash forced the company to shut its doors. All that work and zero in investment return. I've also had success in gold/silver investments and swing trading.

But nothing comes close to real estate investing. Once you understand how to land develop and BRRRR, the possibilities are endless in real estate investing. I cannot think of a sustainable way to get 100% IRR consistently year after year. If you did that as a Wall Street trader, they would write books about you.