All Forum Posts by: Account Closed

mike_mn is absolutely correct. It is simply a difference between being self employed and building a business that could continue without you if you wanted or needed it to do so.

There is absolutely nothing wrong with either business model.

I called my local B&N yesterday morning and ordered Mike's book. I got an email a few minutes ago from the manager that it arrived at the store in the overnight shipment. I will pick it up this morning.

Definitely have to include Atlas Shrugged by Ayn Rand as one of the most influential I've read.

Originally posted by Bob Bates:

Where do you find deals? For the most part the MLS and internet don't have much more than full retail and I haven't heard of much through networking.

They are all full retail when you first see them.

I get deals from brokers, sellers, other investors, bankers, lawyers, accountants, I could go on for a very long time. The net-net of it is you must network. You talk to anyone and everyone who will listen and let them know what you are looking for in a multifamily investment property.

A great way to start is to pick an area and seek out the commercial brokers in that area. Not the residential types, they don't have a clue as to how these deals go down.

Explain precisely what you are looking for. If you want a B or C property in a B area, make sure they know it. If you want a property that is under performing because the rents are under market or the occupancy is low or it is just poorly managed, let them know.

When they send you a deal, 99% of the time they will send you proforma numbers. Those are fine to eliminate a deal. It is in an area you don't like or does not fit your criteria. If you can eliminate it quickly, great. Call the broker and explain why it did not meet your needs. That one step will separate you from 95% of the other investors out there.

But, if it looks promising. Contact the broker and ask for current operational numbers. Those are the numbers you use to draft your LOI to get to the next step which is due diligence.


Remember when I mentioned networking above? You do it for potential private money too. They can be partners or lenders but under no circumstance can they be both. If they are sharing in the monthly cash flow and/or the appreciation then they don't get a note and mortgage guaranteeing anything.

Originally posted by Chuck Stone:

If I had to take one over the other,

Like it or not, we do have to take one or the other.

Use wisely your power of choice.

The Purpose Driven Life by Rick Warren

The Art of the Start by Guy Kawasaki

The Dip by Seth Godin

and

The 4-Hour Workweek by Timothy Ferriss

Originally posted by Fred S:

Many PM's in the area that I've studied also invest/sell -is this typical of a PM company?

Personally, I won't hire one that does not have investments of their own.

I know, horror stories abound like the one Joshua described. But, it does not happen with the good property management firms.

A good management firm has more than one property manager, and the really good managers specialize. An agency might have some who are really good at turning around an under performing complex, getting it humming along and then turning it over to someone great at managing on cruise control. With the owner's permission of course. They may also have one or more who specialize in government subsidized housing or housing for a specific target market that carries special tax breaks. There are lots of niches out there and you never want just a property manager. You want the one with the skills, experience and knowledge that fit your circumstance.

Let me share a case in point, I am taking control of a complex near me on Monday 8/18. I have not personally seen the property, I will either Monday or Tuesday. But, the property manager I have already hired is tightly matched to the needs of the property. She is the best at what she does and what she does is what we need for this complex.

She has investment properties but she does not manage them. She uses another person in her firm. Why? Because the properties she owns do not need her unique talents. She has already done what she needed to do to get them into shape and humming along. But, when she bought a property like the one I am using her for a couple of years ago, she did her magic before handing it off to someone else.

Now, apparently some here would call her foolish or maybe even stupid to throw that money away because, clearly she can manage the property as well or better than the one doing it for her.

But, I know she is brilliant to do that.

Why?

Because she is giving up a relatively small amount of money to have the freedom to continue to ply her craft, in this case, for us, while her investments hum along.

There are lots of other dynamics in this equation too. Like emotions. When an owner walks into an apartment a tenant has trashed they feel violated. They think back to the hours and effort they put into making that unit ready and now they are right back at square one. A property manager, on the other hand, walks in, notes what needs to be done, gets the right people in to do it, deducts the amounts from the damage deposit, files criminal charges if necessary, files a small claims suit if needed, then at the end of the day sits down and had dinner with their spouse and kids and the owner reads the report and does the same thing. No churned stomach, no gnashing of teeth about wanting to squeeze the tenants head until their eyes pop out and they look like the unit did. None of that. Without these emotions, it is just business.

Originally posted by Wheatie:

To be frank, when you offer 20% returns and say "there is hardly any way to lose money in what I am doing" my eyebrows really go up.

So do the eyebrows and investigative interest of every state regulator and the Securities and Exchange Commission.

Originally posted by B M:

So is there a way to fund my projects without private investors? If I use private investing, what can I expect to pay for the money? Terms?

If this is your first forey into this type of investment you are going to be hard pressed to get any kind of institutional money in the "low 9 figure" range. If you want to try, you are talking about dealing with investment banks, insurance and retirement fund pools. They are not going to take you serious at this stratospheric level for your first deal.

Can you cobble together private money to do this? Maybe, how strong is your network of people with lots of money? That is not a flippant question, every investor should always be looking to build their network. Your goal should be to be within one or two introductions to people with funds like you describe, if this is going to be where you want to live from an investing point of view.

What will it cost you? It depends on how well they know you and trust you and whether you are looking for a private lender or equity partner.


You will still pay tax on all retained earnings and depending on how well you can justify the retention as needed to conduct the business you may pay some additional penalties to "retain it". A C corp is the best option to retain earnings and while you can set up an LLC and elect to treat it like a C corp, I don't know of any benefits to doing it.

You are talking about a very large dollar deal here. Spend the bucks on a good attorney and CPA who are familiar with the type of deal you are trying to take down.


There is no free ride of the kind you are seeking. At best you will still pay the federal and state corporate rates and at worst you could be hit with penalties for retaining earnings beyond the amount needed to conduct the business.

Also, for those who do want to manage their own properties there is no better resource than Leigh Robinson's book entitled Landlording. It shows you step by step how to do it right, what to avoid and how to stay ahead of most tenant nightmare stories you've probably heard. You can get it new for $20 at amazon and it is worth hundreds of times that.