All Forum Posts by: Tim Porsche

@Taylor L. My 3 year goal is buy 2 or 3 more multi-unit rental properties that cash flow enough where I could comfortably pay all my living expenses from rental income alone, freeing up more time to put towards pursuing things like house flipping. My 5 year goal would be to have a successful house flipping business in place, and be at the point where I could start looking into purchasing small apartment complexes. 

I am definitely leaning more towards giving it a go doing REI full time. It's something that has always really excited and motivated me. The overarching long term goal has always been to be able to support myself 100% without needing to rely on a job, whether that's through REI, freelancing, other entrepreneurial pursuits, or some combination of all the above. I'm thinking I'll give myself one full year to get to a point where I am making at least as much as I was at the day job, and worst case scenario if I fail I can always go and look for another job at that point and continue to save for and buy more cash flowing rentals. At least I'll have the satisfaction of knowing I tried and even if it doesn't end up working out I'll gain valuable experience and know more than I do now.

Hey folks, looking for some advice and feedback. I've been working in the IT field full-time doing systems support for the last 6-7 years. I've been working for a contracting company at a client site this whole time, and I found out last week that the client will be ending the support contract with the company I work for in October of this year, which means my position will be going away.

I've been purchasing rental properties the last 4-5 years with the goal of eventually being able to replace my W2 income in the event something like this happened, and also just to get to a point where I'm not trading time for money as much and have greater control over my time. I currently have enough positive cash flow from the rentals to cover about 70% of my living expenses where I am at right now, and am trying to decide what to do next when this support contract expires. Honestly I've been looking to make a change for awhile now, but have stayed in part because the pay is good and also because it's easy to get mortgages for additional rentals with this W2 income. My plan was to get to the point where 100% of my living expenses could be covered by rental income before making a change.

I would love to transition into real estate full-time, while also supplementing my income by doing freelance writing gigs online. I've been doing freelance writing on the side for a bit and know for a fact that with freelance writing, plus my rental income I can easily make enough to pay my monthly living expenses without a W2 job. I also will have about 4-5 years worth of living expenses in cash as soon as I sell a flip project I am currently working on that is set to close within 3 weeks. My two main concerns with this however are:

1. It's going to be difficult if not impossible to get a conventional mortgage until I would at least build up 2 years worth of steady 1099 income from freelancing and real estate investing (flipping most likely).

2. I'm afraid that if full time REO investing and freelance writing don't end up working out as well as I'm expecting, I'll lose out on a lot of growth I could have had with investing that steady paycheck month after month.

3. I've only ever flipped one house before and don't have near as much experience as I would like before trying to go full time.

4. If I flip a house and can't make as much as I'd like to on the selling side, normally I would look into refinancing and holding it as a rental as a plan B. This likely won't be possible without W2 income.

My other option is to play it safe and find another W2 job even though my heart's not really in it.

What would you all recommend? Take the plunge or look for another job and keep buying rentals and prepare further? Are there other things I should be taking into account and considering as well?

Thanks in advance for any feedback!

Hey folks, looking for some advice and feedback. I've been working in the IT field full-time doing systems support for the last 6-7 years. I've been working for a contracting company at a client site this whole time, and I found out last week that the client will be ending the support contract with the company I work for in October of this year, which means my position will be going away.

I've been purchasing rental properties the last 4-5 years with the goal of eventually being able to replace my W2 income in the event something like this happened, and also just to get to a point where I'm not trading time for money as much and have greater control over my time. I currently have enough positive cash flow from the rentals to cover about 70% of my living expenses where I am at right now, and am trying to decide what to do next when this support contract expires. Honestly I've been looking to make a change for awhile now, but have stayed in part because the pay is good and also because it's easy to get mortgages for additional rentals with this W2 income. My plan was to get to the point where 100% of my living expenses could be covered by rental income before making a change. 

I would love to transition into real estate full-time, while also supplementing my income by doing freelance writing gigs online. I've been doing freelance writing on the side for a bit and know for a fact that with freelance writing, plus my rental income I can easily make enough to pay my monthly living expenses without a W2 job. I also will have about 4-5 years worth of living expenses in cash as soon as I sell a flip project I am currently working on that is set to close within 3 weeks. My two main concerns with this however are:

1. It's going to be difficult if not impossible to get a conventional mortgage until I would at least build up 2 years worth of steady 1099 income from freelancing and real estate investing (flipping most likely).

2. I'm afraid that if full time REO investing and freelance writing don't end up working out as well as I'm expecting, I'll lose out on a lot of growth I could have had with investing that steady paycheck month after month.

3. I've only ever flipped one house before and don't have near as much experience as I would like before trying to go full time. 

4. If I flip a house and can't make as much as I'd like to on the selling side, normally I would look into refinancing and holding it as a rental as a plan B. This likely won't be possible without W2 income. 

My other option is to play it safe and find another W2 job even though my heart's not really in it.

What would you all recommend? Take the plunge or look for another job and keep buying rentals and prepare further? Are there other things I should be taking into account and considering as well?

Thanks in advance for any feedback!

Hello All,

I have a question regarding reassigning rehab items on a contract signed by a contractor and myself. The contract was signed on 01/18/19 and was for about $21,000 worth of work. I made a rookie mistake and did not specify the time by when it needed to be complete, or have any financial penalties built in for being too far behind schedule. I wasn't worried though as I had worked with this contractor before with smaller jobs and never had any issues. 

Anyway, the contractor told me verbally that we would be looking at 6-8 weeks to have everything completed. Fast forward to today, and we are about 14 weeks into this thing and there's still ~$7,000 worth of work to do. The contractor seems to send one or two people to the house for 1-2 hours maybe 2-3 times a week to do a few small things, and that's it. Clearly it's not on the top of his list of priorities right now. I've talked to him multiple times about trying to speed things up and he always says they will, but work just continues at the same slow rate. At this rate we won't be done until July or August which is way past the time frame I had planned for. 

What I would like to do is have this contractor finish certain items he was hired to do, and hire out the rest elsewhere. Is this possible to do, or am I stuck waiting for him to finish everything in his own time? If he is agreeable to it, would I just draw up an addendum to the original contract, listing what items will be removed and the associated cost reduction for each one removed, and have him sign and date it? Thanks in advance for any input. 

Thanks for the feedback everyone, much appreciated! I ended up emailing the contractor and came to an agreement. I will file a dispute for the $4,000, but with the promise it will be dropped as soon as an additional $3,000 worth of work is completed. The contractor seemed to understand and said he will pick up the pace. Will see what happens but I'm cautiously optimistic at this point.

@Jo W. You are absolutely correct. I was kicking myself after signing the contract when I realized it didn't have the timeline in writing on the contract. I'm making a list of mistakes made\lessons learned from this first flip project so I will hopefully not repeat in the future. 

Hi All, I'm in the middle of doing my first flip project and I'm in a bit of a tricky situation at the moment. I hired a contractor who I have worked with previously on several occasions for smaller jobs at my rental properties and always did a great job. The contractor is in charge of doing about 80% of the work on this flip. We signed a contract back on 01/18 of this year and he originally estimated 6-8 weeks to get everything done. There was about $21,000 worth of work to do, including labor and materials. 

The first two weeks started out great. He got in there with his crew and made some pretty good progress. After the first two weeks though, they would only show up maybe one day every week or so and progress has been slow. There was always a semi valid sounding excuse though. We are at the 8 week point now and I'd estimate only about 50% of the work he was supposed to do is completed. I have paid him about $16,000 so far and he has completed about $12,000 worth of work, so we are roughly $4,000 ahead on payments I'd say. 

I've told him I'm a bit concerned that only 50% is done so far and tried to get him to give a date when the rest of it will completed but he doesn't seem to want to give a firm date on anything. My question is, what would you rehabbers who have more experience recommend doing in this situation? The only options that I can see are...

1. Let him go and try to find another contractor to finish the rest of the work. 

2. Keep waiting and hope he'll start dedicating more time to working on the rehab.

3. Keep letting him work until he eventually and hopefully completes the remaining $4,000 worth of work that I've paid ahead of him completing, and then let him go if things still are not working out. 

If I go with option 1, I worry about losing the roughly $4,000 worth of work I paid ahead of him completing. If he's willing to refund me that money, great, but if not then the only recourse I have would be to file a dispute on the credit card I used to pay him with. The last credit card payment was for a little over $7,000. From what I understand I have 60 days from the date of the payment to file a dispute...which would give me until 03/25 (three days). I feel like if I file a dispute I'll lose any good will and the working relationship I have with the contractor, but on the other hand I feel like if I don't file a dispute I might be out of that $4,000. Not sure on the best course of action here...any advise would be super appreciated. Thanks in advance.

Hey All, I've been looking for my first flip project for a couple months now and finally got one under contract. It's a banked owned foreclosure that went on the market about a month ago. It was listed for $120,000 but was recently dropped down to $98,000, and I now have it under contract for $92,000. I went and saw the property today for the first time, and met a contractor there to walk through the house and get a quote for the rehab.

During the walkthrough we discovered that the property has a cesspool type septic system which they stopped allowing many many years ago. I am unsure if it is still functional or not, but have an inspection scheduled for it on this coming Thursday. Since there is no place to put a drainfield in for a new septic system because of the way the yard is configured, the cost for the type of system I would need is around $30,000 I have been told.

My question is, if my numbers still look good after getting a firm quote from the contractor, having a home inspection done, and the cesspit clears the inspection, would you recommend proceeding with the purchase? Or do you think the chances of the cesspit causing issues down the road and the extremely costly replacement would make it not worth it? I guess I'm just wondering how much I need to worry about it even if it does pass inspection...the house was built in 1955 and I'm assuming the cesspit would have been put in around the same time. Thanks in advance for any advice!

@Chris Mason Thanks for the feedback. I only see 3-4 recent sales along this same street within the past 12 months. They went for between $140,000 - $150,000 with the ones closer to $150,000 being more nicely upgraded and one having an extra bath (3 instead of 2). Otherwise very comparable though. AS-IS I'm thinking it could go for $130,000 - $140,000 and he is asking $120,000. If I could get it for under $110,000 I think it's a pretty decent deal...would cashflow about $210 per month after accounting for all expenses and I'd have a nice bit of equity already built in. 

Hey All, was approached by a seller earlier this week and I have an opportunity to buy a SFH rental at a discount. I'm having a tough time determining what the current value of this house is though and would love to hear some opinions and would appreciate any feedback.

The primary reason I'm having trouble determining what the current value would be is because on one hand the house was appraised last year at $148,000 by an appraiser according to the current owner. However, I see on Zillow that it was listed for sale at $135,000 back on 10/2017. I asked the seller about this and he said he originally purchased the house for $60,000 and rehabbed it with the intent to keep it as a rental. When the last tenants moved out, he was unsure if he wanted to sell or rerent it so he just put it on the market for sale for about a month, at which time he found new tenants and decided to keep it.

He said the reason he looking to sell at a discount now is because he has two flip projects on the market that haven't sold as quickly as he had planned and he needs cash. Also, he doesn't want to kick the current tenants out as they've been very good. I know this area relatively well...I have a rental just about a mile away from this one actually, and would estimate the value at $140,000 conservatively after viewing the inside and outside today. Should I be worried that it was listed for sale at $135,000 for a month and didn't sell though? Or am I overthinking this? He said he'd be willing to sell for $120,000 but is open to lower offers. I looked at comps in the area and it looks like it should fetch $135,000 - $145,000 all day. Is there anything else I should be doing as due diligence before making an offer, and anything else I should be doing to make sure I'm valuing this correctly? Thanks in advance for any advise. 

@Robert Biggerstaff Yes that is how you're supposed to estimate your capex expenses. Figure out how much something like a roof or furnace will cost to replace, figure its expected lifetime, then break it down into a monthly cost. Or you can do the quick and dirty way and just estimate that a certain percentage of your rent will go towards capex...for me personally I estimate 7.5% of rent for capex, 7.5% for regular maintenance and repairs, and 5% for vacancy. 

I don't actually set aside that percentage every month into a reserve account, although there's nothing wrong with doing it that way...instead I just put all positive cashflow into my reserve account until I have 5 months worth of PITI payments for all properties, then I take all my cash flow going forward and save it for a down payment on the next rental. If I have to dig into my reserve fund for some reason, then I divert the cashflow I'm saving for a down payment until my fund it back up to 5 months worth of PITI payments again.