What I learned today...

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to quote an off topic source but stuck with me this morning...

“The pessimist looks down and hits his head. The optimist looks up and loses his footing. The realist looks forward and adjusts his path accordingly.”

- The Walking Dead

Because I live in LA and my interests at the moment seems to be Buy and Hold Multi.  I'm actively reviewing out of state options.  Vegas is the next and closest logical location for me as I spend plenty of time there with Family. It only costs about $99 dollars to travel there and I have a place to stay I need to go on Business.

Here's an interesting article I found on Las Vegas Multi-families.  It also does a nice job illustrating how adding value and adjusting expenditures can increase equity.

Las Vegas Multi Units

Noting here Vegas does scare me a little.  I'm sure investors there will argue but it seems like there is so much new building combined with war zones/ crime and an industry reliant on good overall National economy.  Should things go south then...

 @Ben Leybovich blog about owning a primary 

grant-cardone-primary-residence

prompted me to run some imaginary primary numbers as if buying market value with an FHA 3.5 percent down and look at it with investment eyes...

If one assumes you are in your primary for 30 years to pay off the mortgage. Sorry if my number are off I did them quickly. 

$410,000 loan with 4.5 % interest amortized over 30 years costs w/closing costs wrapped into loan.

$747,868

Purchase Price -

$425,000

10 percent maintenance and cap x over 30 (modest at best I think)

$42,500

utilities over 30 -

$90,000

taxes over 30 -

$165,000

landscaping over 30 -

$36,000

6 percent to sell -

$44,872

total cost over 30 years

$1,126,240

Value of the home with 3% appreciation over 30 years

$1,031,586

(-$94,654)

To be fair, I didn't account for inflation of costs / increases in property taxes or tax benefits of interest.  

I'll be interested to see where he goes with part 2 of the blog.  My assumption is it will either be don't buy primary until passive income can pay the cost or find the sweet spot where you can leverage your equity to offset the costs of ownership.

Ain't that a *****...LOL


I can see where Grant is coming from however the mortgage on my home is $575 and rent in my area is at minimum $1200 and that is for at least 200 sq ft less than my home. Think about the cost of over $600 every month over 30 years with inflation! I have more money left over after bills to save for investing... What is everyone's thoughts on this? 

@Greg C. I admire your sense of humor and your stamina. Apparently you observe my fathers dictum-never go to bed unless you can say you learned at least one new thing that day. 

 "I like single level multi-units because water travels down"------priceless!

Originally posted by @Bob Martin :

@Greg C.

 "I like single level multi-units because water travels down"------priceless!

 Sounds like something I said...hahaha

So as I listen and read... there is an overwhelming message to be heard...

"Take Action!"

I find myself doing a lot of research on the whats wheres and hows.  I read pretty much every new post on this forum.  I've listened to most the Podcasts on BP at least once at this point. I search loop net and Auction and Zillow and I find properties and analyze them just to do it. And as I find interesting properties I research the economy of the location

But it occurs to me there are actions I still need to be taking to "mind my own business..." The where and the how don't matter much if my personal financials are not ready.  So I shifted focus.  

My primary goal over the next few weeks will be to 

Get my primary refied (good thing I locked in yesterday as rates are on the rise)  

Get My Heloc Locked in at 80% LTV

Create a budget my family can live with to start saving more aggressively.

So I'm taking Action.  And I'm taking Action today.

RUBS - (Ratio Utility Billing System) Who knew?

"Multifamily Utility Company offers a variety of customized Ratio Utility Billing Systems (RUBS) for situations where the constraints of space and/or construction do not allow a property to be submetered. RUBS can be utilities for almost all utilities including water, wastewater, electric, gas and trash. " 

multifamilyutility.com

So since my focus the last few days has been Personal Finances.  I thought I would make note of Podcast 200.  There was a quick mention of Mint.com which I hadn't looked at for years.

Pretty cool stuff... Led me back to Quicken (for Mac) which I hadn't used in years because of lack of time to really under stand  how it worked.

The nice thing about Mint is the automation of it all.  It'll look look up the value of your home and cars and give your assets value.  It's a great at a glance total financial option.  Down side is there are a few accounts I just can't link and printing reports, if you can, I haven't figured out yet.

Quicken looks better for what I need but is less automated.  IE there are various accounts that won't link also Loans, Assets and Liabilities in the Mac version are all manual entries.  But on the plus side the budgeting options are straight forward was well as forecasting.  It also performs in seconds for my different tax schedules what usually takes me a week when it comes to Tax time.  I'm still trying to figure out how to utilize it without having to do hours of book keeping.

On the plus side. Refi is going through at record speed. HELOC is looking good as they are closing at the same time with the same bank.

I found that putting a packet together for the Appraiser was a huge benefit. Our Home was a REO that had been basicly ripped clean. So we put a significant amount of work into it even outside the scope of our original 203k construction loan. I should see the final appraisal by Monday but the Appraiser seemed very impressed. In the packet I included total costs of all major upgrades and before pictures of all the exterior and interior at original purchase. Even though I knew he would pull his own comps I also had a real estate friend run a CMA to include.

Just some things I picked up from the last few podcasts I've listened to.

Podcast 201 - "America rewards persistence"

Zombie-Houses-with-Justin-Stamper

Podcast 189 - really emphasized the Idea of "Systems".  which reinstated the idea of franchising.  Not sure if it was Rich dad or another book but the was notion that to be truly passive there needs to be a strong "System" in place so anyone anywhere can literally do the work the way you want it done.

Tarl Yarber

Podcast 178 - There is a great segment in here regarding lead generation.  Looking at specialist to forward leads.  IE the Post man Roofers.  In Charlie's case he discussed Foundation experts.

podcast-178house-hacker-house-flipper-landlord-charlie-kao

HAI - Housing Affordability Index...

"C.A.R.'s Traditional Housing Affordability Index (HAI) measures the percentage of households that can afford to purchase the median priced home in the state and regions of California based on traditional assumptions. C.A.R. also reports its traditional and first-time buyer indexes for regions and select counties within the state. The HAI is the most fundamental measure of housing well-being for buyers in the state."

http://www.car.org/marketdata/data/haitraditional/

Hey Greg, 

I think the book you're thinking of was "The E-myth" by Michael E. Gerber that talks about strong systems and franchise business models in generating income.  

Thanks for the posts on podcasts.  Very helpful.  

Hi Greg- I'm also new to real estate and these are great notes! Thanks for putting them in 1 place! 

@Megan Roche Thanks.  Helps me remember the mind numbing amount of info I'm reading or listening to.  

Wish I could edit some earlier posts.  I have a bad habit of typing and not actually reading what I typed... 

<----has caveman fingers

Stumbled on this website today. Smatasset.com.  Has some interesting calculators on if.

found it through this article that has Price to Rent ratios as of Feb 2016

price-to-rent-ratio-in-us-cities

Finally finished the actual size "Rich Dad Poor Dad."  To be honest I think I liked the mini version better.  Had all the same info just less repetitiveness.  Still love the ideas presented though.  To be fair it's probably not the first time I have heard them but it is the first time I was paying attention.

Also read "The Richest Man in Babylon" by George S.Clason.  The message in this book really resonated with me.  For so much of my life my savings was what was left after I spent everything.  This book really drove home the importance of "paying yourself first" and at minimum saving 1/10 straight of the top.  Again not really a new idea to me but I am paying much more attention now. Also the relation of money making money is explained well here.

Next on the list of to reads

"Think and Grow Rich" Napoleon Hill

"The 4-Hour Work Week" Timothy Ferriss

"The E-Myth Revisited" Michael E. Gerber

Recommended books on Syndication Investing by @John Thedford

"It's A Whole New Business" by Gene Trowbridge
"Real Estate Securities" by Mark Levine

BP Pod Cast 146 - buying-100units-word-mouth-marketing-enrique-jevons

Interesting tip in here regarding financing with a bank. To paraphrase Enrique Jevons...

When banks are advertising or pushing opening a bank account or giving incentives for opening accounts they are probably cash light.  So it might not be the best time to ask for a creative loan.  When they start advertising Auto loans they are probably cash heavy and need to do more loans...

While looking at some crowd funding sites I kept seeing the term Targeted Equity Multiplier... So I'll add it to the list of what I learned today

Equity Multiplier - "The equity multiplier is calculated by dividing a company's total asset value by total net equity, and it measures financial leverage. Companies finance their operations with equity or debt, so a high equity multiplier indicates that a larger portion of asset financing is attributed to debt. The equity multiplier is a variation of the debt ratio, and its definition of debt financing includes all liabilities."

http://www.investopedia.com/terms/e/equitymultiplier.asp#ixzz4SN5BZ5PT

Also just to note... Been Listening to Think and Grow Rick on audio book.  Among the many motivating stories in this book one that sticks in my head ends with the moral being: 

"Don't stop three feet from the Gold".  

i hear a lot about  do the "math" on BP but today i realize that there's a reason why math is the universal language.   it defies all logic and explains all. everything can be explained by math even relationships lol if your cynical enough to try to quantify it .

@Carlos Tavares Ha... I refuse to calculate the IRR on my wife. I feel I don't want to know those numbers :-)

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