1. I recall a post you made a month ago talking about real estate just keeping up with inflation. If real estate merely paces inflation, how were able to make millions? (Obviously cash flow and debt pay down are other ways to make money in real estate, but that takes time.)
https://www.biggerpockets.com/...
2. In the same post you seemed to advocate the stock market over real estate, claiming much more opportunity for upside. How much of your wealth came from real estate versus the stock market? (I am personally about 70% real estate and 30% stock market.) Maybe you can explain your thoughts on comparing the two?
3. What market did you start investing in real estate and how did you get funding to start?
4. How has your strategy changed over time and going forward? Are you changing markets or type of property (SFH vs MFH, etc.)?
After doing some research I want to get into Multifamily Syndication underwrite and all that good stuff. How do I find someone that can help?
I don't understand your question. You want to underwrite? You mean underwriting? I don't think you know what that means or what it has to do with syndication. If you want to be a guy to gather money from investors to buy and manage properties for them, you need to have some experience and knowledge of the terms. Unlikely anyone is handing you any money to invest if you don't even know the terms and have no experience or track record...
@Jack B.
If I just got $50k from a property should I use some of it to pay down my personal debt or just use it all to reinvest into another property?
No, debt is money. If you can use debt to make money, debt IS money. The CONVENTIONAL wisdom is pay down debt based on interest rate, rates of return, etc. That's dumb. I paid cash for my first house in my mid twenties (tech career, no inheritance or help from family or anything like that) because it was a paid off place to LIVE. Instead of paying off my student loans. I sold that house for 3x what I paid for it a few years later, used the money to buy two more properties, etc. Had I used the money to pay off debt like my student loans I would never have been able to do that at that perfect time. I made 700K instead of paying off 42K of student loans. Plus I had a guaranteed roof over my head. Paying off student loans would have been dumb. Great I have no loans but now I'm homeless, whoopty doo. THINK. RE has utility value. You can live in it, you can grow/raise food on it. Food, water, shelter. Get that down before you invest or pay off debt like cars, student loans, personal debt, etc.
@Jack B. Hi! I’m a realtor in Houston, Tx and I’m looking to become an investor/developer. I currently have my eye on some land. ¼ of an acre and I’m thinking put a multi-family triplex maybe quad. I wouldn’t mind living in one. I’ve never owned a home. What steps do you think i should take to make it a reality?
T.I.A.
Someone who has never owned a home is going to buy raw land and have a multi family built on it? It's like saying I've never owned or driven a car, but I'm going to go build a lambo and become a race car driver because I sell cars at a dealership. Rethink your strategy. There is a pattern of people with little experience or money or credit (lot's of 18 year olds wanting to buy apartment complexes as soon as they turn 18 in this thread) who have more ambition than strategy. You need to be realistic. This could work but is very risky. Contractors will take advantage of you.
What's the biggest misconception about real estate investing?
That it is for everyone, and that if you just do what someone else did you will reap the same result. It takes a certain kind of person to do this. Many of my high paid colleagues tried it and failed, bankrupt.
Also that it beats the stock market. It doesn't. I've shown chart after chart that RE only keeps pace with inflation. The undeducated will come back with, oh I'll just cherry pick markets. OK buddy. Even then the charts show an index fund beats RE 3 to 1. But if I cherry pick stocks too it beats RE 1,000 to 1. Then they argue but you can leverage RE!!! You can leverage stocks too....like I said, uneducated....comparing cherry picking leveraged houses in specific markets to a broad index fund...then get schooled that the index fund still beats that and if you cherry pick stocks and leverage them, RE can never come close to that kind of return. But RE is good to have in your portfolio. It's a no brainer for asset diversification and a hedge against inflation. It's much less risky than stock picking too, despite the fact that in RE, you're investing in what is basically a single stock. The difference is though...everyone needs shelter, the population is exploding and they aren't making anymore land. Basic economics.
@Jack B. Hi jack, little late to the show. I'm a newbie wholesaler who's about to hit the ground running and was hoping to get clarification. Would I go to the title company to start escrow after I've assigned a contract with the seller, or would I wait til I have both buyer and seller under contract to then take to the title company? Thanks in advance!
You can setup title once you have a contract if you like, or wait for a buyer. I'd wait in case you don't find a buyer and walk. Less work.
@Jack B.
Define multimillionaire please. Total portfolio appraisal? Total equity? Total equity prior to appreciation?
Someone who has millions of dollars. Not that hard to figure out bud....
Hi Jack,
I'm new to all of this, but I think I found a deal with a 12-13% cap rate and a Cash on Cash of nearly 40% if the numbers I have are correct, which I'm almost certain they are. The problem is, I started earning rental income from glamping sites just a 2 months ago, and banks don't take that for proof of income to get any sort of loan. How can I find a private equity partner to help me fund this deal? I think it's really good, and I have a great team that can back me up on the sweat equity, but we just don't have the funds and I would love to start forming a relationship with an investor.
Thanks ahead of time and I really enjoyed reading through all of your responses!
@Jack B.
Someone who made multiple millions of dollars through real estate investing would’ve answered the question, bud…
@Jack B.
Hey Jack, it’s awesome you’re so willing to help others attain their goals.
My question is about loans. I'm looking to house hack a duplex, triplex, or 4plex. Because the price ranges from around 300k-750k I want to be prepared with being pre-approved for an FHA loan. Owner from the lenders I've spoken with, I will only be qualified for a Max of around 450k. I want to do this deal without partners to maximize cash flow and gain personal experience before using other people's money.
Am I stuck with limiting my choices to 450k and below?
Hi Jack,
I'm new to all of this, but I think I found a deal with a 12-13% cap rate and a Cash on Cash of nearly 40% if the numbers I have are correct, which I'm almost certain they are. The problem is, I started earning rental income from glamping sites just a 2 months ago, and banks don't take that for proof of income to get any sort of loan. How can I find a private equity partner to help me fund this deal? I think it's really good, and I have a great team that can back me up on the sweat equity, but we just don't have the funds and I would love to start forming a relationship with an investor.
Thanks ahead of time and I really enjoyed reading through all of your responses!
Google portfolio lenders in your area and around the country. I know of a few here but I've never used them but know others that have.
@Jack B.
Hey Jack, it’s awesome you’re so willing to help others attain their goals.
My question is about loans. I'm looking to house hack a duplex, triplex, or 4plex. Because the price ranges from around 300k-750k I want to be prepared with being pre-approved for an FHA loan. Owner from the lenders I've spoken with, I will only be qualified for a Max of around 450k. I want to do this deal without partners to maximize cash flow and gain personal experience before using other people's money.
Am I stuck with limiting my choices to 450k and below?
Well if you don't want partners that would put a larger down payment down then you're either going to have to go smaller or find a place with seller financing. If you have partners you'd have the same or less returns as if you went smaller since you have to split the proceeds and you have the headaches and risks of partners. I'd go smaller. The trend I'm seeing is everyone wants to start out big out of the gate. Several 17 and 18 year olds in this thread talked about getting MF out of the gate. How? With no income, no credit and no savings? People have to be more practical. Start small, build up. Use the equity from the smaller deal as it appreciates to buy another duplex, then you basically have a four plex. Then keep doing bigger and better deals over time.
If I just got $50k from a property should I use some of it to pay down my personal debt or just use it all to reinvest into another property?
Mathematically speaking, it depends how much your personal debt is costing you. If the rate of your personal debt is greater than the rate of return you could get investing in an investment vehicle, then paying off debt would make more sense. If your rate of return in your chosen investment vehicle is greater than your debt % rate, then invest and use the arbitrage to pay down the debt.
Did you ever get that tenant that hadn't paid in over a year out? I remember your avatar...How did that end?
If you are referring to my "Occupants from Hell" thread, yes, after almost 5 years, I finally got them out and that 5 years had the biggest run up in appreciation so I actually made out, but would I ever want to make that money in the same manner? - Hell NO and NO again. Way too much stress, but simply bad luck I got dealt those cards. Thanks for asking.
If I just got $50k from a property should I use some of it to pay down my personal debt or just use it all to reinvest into another property?
Mathematically speaking, it depends how much your personal debt is costing you. If the rate of your personal debt is greater than the rate of return you could get investing in an investment vehicle, then paying off debt would make more sense. If your rate of return in your chosen investment vehicle is greater than your debt % rate, then invest and use the arbitrage to pay down the debt.
Did you ever get that tenant that hadn't paid in over a year out? I remember your avatar...How did that end?
If you are referring to my "Occupants from Hell" thread, yes, after almost 5 years, I finally got them out and that 5 years had the biggest run up in appreciation so I actually made out, but would I ever want to make that money in the same manner? - Hell NO and NO again. Way too much stress, but simply bad luck I got dealt those cards. Thanks for asking.
Man I couldn't remember how long it was. That's INSANE! Professional tenants and a tenant friendly system. Glad you made out though. But yes of course, appreciation is the play on our coast. I think about that when I deal with expenses of say 2to 10K once in a while for capex or repairs. In the broad scheme of things, I'm making money hand over fist on appreciation.
@Jack B.
Someone who made multiple millions of dollars through real estate investing would’ve answered the question, bud…
I did, you asked what that means. You thought it also could mean how much debt someone has or total porfolio. No, it means you have TWO million dollars or more to be a multi millionaire. Not total debt, not total portfolio. Two million or more dollars. I'm not going to break out an accounting equation to explain how to tally net worth, because you obviously think it's impossible that anyone could be a multi millionaire, after over a decade of real estate investing, most of the time being a member on here, in the 6th most expensive housing market in the country, on a real estate investing forum. You're a very new member here, I've been here for almost a decade. You're clearly a newb and a troll. I got that. In fact I looked through your posting history, not one post I read out of dozens do you actually make any mention of owning anything. You just troll the forum.
@Jack B.
I agree. I have thought about the options and hear many BP podcast interviewees share they would have gone bigger earlier. But, basically everyone they ask that to started small, gained the knowledge and confidence, and equity to go for bigger. And I’ve heard Brandon share the bigger/better the deal, the faster you obtain you’re goals. But he also stresses this is t a get rich quick strategy.
A selling finance would be the best move. It’s about finding it now. Thanks!
@Jack B.
I agree. I have thought about the options and hear many BP podcast interviewees share they would have gone bigger earlier. But, basically everyone they ask that to started small, gained the knowledge and confidence, and equity to go for bigger. And I’ve heard Brandon share the bigger/better the deal, the faster you obtain you’re goals. But he also stresses this is t a get rich quick strategy.
A selling finance would be the best move. It’s about finding it now. Thanks!
The bigger the gains, the bigger the risk. Taking on MF at 18 for example is VERY risky and likely to end in disaster for most 18 year olds. I have tenants that were multi millionaires. Lost everything during the crash because they were over extended. Met a few realtors that did too. They over extended themselves. I always keep a heavy cash position though. Whether eviction moratoriums or some other issue, I can pay them off or buy myself time by paying the mortgages for years, even if just to wait for a recovery to sell while they all sit empty. Luckily, my tenants paid their rent. One skipped out on a years worth of utilities but it came out of their deposit.
Ultimately, it's better to get started small anyways because that's what is possible to start with. Grant Cardone started with a house. As you gain experience and decide that yes, this is for me, you take your equity and expand. Luckily I'm in a highly paid profession so I didn't need to tap equity and didn't at first, I'm basically using cash out refinances to fund new deals rather than taking savings on hand to the market. I don't want to be all in RE nor do I want to have 50% or 75% equity positions. I sold my paid off house years ago after I realized I should leverage up.
@Jack B.
My uncle always says, “noone will care more about your money than you.”
Thanks for sharing your knowledge. Following the thread and looking forward to learning more.
how much time and headache can I expect from owning rentals in multiple cities?
-> A lot of headache. What is the purpose of buying them in all different cities? It makes no sense. You now have to manage 10 different property managers in 10 different cities, instead of 1 PM for 1 city with 10 rentals.
Thanks for the response, and good point.
What if we condense that down -- what about the level of headache and time of a one-city portfolio? How self-sufficient is that process with a good manager (assuming she/he sticks around and works out well)?
There are people on here who have 100s or 1000s of doors in a portfolio. What am I in for if I go that route?
@Jack B. Thank you for the response.100% agree with you. Given my level of income and recent refinance I wasn't in a buying position for the last 2 years. I've been in these forums for a few years and understand the market trends. My brain is trying to justify where I'm at but I know inflation is burning a hole in my liquid funds.
Better question: Are you currently buying in 2021? If so what avenue(s) do you take to find leads? I'm not afraid to knock on doors and I've done it in the past.
@Jack B.
Hey Jack, have another spin through my file, I’ve chatted about owning property a fair number of times I’d say.
And those who have followed me over the years here (approximately the same number as you it sounds like?) know that I’m pretty open about coming and going and closing accounts after they hit 500 votes. The reason, I just don’t care if people know or like me. [Personal attack removed by moderators]
You haven't answered the question yet on HOW you made your many millions. Was it appreciation off a good investment or two? Mortgage paydown over time? Sweet sweet cashflow on a great STR (you're in a fabulous market for that!)? Maybe some brrrr magic?
Providing context, or “what’s behind the curtain” increases the value of your contributions / guidance here. And at the risk of appearing to be measuring dinks, I’ll provide you with my modest holdings context:
I do suited single family bilevels. 1100-1250 sq ft, I buy on great blocks in great mature areas but I buy ugly and get rid of the ugly. I buy on subdivisible lots and am starting a redevelopment project on one of them currently. Slowly. So far the shortest period I've had my investment back is about 11 months (refi) and the longest would be 3 ish years. I've recycled the same ~$100k investment about a dozen times with decent success. Total value of current holdings would be low to mid $3M at a LTV of just under 62%. LTV will be increasing to about 67% here shortly as I've got two refinances on the go currently. Locally lenders are fairly conservative on refinance appraisals so it'll be interesting to see how that all shakes out. My first several years of investing I taught some physics and year one my take home from my day job was a whopping $26,000. That's 10 paychecks over 9 months of $2,6xx each. I thought I'd captured the rainbow.
So, as you can see, I’m not exactly as affluent as you apparently are, and I’m not an expert in all areas real estate for sure. But if you want to learn about a Canadian style brrrr or specifically pet friendly, or self managing 19 doors from 5 hours away on about 40 hours annually,.. hit me up be happy to chat!
If not, that’s okay too, but sure would love to know how you made so many millions so I can learn from your successes & failures like everyone else!
Hi Jack!
I currently have a full time 9-5 and am looking to ideally transition into REI gradually (certainly not in any big rush to make it a full time gig right off) so I am just starting the process of shopping around for a starter property such as a SFH or small multifamily and am overwhelmed by where to begin as an individual investor without partners or a team of any kind. I currently live in Vermont, but am more interested in out of state investing in growing secondary markets, primarily in the south and midwest regions given the lower purchasing costs and property taxes, as well as the ever shrinking population in the state of Vermont. I have a few different markets in mind, but I guess my question(s) would be what piece or pieces of advice would you give to a rookie investor interested in out-of-state investing and any resources you would recommend to help get me off in the right direction?
Any input is greatly appreciated, thanks!
@Jack B.
Interested in doing something in ATL? I’m locked and loaded and ready for battle. Check profile.
@Jack B. Thank you for the response.100% agree with you. Given my level of income and recent refinance I wasn't in a buying position for the last 2 years. I've been in these forums for a few years and understand the market trends. My brain is trying to justify where I'm at but I know inflation is burning a hole in my liquid funds.
Better question: Are you currently buying in 2021? If so what avenue(s) do you take to find leads? I'm not afraid to knock on doors and I've done it in the past.
Very important to understand the market trends in your area, good job! Yes I am buying in 2021. I bought last year, I bought two new houses this year and am actively making offers trying to tie up four more deals this year.
You might be surprised that I buy retail, off the MLS. I buy quality real estate in good locations. Although I have a strategy to wedge the deal and get it at a discount, I often pay full asking because I recognize an opportunity. I'm not going to walk from a deal over 5-30K that they won't give me a discount for, when that property makes me 125K a year in some years, but typically 75K a year. Like I said to the other guy, if you're sitting watching the insane prices that went from 75 to 150K, sitting on the sidelines waiting for a crash, you'll be kicking yourself when those properties are 500K and you lost out. Real estate is almost always a good thing to buy, the reason being that I view it as a thirty year play. Appreciation, tax benefits, cash flow, fixed costs, someone else pays it off for me and it's an inflation hedge. Even if it goes down for a bit, the long term play is important. Hence why buying is almost always a good thing...but that said I keep just around 1.5 mil in cash at all times to buy on dips if opportunities present themselves. But do I stop buying because the properties I bought for 145 or 300 are now 450 and 700K? Nope. I just cash out and keep buying. This year I will make almost 1 million between W2 income and investments.
@Jack B.
Interested in doing something in ATL? I’m locked and loaded and ready for battle. Check profile.
Possibly. I have a number of friends I went to my MBA program with that are syndicators and I still don't partner with them. But as I plan to be less actively involved in property management due to wanting to relocate out of state, large apartment complexes are attractive to me as they justify a PM on site so I don't have to liquidate and move my portfolio.
Hi Jack!
I currently have a full time 9-5 and am looking to ideally transition into REI gradually (certainly not in any big rush to make it a full time gig right off) so I am just starting the process of shopping around for a starter property such as a SFH or small multifamily and am overwhelmed by where to begin as an individual investor without partners or a team of any kind. I currently live in Vermont, but am more interested in out of state investing in growing secondary markets, primarily in the south and midwest regions given the lower purchasing costs and property taxes, as well as the ever shrinking population in the state of Vermont. I have a few different markets in mind, but I guess my question(s) would be what piece or pieces of advice would you give to a rookie investor interested in out-of-state investing and any resources you would recommend to help get me off in the right direction?
Any input is greatly appreciated, thanks!
You should absolutely NOT start out out of state. You won't know the area, and can't keep your eye on it. Being a landlord can be difficult, and it's always better to be NEAR your properties with exception to large MF. But a single house out of state won't justify a PM and you can get a bad PM that is dishonest and incompetent. Start out local. Then expand out if you want. I'm currently trying to figure out how to manage remote if I move out of state. Either that or sell and buy when I move or sell to a REIT (being an accredited investor you can work with them through an investment firm) and 1031 to a large MF so I don't manage at all. Then I can be free to do whatever without worrying about single family home type issues. That said, the financing on commercial real estate is pretty risky.