Does BiggerPockets have any sacred cows that you disagree with?

Question

Apart from a handful of books, just about all of my little real estate knowledge comes from BP.  So I'm naturally curious if there is anything that is thrown around on BP like gospel or common knowledge that may not be so surefire in the real world.

Jay Hinrichs · Answer

Logan A.  that's a very good question

my answer is many of the metric's folks use to decide what a good deal is and what is not, are very regionalized... whats a great metric in one market may not even be remotely possible in another.

perfect example is the west coast buy and hold investor pulling their hair out trying to find a 2% deal.. and realizing they either don't exist or are so rare that you would be super lucky to find one.

And those in other markets were the 2% rule props are on every block literally and they won't buy them unless they are at least that or much higher in some instances.

So this puts investors in a paralysis mode not being able to buy ...

So with all these different methods and schemes many are only appropriate for a given market and price point.. get to know your target markets realities and then work within them.

Brian Gibbons · Answer

I think there's a few people that you should study and avoid some noise

@Ken Rishel Mobile homes regulation

@John Fedro Mobile home space marketing

@Jay Hinrichs transactional funding flipping

@J  Scott read everything is written and buys books on BiggerPockets on Wholesaling flipping, don't ask wholesaling  questions on these forums until you've read everything he's written and read his flipping book and his renovation costing book

You could read my BP blog on seller financing and joint ventures home sellers, money partners, private IRA lenders, and other creative ideas

Dodd Frank and safe act are not the easiest laws to understand and I highly recommend that you use a registered mortgage loan originator

Lastly buy the real estate agent books in your state and know the information.

Logan A.

Steve Vaughan · Answer

Most of our risk meters are broken.  Getting a hard money loan, borrowing from family, getting a partner, early withdrawals from retirement money, whatever it takes to do the deal when you have no other options is ok.  What?  No it's not.  There are always other options!  No deal is worth a relationship, those deadlines and fees, etc to me.

Not enough is said about taxes or commissions.  Flipping is extremely expensive and most of your profit will go to those two.  Wholesaling has high taxes as well.  Real estate is the best tax haven out there IF you hold for 366 days.  Cheers!

J Scott · Answer

I'm sure Brian doesn't want to mention himself, but if you're looking for great lease option info, he's the guy!

Anthony Gayden · Answer

One thing I have seen all the time mentioned is the 50% rule. Well I personally think it is dependent upon the property. An older C class multifamily property is more like the 55-60% rule. A nice new construction single family rental in an A class area with A class tenants may be the 40% rule.

Therese V. · Answer

I definitely have to second these thoughts. Different parts of the country have different key characteristics and patterns that you can begin to notice.

One thing that seems to be ripe for argument is the 50% rule. Some don't believe it and go by a different thought while others follow it when choosing a property.

Anthony Gayden · Answer

That is a good point, and something that I should keep in mind as a long term buy and hold investor.

I still believe that the tenants themselves in lower end units will cause more damage, wear, and tear on certain aspects of a property. An A class property probably won't ever have a tenant like my former tenant who literally punched holes in the drywall.

J Scott · Answer

Remember, the 50% rule assumes LONG TERM -- potentially 30 years or more...

So, that older Class C will eventually have to undergo a big rehab and the expense ratio will drop.  Likewise, that new construction SFH will eventually no longer be new and will require major capital expenditures.

People like to think about expense ratios in small periods of time, but if you're a true buy-and-hold investor, you need to project your costs over much larger periods of time.  When you do so, you'll find that there are fewer outliers than you might expect (though there will always be some, of course).

Ryan Dossey · Answer

Being an open form you're going to find bits and pieces that you agree with. I don't agree with Bill and Richard on some things but I do on others.  Its your job to dig through the info and find what you agree with. I don't agree with owner financing at exorbitant rates to folks who have no credit. Some folks are.

My litmus test:

Is this ethically okay?

Is this legal?

Is this beneficial to my company and those I work with?

Does BiggerPockets have any sacred cows that you disagree with?

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