Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
3y
Cash on Cash return. That is my biggest measure of success. What is the yield on the money that I put into a deal? That is how Warren Buffet evaluates businesses. It's future expected cash outlays over a period of time, e.g. Net Present Value (NPV). If the best investor in the world measures an investment based on how much cash it splits out over a period of time, who am I to question if it works or not?
In the book the Psychology of Money they define the cost of success. "Nothing worthwhile is free. Most financial costs don't have visible price tags. Uncertainty, doubt, and regret are common costs in the financial world. They're often worth paying. You have to view them as fees (a price worth paying to get something nice in exchange, rather than fines (a penalty you should avoid)." I think that quote relates to REI. You need to know the costs before you buy, flip, or manage rental properties.
Cash on Cash return. That is my biggest measure of success. What is the yield on the money that I put into a deal? That is how Warren Buffet evaluates businesses. It's future expected cash outlays over a period of time, e.g. Net Present Value (NPV). If the best investor in the world measures an investment based on how much cash it splits out over a period of time, who am I to question if it works or not?
Andrew so happy you reached out! I agree that CoC has a huge impact on analyzing deals. I will have to listen to some more of Warren Buffet. Thank you for your insight!
1 - The minimal cost to the REI. The cost, and the ONLOY cost, to a REI is all the cash (only) they put into the deal.
2 - The terms. The terms are defined by "How someone, or something else, pays for the rest".
It's just that simple. Everything else is either just decoration, rationalization (very expensive), or the means to execute numbers 1 and 2 above.
Joe, Firstly great name! More importantly I love how you have made the analyzing process cut and dry for yourself this allows much more time hunting for the deals! Thank you for the insight!
In the book the Psychology of Money they define the cost of success. "Nothing worthwhile is free. Most financial costs don't have visible price tags. Uncertainty, doubt, and regret are common costs in the financial world. They're often worth paying. You have to view them as fees (a price worth paying to get something nice in exchange, rather than fines (a penalty you should avoid)." I think that quote relates to REI. You need to know the costs before you buy, flip, or manage rental properties.
Jaron thank you for your feedback from Joe. I agree with both of you that if we shift our focus and allow ourselves to trust our skills it really is as simple as it sounds. Make a mistake it will pay you ten fold in the future! Thanks again!!
GM BP Fam, I'd love to hear some insight on what your key indicators are for evaluating a deal(s)? What is the deal breaker?
Hope Everyone has a great Wednesday!
- Joe
NOTHING else matters but the numbers, and knowledge of the area, end of story. Cleveland, well you better have a team around you. I have done 100s and 100s and 100s there all while living out of state.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
CoC is probably my biggest incentive. However, sometimes you can buy a property with good equity built in with a low purchase price. In that case, I'm ok with lower CoC. I just bought one like this. And my cash flow is only around $250/month. I also look At gentrifying areas near downtowns and freeways. I'm looking 5-10 years into the future and if I see a lot of tear downs or rehabs in the area, I'm excited to buy it even if the cash flow isn't great at first. And finally, I buy in growing areas because market rent and appreciation will increase a lot over the next 5 years.
In the book the Psychology of Money they define the cost of success. "Nothing worthwhile is free. Most financial costs don't have visible price tags. Uncertainty, doubt, and regret are common costs in the financial world. They're often worth paying. You have to view them as fees (a price worth paying to get something nice in exchange, rather than fines (a penalty you should avoid)." I think that quote relates to REI. You need to know the costs before you buy, flip, or manage rental properties.
Man, did I need to hear this today - Uncertainty, doubt, and regret are fees, not fines. I have yet to make my first transaction and I am finding it difficult to find the deal. I feel like everyone else knows the secret and I'm on the outside looking in.
In the book the Psychology of Money they define the cost of success. "Nothing worthwhile is free. Most financial costs don't have visible price tags. Uncertainty, doubt, and regret are common costs in the financial world. They're often worth paying. You have to view them as fees (a price worth paying to get something nice in exchange, rather than fines (a penalty you should avoid)." I think that quote relates to REI. You need to know the costs before you buy, flip, or manage rental properties.
Man, did I need to hear this today - Uncertainty, doubt, and regret are fees, not fines. I have yet to make my first transaction and I am finding it difficult to find the deal. I feel like everyone else knows the secret and I'm on the outside looking in.
It's like riding a bike. When you first try to learn, you run into a telephone pole. That hurt, but you get up and now you head the other direction. It's especially easy if someone is holding the bike for you until you learn how to balance and brake. You don't/shouldn't start out on your own, that's crazy talk. You should either get some training or team up with someone who knows what they are doing.
I am considering the latter. I just need to spend some time figuring out how to find that person. I have signed up for a couple of mastermind meetups in my area. Hopefully, through networking I can find a mentor.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
2y
Hi Joe, Your goals determine whether or not a property is a good deal for you. If you are buying properties planning to hold long term and self manage looking for both cash flow and appreciation or if you are buying to hold for say, 5-7 years using a property manager looking to maximize cashflow and put as little down as possible you'll probably choose different properties.
In the book the Psychology of Money they define the cost of success. "Nothing worthwhile is free. Most financial costs don't have visible price tags. Uncertainty, doubt, and regret are common costs in the financial world. They're often worth paying. You have to view them as fees (a price worth paying to get something nice in exchange, rather than fines (a penalty you should avoid)." I think that quote relates to REI. You need to know the costs before you buy, flip, or manage rental properties.
Man, did I need to hear this today - Uncertainty, doubt, and regret are fees, not fines. I have yet to make my first transaction and I am finding it difficult to find the deal. I feel like everyone else knows the secret and I'm on the outside looking in.
John, that's exactly I felt before I bought my first place. I was renting in a B+/A class neighborhood. The properties around me were never going to work for my budget and nothing was truly distressed for a live-in flip or BRRRR. I started exploring C class neighborhoods, walking distressed properties, and never looked back.