StrongBrook? Anyone heard of them...
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votesOut of the blue I am receiving messages about a company called Strongbrook and how great they are and that I should refer all of my clients to this great and ethical company. Seriously, that was the message. I have never heard of them and really have no need for their services, I simply wanted to ask if anyone else on the site knew who they were. I find it odd that one of the messages I received had an imbedded referral code almost like an MLM code to track levels of investors.
all the best, Chris
Matt Parks that's a pretty significant expense to leave out. I'd be curious what items actually are included in "expenses".
True almost everywhere now. That's not a very meaningful metric. A more meaningful metric is the value vs. similar properties that have recently sold nearby. Independently verified by you or an appraiser, not a value given to you buy this company.
I was recently in touch with a StrongBrook rep or two (was looking for alternatives for my clients in the investing world). I've also been told that they can do self-directed accounts for real estate, but I'm still in the process of vetting the company.
Hi James - We are investors with Strongbrook, and they work hand in hand with American Pension Services out of Riverton, UT (go to www.americanpension.com) - Jim Allfrey, who represents them, came to Denver and gave a presentation at a Strongbrook event.
Thank you, Joshua Dorkin.
Seeing that people from Strongbrook were convicted and paid a $75,000 fine tells me that I don't want to involve myself with them.
http://www.sec.gov/litigation/litreleases/2012/lr22437.htm
Thanks, again. That's the information I was looking for.
Also, to answer the question about self-directed IRA's I have had one for a year now. It's an LLC that owns my ROTH IRA with me being the manager. It has a bank account and a Schwab account and I can invest in things that a traditional "prison" IRA cannot.
Investments like physical precious metals, real estate and such. There are a few things one can't buy, like life insurance.
Mine is a ROTH, so profits are tax-free. Going into retirement years and being able to invest without paying taxes makes it a good way to invest with much more latitude than what I call "prison" IRAs.
There are a number of companies that will help you create a "checkbook" or "self-directed" IRA.
The one I used is in Austin, TX, called Asset Exchange Strategies.
They did an excellent job. And I have no other connection to them. I don't get anything like a referral fee. I'm just telling you about a company that did the job right.
I saw you boys had posted an article about a complaint filed against the company but there are always two sides to things, so always take what you read with a grain of salt. I found this online in response to that complaint. Take a look: http://www.prweb.com/releases/2013/3/prweb10474458.htm
I haven't been on in a good while. Agreed with Amy, there are at least two sides to any story.
Again, my intent here is not to advertise, just provide information. Previously I posted some basic numbers on the first investment home I purchased through Strongbrook. I thought I'd give you a follow up. Pick at them any way you want. :) They are what they are, for better or worse.
It took four months to get my renter in initially.
First fiscal year, I made a whopping $10.96 of cash flow. As I reviewed my earlier posts, I found I had stated seven hundred something in my first fiscal year. I believe I must have made a spreadsheet calculation error at the time, because that is certainly not the right figure. It was only $10.96. My apologies for the mistake, I hope my correction here is evidence enough that my mistake was sincerely that.
Second fiscal year, I made $2,959.32 in cash flows. I had no vacancy period during this time. For clarity, yes, that is operating profit, after everything - maintenance, repairs, PM fees, HOA fees, PITI... everything. Calculated just like the $10.96 the first year. Part of the reason it was so high is my initial tenant had to break the lease and the PM company didn't miss a month in signing a new tenant.
Also in the second year, a home appraisal evaluated the home at $120k. You'll recall I purchased at $83k. I refinanced the home to pull out my initial investment. Through the end of August (I'm a bit behind, haven't entered my September numbers yet), I'm $5297.24 in the black. The home has about $30k of equity in it at its current value and, after the refinance, is cash flowing $132.14 / mo (again, without counting repair costs).
I used the money to purchase my second investment home with Strongbrook. It was a rather easy process to do. Again, they do most all the work for their clients, so I did have to do much more than say "that one looks good," provide loan paperwork, and sign purchasing and loan papers. My name is on title and the home is mine - ownership is not shared with Strongbrook in any way.
This second home got a renter after 3 months and is cash flowing, though I admit I haven't done the numbers in as much detail as I did the first. And frankly, I've disclosed a bit more detail than I'm comfortable with in such a public forum.
I recognize people will see what they want to believe for better or worse (just look at facebook after a political debate! ;) ). I've no problem with that. I personally am happy to be a client and referrer and look forward to continuing as such for years to come.
I am ignorant about real estate investing. I do own 2 income properties in Arizona. Both are town homes with HOAs. The good thing is that the HOA fixes everything on the outside, roof, stucco, irrigation, driveway and landscaping. I do pay about $700/yr for insurance that covers all appliances, plumbing, water heater & air conditioning. It does not sound like Strongbrook properties are in HOA neighborhoods. Have I foolishly given Strongbrook $6k to purchase 4 properties in Indiana? They sent me samples of properties that have PITIs ranging from $414/mo to $819/mo. Is PITI profit? Or does it stand for something else. Total out of pocket for client ranges from $23.5k to $39.5k I have $120k to invest. It sounds like an awesome deal for me, but I really don't know anything about this. It would be so, so easy to take advantage of me. This is all the money I have to invest so of course would hate to lose it. I would be in big trouble. Any advice? I also said I was interested in becoming an IBD, which is akin to selling Amway or Avon but on a bigger scale. Naturally I could not sell anyone a product that is not represented in a truthful manner. Again, I would appreciate ANY and ALL advice. Thanks everyone, Timothy Nelson.
@Timothy Nelson PITI is principal interest taxes and insurance. This is all wrapped into your monthly payment. Not your profit. You would need to know what they property will rent for and subtract PITI, property management fees if there is a fee for that, maintenance costs, etc. If there's not a substantial spread you should probably look elsewhere I've seen a lot of people get taken advantage of especially out of state owners when buying somewhere they have no idea what that property is worth and end up paying at or above market value for a house that should be bought at 60-70% of it's actual value based off of deferred maintenance. Now that being said I don't know anything about the company you are referring to, but I'd just say buyer beware do you due diligence before jumping in as like you said one bad decision could really cost ya!
If you have any questions regarding property management let me know I'll tell ya what I can!
@Adam Gerig Thanks for responding. Your reply is of great benefit to me. When I look at what they are calling 'financed proformas' the rents minus PITIs range from approx. $461 to $535/mo. They then show monthly cash flows after projected periods of vacancy, repair costs and management fees. The numbers then are reduced to the $327 to $363/mo range. They project cash flow to increase in subsequent years based upon 5% rent increases annually. I am thinking I need to do at least 3 things. I need to call them and see if they are leaving anything out, say HOAs as an example. The thoroughness of their charts make everything seem copacetic, but of course I still do not have the knowledge needed to know whether enough info is being provided or not. It seems to be. Anyway, I also need to look at the included information about the properties to look up comps. Although, as I have no access to MLS I believe I may not get accurate prices as all I will see is sellers 'hope to be' purchase prices. I will not know what 'sold for' amounts are. The info Strongbrook includes: street addresses, city, zip and state. Also included is year built, square footage and #Beds/Baths. After looking up that information I should look up rental prices. Maybe I should print up info they sent me to real estate agent/owner and/or financial advisor for input. Do you think that I would then have enough info to make a wise decision? Also, I need to find out if they guarantee such properties are not anomalies but the norm. If not I should get my 6k back. I just want to again say how grateful I am that you are taking the time to help a stranger! Really kind of you.
If they're reducing cash flows from about $460 to about $330, that means they're assuming about $130/month in non-PITI costs. That seems very low to me.
Remember, this will include property management (likely 10% of gross rents), maintenance (could be another 8-10% of gross rents), capital expenses (probably $50 per month), vacancy (likely 5-8% of gross rents), utilities, lawn care, legal fees, etc.
I'd ask them what their projections are for each of these components...you'll find that it's a lot more than $130/month is calculated correctly.
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Raymond
I am just copying this post from the post from another forum. As has been explained the 50/50 rule is rent minus 50%. This gives me my maintenance costs on a property. But this does not include PITI. If I purchase a property for 140k with 20% down, the PITI (assuming 5.125% interest) might be $850. If I rent the property for $1300/mo the 50/50 rule says $1300-$650=my income on the property. Then I subtract the PITI of $850 which leaves me $200 in the hole each month. If I were to buy a 30k property with cash and was able to rent it at $500/mo that puts me at $500-$250=my income. As there is no PITI my income really is $250/mo. So, it is preferable to buy a cheaper property for cash as opposed to financing a more expensive property?
That will give you your cash flow, but won't tell you your ROI. To calculate your ROI, you use the following:
ROI = Cash Flow / Total Investment
So, for example, on that $30K property where you're making $250/month in cash flow, that's $3000 per year in cash flow. Assuming your total investment was $30K, your ROI is:
ROI = $3000/$30,000 = 10%
That will allow you to compare the investment of the $30K into this property versus other investments (real estate or otherwise).
In general, most investors (though not all) look for high ROI as their benchmark of a good investment. In order to generate high ROI, you're looking for your ratio of monthly rent to cash invested to be as high as possible (per the ROI formula above).
So, to answer your question above, you want to find places that are cheap to buy, but rent for a lot.
Thanks J,
As always, I am truly grateful and appreciate your help more than I can say.
@Matt Parks , you mentioned that the first year you only made $10.96 and the second year you made $2,959.32. That's a small cashflow where your full time job would still be required. How does this make a 5 or 10 years retirement plan possible? How many properties do you need to purchase and sell in order to meet that requirements? Also what is the rate of return with Strongbrook? And how do they calculate it?
* How does this make a 5 or 10 years retirement plan possible?
Our first home bought our second. It will also buy our third, while the second will buy our fourth and perhaps fifth. It's not a get rich quick kind of process - it takes a few years to build. By the end of 10 years, my retirement game plan shows me owning 6 homes outright (no loan) cashflowing around 6-7k / mo..
That's me and my game plan. For you? I have no idea. You'd have to request a game plan from them to find out what that might look like for you.
* How many properties do you need to purchase and sell in order to meet that requirement? (Assuming you mean the "retirement" requirement.)
Everyone has a number. That number is how much monthly income they need to retire with the lifestyle they desire. The question really is, what's your number? From there, the game plan reps inside Strongbrook can reverse engineer that based on where you're at and thus answer this question.
* What is the rate of return with Strongbrook and how do they calculate it?
As I understand, the average rate of return is around 19%. I don't know exactly how they calculate it, but it includes equity growth, net cash flows, etc. I don't think it includes the tax-rideoffs from interest and such, but again, I really just don't know.
Does that help?
Yesterday I sat through a presentation for Stonebrook and based solely on the numbers and what they offer, it sounded like a good option for someone that wants the benefits of real estate without having to know anything about it. I'm always interested to learn, so I'm going to set up to speak with one of their coaches. The two main questions I have are first, how do they consistently purchase homes at 30% under value, and second, how will their 16% ROI hold up now that the market is flattening out? It's easy to make any real estate graph go up when you started your company in one of the most depressed markets in decades.
At this point I enjoy being an active investor to much to be interested myself, but I really want to find out how to answer friends and family when the ask my opinion about this as an investment.
Hey Everyone,
I'm 25 years old, and am highly experienced in MLM's, Sales, and every other form and art of persuasion. Obviously I come at this biased, due to my close involvement, and so what I'm going to say you can take as you will.
I know I'm late to the party and this is probably old news, but for people who had concerns about the SEC filing. This is an article which explains what went on there in a way that I think is true AND fair:
http://www.benzinga.com/pressreleases/13/03/p34379...
Anyway, I also wanted to say thank you for everyone's view and opinions. I feel like often times we experience a lot of things in life that slant or bias us one way or another, and teach us our own version of reality. This is mine:
There's a lot of "snake oil" salesmen in the world, more so than ever before. I used to be one! I've sat through more MLM presentations than I can recall. I've had more "RA RA" meetings than I can stand, and every time someone comes to me and says, "THIS IS THE NEXT GREAT THING!" I say, "Thank you for being willing to share with me, but could you skip the sales pitch and tell me the numbers?"
From my experience in life I've learned to be able to tell the snake oil from the real deal. The trouble with MLM's is that some portions of a company are "snake oil" and some aren't. For example, any sales rep will do a good job of promoting Melaluca, StrongBrook, DoTerra, Pest Control (Name your company here), or any other MLM structure as: "THE solution for everyone", when, fact of the matter is: It's not.
Melaluca IS NOT a good purchase for everyone. Nor is DoTerra. The same is true of StrongBrook. Do they work for a lot of people? YES! (The salesmen will tell you!), but often those promoting it go overboard.
StrongBrook makes no illusions of grandeur, nor promises perfection. In my opinion be it humble or otherwise,:They do have a system, and it works for some.
That's my two cents. I felt the need to share that because, like in their voting habits, some people follow crowds, their past experience, or their own flawed logic, rather than doing research. All I can say is that I did my research and StrongBrook works for me.
Thanks!
For those who want the numbers:
I'm willing to put anyone in-touch with my brother (He is NOT a sales rep. He walks clients through the financing, purchasing, rehabilitating, renting, etc. process mentioned in previous posts), if they would like to know more specifics.
But I'm not sure if I can offer that on here? Just to be clear: I am not promoting/marketing the company, but I am offering an avenue for information about the company in a way that is NOT through a sales representative, AND, I make no commissions from you speaking with my brother. Is that okay for me to offer, @Joshua D.? If not, I'll take it down immediately. I have expressly not posted any contact/personal info in order to stay in compliance with the terms and use of this website.
http://www.benzinga.com/pressreleases/13/03/p34379...
Just a clarification...that's not an "article," it's a Press Release.
An article is journalism. A Press Release is marketing.
Just a clarification...that's not an "article," it's a Press Release.
An article is journalism. A Press Release is marketing.
@J Scott
Hey, sorry about the mixup, The actual "articles" are linked at the bottom of the press release. I'd edit my comment but I'm still unsure of how/if I can do that. Is there a way I can, or do I just need to "repost"?
Thanks.
I received an email today, and apparently Mr. Clothier is teaming up with Jerry Norton for some new 'passive income' buy and hold scheme or partnership.
Not to sure what to make of that, i deleted the video before it finished.
I received an email today, and apparently Mr. Clothier is teaming up with Jerry Norton for some new 'passive income' buy and hold scheme or partnership.
Not to sure what to make of that, i deleted the video before it finished.
Sorry, perhaps it was Mr.Krohn at any rate Strongbrook is teamed with Norton on this venture.
I have property with Strongbrook. They are legit (in that you do buy real property), but I would steer anyone away from them. They take advantage of people not knowing real estate, and charge exorbitant fees. Their agents find properties that will maximize THEIR returns, not the clients'. Because they own the entire system (from the agent, to the title company), they charge what they want, and put people into expensive deals that would not otherwise suit them. I would advise anyone to stay as far away from them as possible.
I am a real estate agent in California and also a real estate investor with Strongbrook and have been for almost 4 years now. I own 4 properties through them in Memphis, Cordova and Germantown. This is just one of the locations that they concentrate on for their investors. The real estate investing side of the business is not MLM. Only the advertising component by word of mouth is and for this a referral fee is paid out to the person who referred them to do business with their company. I have made money with them but always also, keep my options open with multiple companies to look for my investments. They are a full service company and so far extremely reputable. I am sorry to hear that an Independent Business Developer was soliciting by Email to anyone here who found it offensive but I'm sure that they were only showing you some other options that may or may not fit into your business model. Simply so no thank you, not interested. No need to slander or be upset over it. We all just want to market our service or product the best we can and to all who are open and reachable. I still look at the Memphis invest properties in consideration of purchasing for future deals and appreciate multiple sources for finding what fits in my portfolio. I wish you all great successes and hope to remain a member here as well to be open to what you all have to offer too. Make it a great day! :)
