All Forum Posts by: Marcus Auerbach

Well, if you run a lending business on crypto you get interest, but crypto in itself does not cash flow. Neither does gold.

Hi Matthew, excatly, it's the newbie who is unsure what to do and partners with a friend who is equally green and then they go and buy a duplex as tenants in common. Sooner or later one wants out and the other one can not aford to pay him out, or one rents to a bad tenant and they loose a bunch of money on an eviction and now the blame game starts..

The best partnerships are formed when 2 people complement each other, for example one has money and the other has time or skill. The odds of success of two pros partnering are much different than two noobs forming an LLC and then calling me, because they want to buy their first property and of course OOS... ;-)

@Cody L. congratulations!! I only know a handful of people who have scaled this large! Most never went past 10 or 20 units, but even that wil chnage someones financial future. So my comments are aimed at investors who are looking at 1-4 unit deals, maybe a considering and 8 or 12 unit building. 

Once you go 100+ units the dynamic is obviously much different, you have a much bigger rent roll to pay contractors or full-time staff. Being local is not that important anymore..

Yup, thats exactly what it comes down to good boots on the ground, someone who has the necessary knowledge and you can trust. But of course there is a cost to that.

Partnering is an option, but I'd be very careful. Almost every biz partnership I have ever seen went sour sooner or later. Written agreement, spelled out responsibilities and a spelled out exit plan is a must!

If I may comment here: John manages 19 at home, which gives him a solid working knowledge on how to do thast. Apps and websites are not a solution to managing OOS.

You need a solid process to show units, you can interview, screen and background check applicants online. And you need a good plumber in speed dial, know enough to troubleshoot issues over the phone before you call that plumber and also provide enough business to that plumber, so you get a good rate and priority treatment. Same for a few other trades..

If you buy a quality property in good repair, you don't have to many maintenance calls in the first place. Half the calls, half the headache, half the cost.

@Steve K. I had to copy/paste your last statement, because I agree 100% and you sum it up very concisely:

The folks who I have known who have been successful investing out of state fit into at least one if not all of these categories: 

1) Have a lot of first hand experience in the market either from having lived there before or having grown up there, or bare minimum from having spent a lot of time there learning the good and bad areas to invest 

2) Have close family members or close friends living in the market (often in the actual property like a child attending college and renting rooms to friends) 

3) Invest only in quality properties, maybe B/B+ but preferably A 

4) Have extensive experience in real estate and property management plus systems in place to manage remotely/ know how to work with a PM remotely and not let things fall through the cracks 

5) They have plenty of capital to cover any unexpected expenses that come up (probably most important and can make up for lacking in the above areas, but of course you’ll be spending more money which goes against the point) and are primarily looking for appreciation, not dependent on monthly cashflow.

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The biggest noobie-trap I see is buying OOS because the low price points have an irresistible allure and totally mesmerize them like the snake Kaa in The Jungle Book! They put (spreadsheet) cashflow over everything, buy in the cheapest neighborhood, remodel very little to protect CoC returns, hire the cheapest PM and charge the highest rents, and as the consequence of all the above inevitably attract the most desperate tenants.

Thanks Don, right back at you! I always pay attention when I see your posts! You have a depth of knowledge not many people have and you are devoting a lot of time to sharing a lot of it here!

It's very hard to nail down THE best place. There are so many factors to consider beyond just population growth and unemplyment rate. What about landlord-tenant law, geography and climate? 

I study a lot of data and could not tell you which Midwest market is better. I just happen to live in Milwaukee and I am pretty content with our market here. But that does not make it the best.

Economic factors can shift, especially if a city depends on one major industry or the government - look at Washington DC right now. That was always considered "safe" because of gov jobs.

Betting on demographic shifts is always solid, we all age, nothing can change that. If weather, stroms, heat, fresh water become an issue, that is also a very powerful macro trend that could shift entire populations in the US. 

Crypto is 100% speculation. Remember the dutch tulips? 

If not, you might want to google it..

You basically buy crypto in the hope that someone else will buy it from you for more. Crypto has no intrinsic value. Crypto does not cash flow. It's even worse than gold in that way. Might as well buy an NFT. High on hopeum.

The best argument I see for crypto is that you can take it with you on a USB drive. But you gotta have some nerve to put your life savings on a USB drive, fly to New Zealand and hope that the USB drive is not broken when you plug it in.

We are also in camp "20 min radius" and a lot of them are so close together that it's easy to pull a contractor from a job on one house and fix a door handle on another on the way home.