All Forum Posts by: Adam Hershman
Adam Hershman has started 0 posts and replied 228 times.
Post: Did Your Retirement Account Do This in 2015?

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Darnell Kramer:
Strange I get a 13% return on your housing investment numbers.
How did you calculate 2.5%?
I'm not sure how your getting a 13% return. My calculations were pretty basic.
Avg house price $220300
Avg house rent $1182 monthly
Mtg on $176240 (220300 less 20% down at 3.92% fixed 30 rate) - $833 monthly
Avg appreciation on house 3.9% - $8591
So if you subscribe to the 50% rule, $591 monthly would go to expenses, leaving $591 to pay the mtg of $833 resulting in a net outflow of $242 a month or $2904 annually.
At this point your only return would be appreciation ($8591) less your net outflow ($2904) totaling $5687 which is 2.58% annual return on $220300.
It's possible that you're not taking into account the financed portion or something of that nature...Where $5687 is 13% of your $44060 down payment. In that case I would need to modify my example to have leverage built in to your securities purchase. This might make the return on the RE look higher, due to the fact you can generally leverage RE to much higher levels than you can securities, but you're also assigning your credit to the loan, which you don't do with securities. So while the RE investor has $175K in debt on his credit report, the securities investor shows none, because the margin is secured by the existing assets, not the borrowers credit.
Post: Did Your Retirement Account Do This in 2015?

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Mike D'Arrigo:
@Adam Hershman I understand your point about the DOW not necessarily reflecting the performace of an individuals 401K or IRA but by the same token, you can't use average national real estate prices which you've done. National average are meaningless. Real estate is highly local. Although national median prices may be $220,300, there are many markets where the median price is half that. Markets at the national median price will rarely cash flow, however, that doesn't mean higher priced markets aren't good investment markets if your objective is appreciation. In California, where I live, Appreciation rates have been well over double digits and had been as high as 20% for 2 years straight at one point, which is obviously much better than the national average of 3.9%.
I don't advocate investing in just one asset class. I believe people should have a balanced portfolio.
That is exactly the point I was making. National Averages are as meaningless to your RE portfolio as the DJIA's performance is to your portfolio performance.
Post: Turn $100k into $5k/month positive cash flow

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Arthur Zaragoza:
Looking to turn $100k into $5k/month in positive cash flow in 1-2 yrs
Hi, I just sold my rental property and refinanced my primary residence. Now I have a bit over $100k to invest and would like to scale into a business. A few options I have been considering:
- New construction
- BRRR
- Commercial/multifamily
- commercial/retail/business/strip malls
My situation:
I live in Toronto, Canada where the market is very expensive, taxes and cost of living are high. I have a real estate license which works for my benefit however I would like to relocate with my family somewhere warmer near the ocean with a lower coast of living and enjoy a better quality of life and scale my business. I am considering the west coast in Victoria, BC or somewhere in Vancouver Island. I will be closer to my parents that reside in Seattle, WA. They also have plans to invest in real estate to help with their upcoming retirement and they are open to partner up with me.
I understand the Canadian to American dollar is at .7 to 1 right now however the ROI in the US seems better and I could also leverage my parents good credit to obtain financing.
I have around 5 years of industry experience as a (home owner, landlord and realtor) and would like to be hands on with the transactions, managing some of the rehabs and hands off with management.
Any ideas and recommendations would be greatly appreciated.
Thanks in advance.
I think the option with the best chances of success for cash flowing $60K a year on a $100K investment is to visit PCH.com
Post: Did Your Retirement Account Do This in 2015?

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Mike D'Arrigo:
The DJIA closed at $17,833 on January 2, 2015. It closed the year out on December 31, 2015 at $17,425--down 2.2%. If you're IRA or 401K followed the performance of the DOW, you had no gain for the year. Furthermore, the average dividend yield of all DOW Jones stocks averaged only 2.87%. 2015 was a pretty dismal year for stocks. Although real estate returns have been compressed due to increasing prices in many markets, real estate is still producing 15-20% COC returns on cash flow alone. Factor in equity gain through mortgage pay down and price appreciation plus tax advantages of depreciation, real estate is still a great investment in my opinion.
Well...I suppose. But only using completely flawed logic.
By your logic, you only made 3.9% appreciation on housing, as that was the average nationwide in 2015. Not really sure how you can say RE is providing 20% COC returns, just because you made 20% COC returns. That would be the same situation as if I had said the stock market is providing 34% annual gain, just because that is what my ROTH IRA posted. I know it can be easy to see numbers, and not understand them, and use those numbers to justify or assure yourself of your current investing strategy. But let me do the same to prove a point.
Median Home Price 2015 - $220,300 (Source NAR)
Median Single Family Dwelling Rent 2015 - $1182 ( Source RealtyTrac)
Well even at a 3.92% rate, for 30 years, with 20% down, your mortgage is approx $833 a month. Pretty simple to see that you're losing money if you subscribe to the 50% rule. In fact your net outflows of $242 a month ($2904 for the year) actually cut your property appreciation by around 1/3. So your total gain on the property would be approx $5,867. That's about a 2.5% return.
Now if you compare that to the DOW (which most financially savvy people wouldn't, because it's about 50 times more likely that your portfolio more closely followed the S&P500 than the DJIA) you might have a lower return, but if you compare it to the S&P500, which ended the year at 2043 (12/31/2015) and started the year (1/2/2015) at 2058 with a median dividend yield of 4.4% your return is a little over 4%.
The reason your portfolio would more closely follow the S&P than the DJIA is the S&P is 500 large cap companies, where as the DJIA is 30.
So by my extremely general scenario (which is only based on averages, as your scenario was) your RE investment returned 2.5% while my "stock market investment" returned a little over 4%. This not taking into account tax (or more pointedly tax avoidance) strategies that are available with securities, or the fact that you pay property tax on RE.
Essentially what I'm trying to say, is you can't make the assertion that one asset performs better than another unless you're prepared for an apples to apples comparison. Unfortunately, as you said, most people understand RE better than how to invest in securities. They come to this false conclusion based on limited information and really no investigation. If you looked at the averages, the stock market would win. Now I'm sure there is going to be a big hubub about how people wouldn't buy houses that don't cash flow, or buy properties in poor condition and then rehab, you can cash our refi and have 5 houses with people paying down the mtgs, etc. All of those have counterpart advantages to investing in securities, the difference being that you need to be pretty intelligent, and extremely analytical to know what those advantages are. With RE, you can hop on BP and find the 2% rule, the 50% rule, etc. that will generally keep you out of trouble.
The bottom line is, your investment performance will be driven primarily by your ability level to invest. If you are a RE genius, then RE will probably post a great return for you. If you understand financial markets and how they work, your securities investments will probably post a great return for you. Saying one performs better than the other because you understand one and not the other is just plain silly.
Don't believe everything you read! Think analytically for yourself!
Post: New Tenant becoming a problem before they move in-HELP

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Tobi Van Zandt:
My new tenants on one of my properties signed a lease a couple weeks ago with a move in date of July 1st. When they saw the house my previous tenants were still in the process of moving out. New tenants signed the lease with no repairs requested. New tenant told me she had asthma and I told her that I was having the carpets cleaned along with the entire house before they moved in, which I did. Previous tenants had house dogs as do new tenants so I had no intention of replacing the carpet. Since it was cleaned new tenant went to the house to measure for her furniture and afterwards let me know that she couldn't handle the smell of the carpet and that she wants it replaced. She offered to pay for half of it. My husband went over to the property and said it doesn't smell bad. I called to tell her that we will have them steam cleaned a 2nd time but that we have no intention of replacing the carpet as it is still in good condition. She took a tone with me that in itself makes me not want to rent to her. She started telling me how bad her asthma is and that she had to go to the doctor and get 7 prescriptions after being in the house to measure rooms. I'm ready to terminate and find a new tenant. I was already taking a chance on them because they are in pre-foreclosure and they credit's not so great, but I had a good vibe about them and I try to help people out when I can. The good vibe is now gone. What should I do?
Terminate and find a new tenant. No hesitation, they clearly have an issue with the carpet and their issue is not clearly apparent to you. Regardless of who is "right" or "wrong", if the tenant/landlord relationship has deteriorated to thinking of terminating before the tenant ever moves in, then you as a landlord, and they as renters are just not a good fit. My guess is if you do ignore your inclinations, it is only going to lead to more issues in the future.
Remember not everyone has the same perception as you do, it's why some people don't do business with companies that most people consider highly reputable, and some people refuse to do business with anyone but an unscrupulous company. I guess a better analogy would be a relationship, attraction is one thing, working well together is completely different. Just because you have a house to rent, and they need somewhere to live, doesn't make it a good relationship.
Just my 2 cents.
Adam
Post: Are you taken less seriously if your not PRO? Or are you just as official with a PLUS account?

- Las Vegas, NV
- Posts 237
- Votes 107
Honestly I take people with Pro accounts less seriously. I mean, they spent $290 on a forum website account...I feel like that should be the definition of poor judgement. Wait, what? 20 keyword alerts instead of 5? Never mind, Sign me up! TOTALLY WORTH IT!
Definitely unnecessary unless you're looking to derive deals from BP, in which case it is pretty much mandatory (they're kind of Pro elitist around here...) Just look at what @Brandon Turner said, if there were 5 wholesalers in his area, and 1 was a Pro member, he would call that guy, even if he was the least qualified and didn't own a single pair of pants. He said it not me...
Post: Why does everyone seem to despise Armando montelongo?

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Joel G.:
Originally posted by @Adam Hershman:
Originally posted by @J Scott:
Originally posted by @Adam Hershman:
The getting into debt part is also not something that is exclusive to gurus, hell, there are 100s, probably 1000s, of posts on BP forums promoting the same type of strategy that they use. Essentially leveraging out cash and getting into massive amounts of debt.
There is a big difference between secured/leveraged debt and unsecured/unleveraged debt. To lump them together in comparison is laughable...it's like saying, "A pound of gold is no different than a pound of salt-- they're both a pound of natural mineral!"
I completely agree, I'm just saying the system that is most often used by guru's is to buy distressed properties, minimally rehab them, and then sell them at a guaranteed enormous profit. Now besides the "guaranteed enormous" that sounds like any number of BP threads that have been posted time and time again. Sure the guru types are more about excitement and emotional decision making, but that's sales 101,
Like I said I get why most people hate the guru programs, and I certainly would never pay for one. That being said, if you break down what they do, and compare it to similar companies, it doesn't seem to warrant the extreme hatred they get on BP, unless maybe people are just jealous that these guru programs can make $40,000 for listening to questionable advice, when no one will listen to their good advice for free?
Granted, I agree that their sales practices are very sketchy and intimidating, but that can be the case in many industries. I did consulting work for a car dealership about a year ago, and they were bleeding money because they were an old school, hard sell dealership. No one hated them for it, they just chose not to buy cars there. That's why I don't understand the extreme reactions from people, if I said I could turn lead into gold and ill teach you for $100.00 and then got out a can of gold spray paint, would I be evil for taking your money, or would you be silly for giving it to me?
Again, no real interest in any of the gurus or programs, just fascinated by how polarizing they are.
Adam
So Adam....let me start by saying that I am not trying to be abrasive....it is truly not my intent....and I am new to BP....with that said I will stick my head in the lions mouth...
Montalongo has a HORRIBLE reputation....for all the reasons stated here...look him up at all and you'll see why....chapter7 for his personal, while his "company" (by and large connected is making money hand over fist teaching about how to become successful like him)....sleazy behavior. Suing his brother, the way he treats everyone...it's all out there....so yes sleazy behavior to say the least.
Second, folks here, nor anywhere, are jealous that anyone would pay them for advice they could offer for free....that's not the point....folks don't like other people being taken advantage of....if he was truly "teaching" these folks how to be successful...then why does no one ever hear about the great success stories coming out of his service?? Other than the unverifiable shills that tout 1 amazing deal in their first 30 days of business....nothing.
As big as BP is don't you think that there would be a plethora of folks here saying that his program was worth every single $40k+ they paid for it...you not gonna find it sir. So...no...no one is jealous of a guy like that...just sorry that others got duped.
Third, if you were selling the idea that you could turn lead into gold....you would definitely raise some eyebrows...maybe even get some folks to pay you for the privilege of listening to your program....but here's the difference (and, frankly, it's more than disconcerning that you don't get this) you sold them on the fact that they could turn LEAD into GOLD, not turn LEAD PAINTED GOLD....and that young man is the difference...they are not dupes...you sir are a criminal...it's called fraud....easy to figure in your scam...harder in the real estate game...but it's all the same.
So when you sell your next property, and bill it as having "unique plumbing" (or whatever) and then justify the sale by fact that the buyer should have been more savvy....just remember that someone trusted you...and you screwed them over for a buck...because in your words they were "silly to give it to you".
I'll wait for YOUR program to show up for sale to see if I'm right...and hopefully you'll prove me wrong and DO THE RIGHT THING.
I swear sometimes I weep for the youth. Good luck.
So I guess first of all...
http://www.consumeraffairs.com/misc/armando-montel...
4 Star rating on 25+ reviews on consumer affairs, doesn't seem overtly sinister... This was the first link google gave when I searched Armando Montelongo Reviews. So I guess the "Look him up at all and you'll see why" argument doesn't really work. As for the complaints, yes there are a ton when you do some digging, and I would be wary of doing business with him. That being said, you can find unintelligent client complaints alleging all manner of ridiculously atrocious improprieties about any number of Fortune 500 companies. This doesn't make them evil or inappropriate.
There are plenty of people out there who are happy with this guys services, granted they are probably not very smart, but ill get to that later.
Second, again, not sticking up for this guy in particular, or any Guru, as I think their systems are ridiculous, but...the strategies this guy preaches are the same strategies I see on BP all the time, so the info that they are selling is the same info people give here for free. I've never been to one of these seminars but I have spoken with many people who have taken seminars by this guy and any number of other guru's, so I have a fair idea what type of pitch they are making. Not sure how the same information at different price points is a ripoff. Milk is more expensive at Walgreens than Albertson's....Down with that evil corporate thug Walgreens! Right? Oh...Different business model you say? Free market you say? If they charge too much for milk, no one will buy it you say? Oh I suppose that makes sense, I guess everyone who bought milk at Walgreen's isn't getting taken advantage of, I guess they are just paying for a service they find more valuable than I do.
Third, my lead to gold reference is really more about peoples perceived stupidity and differences in priorities and preferences than weather or not there is fraud being committed. Essentially the point I was trying to make is: Some people are going to throw their money away on things you may not see as valuable. My grandmother is one of these people to me, she buys essential oils, and quarter collections, humidifiers and dehumidifiers cause somehow having both running is better than having neither. Shes just gullible. It drives me completely nuts, but those are her choices to make. I absolutely love a good craft IPA, a Stone Enjoy By or Lagunitas Hop Stupid, but my grandmother hates beer and thinks buying it is the biggest waste of money ever, but those are my choices to make. Just because you don't see value in Guru training, or think that somehow all of these people are perpetrating fraud just because you don't like the price they charge for services, doesn't mean everyone else does too. Guess what, if I don't like what my mechanic charges me, if I think the fee is completely outrageous, I don't call him an unethical crook, I find a new mechanic. I'm an adult, I prefer to act like one. It's kind of a basic principle of the free market, inferior products at higher prices will naturally be weeded out by the market. They won't be able to survive if other companies provide better services for a better price point. Clearly that is not happening as these Guru's only seem to be growing. Again I have no dog in this fight, I just love playing devils advocate.
And if you think that those people here on BP aren't jealous that these people didn't want their advice, look at any thread about "I got taken advantage of by a Guru." There certainly seems to be a lot of "I told you so" and "You should have come to BP and learned for free". Both points I agree with, but none the less, it's certainly a lot of smugness going around, like "ha ha I was right and they got screwed, I told them not to deal with a Guru." And a lot less empathy of "That really sucks, here is what they should have taught you, and here is the best way to move forward."
Fourth I don't sell properties. But I do buy a house every now and again, ya know to live in. I think paying 6% for a realtor is absolutely insane, there is no reason for it, and realistically they provide less information to me than I think a Guru does to someone silly enough to take their class. Again I don't hop on BP to crusade against realtors as greedy pigs who sold houses for more than they knew they were worth to people they knew couldn't afford it just so they could make commissions, those scumbags... Nope, that's their job, and while I find it a completely unnecessary service, many people out there would be completely lost without a realtor. I have FINRA series licenses, all of the information you need to pass the tests to obtain those licenses is available for free on the internet, but that in no way means I could have passed without paying for an expert service telling me what to study and how it was weighted. Remember not everyone finds RE as easy as you do, and some would rather learn from a big TV name in a big fancy convention hall and be wowed by presentation, and not take the same info from some random person on a message board.
I'll wait for YOUR program to show up for sale to see if I'm right...and hopefully you'll prove me wrong and DO THE RIGHT THING.
I swear sometimes I weep for the youth. Good luck.
I'm not sure if you lost composure there towards the end but I'm not sure how this could be anything but abrasive. I don't have a program, and if I did, it wouldn't be very successful. It would basically consist of managed risk, lots of diversification, and constant diligence on managing your portfolio, or hiring someone who will. I know it doesn't sound so flashy, but I think it works the best. I think the most unethical part of a Guru's strategy is the heinous amount of debt they want you to take on, but the same could be said (and I have) about many of the systems here on BP, so again, if the information is the same from a Guru and BP, with the only difference that the Guru does a ridiculously better job of marketing and advertising, how is a Guru an unethical sleaze, while anyone not charging for the same broken strategy is not? Again I think it comes down to the fact that people are mad that they would pay someone else for bad advice, when no one will take their good advice for free. It seems to be a big deal for anyone over 55, like they have the best advice and if you listen to anyone else, even if that person gives identical advice, then you're dumb. Cracks me up.
Sometimes I weep for the elderly, Sorry =) Couldn't help myself.
Adam
Post: Hit and run at duplex

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Aaron Froggatt:
What the heck is in the left window of the house in the picture? It almost looks like a child or little person waving, haha.
I think it was a lamp actually, but at several points throughout the time I was there, various people were looking out that window. Apparently hitting the cinder-block wall was so loud, people thought there had been an explosion, so there were a pretty good amount of curious onlookers.
Adam
Post: Really? 240k income "insufficient" to buy a 140k investment property???

- Las Vegas, NV
- Posts 237
- Votes 107
Hey @Marcus S.,
You're right, they are inflexible and sometimes illogical, but hey it's the federal government, did you expect the process to make sense?
Adam
Post: Hit and run at duplex

- Las Vegas, NV
- Posts 237
- Votes 107
Originally posted by @Matt Faix:
Hi All - Yesterday we had a car run off the road and onto the property of our rental. Luckily it didn't hit the house, but it caused some damage to the sidewalk/railing. Nothing too major surprisingly, but the driver and passenger fled the scene and were later caught. This is a first for us, so I have a few questions.
Since the police were called and a police report filed, do we press charges or get our attorney involved? Or let the police handle everything for the time being. I wasn't at the scene, but I've been trying to contact the police department for more information. No response yet.
Also, Is this worth turning into insurance if it's minimal? It's probably less than $1000 worth of damage (Small Railing and some damage to the sidewalk). Or do we have to turn it in since the police were involved, etc. Our policy is with Foremost if that makes a difference, or if anyone has had good or bad experiences with them. Any help is appreciated. Thanks!
Tags: Pittsburgh, Police, Insurance
I can tell you from experience the auto policy will cover property damage, not from the experience of the homeowner, but from the experience of being t-boned and spun into someones back yard. My insurance definitely paid for the damage to both houses, no actual damage to the property but I think one of the cinder-blocks smashed an A/C unit, and another damaged and awning and lawn furniture next door. Gotta love them Nevada uninsured drivers.
Adam