All Forum Posts by: Bao Nguyen

@Jay Hinrichs To be honest, I want to make $100k/mo.  I just didn't want to sound like a greedy and pretentious bastard, so I figured saying $10k/mo was reasonable since if I can find a process to get me to $10k/mo, I believe that same process could be scaled to produce $100k/mo.

@Dawn Anastasi    Thank you for sharing. Yes buying low definitely helps. This is another reason why I purchase low-end units, because the price is low, but it rents for almost the same and medium-grade units that costs 2x to 4x as much. The SFHs I'm thinking of purchasing are in the $40k-$50k range (rehab costs included). 

@Larry Turowski Excellent, concrete example. Just what I was looking for. Your assumptions about my holdings are nearly 100% correct: my units have a $50k ARV, which I try to get for $20k to $30k with $10k to $20k worth of rehab. Rents in the area are about $800/mo, and property taxes are about $200/mo. Your example use non-conservative numbers, but I get the point, and I think you're absolutely right. Especially about banks: they give me the biggest smile when I tell them I want a loan, and then they look at me like they've just realized their gold nugget is really fools gold when I tell them I need to finance a $50k unit, or $35k (70% LTV). I guess the amount of work is the same for them for a $35k loan as it is for a $300k loan, where they make way more in fees and interest. This is why I use income from my W2 job to buy properties, and yes, that's why I have 100% equity as well. But nonetheless, I think what I'm missing is a good relationship with a bank to start leveraging as your example shows. Thank you for sharing Larry, and for spelling it out to a guru-course failure. :-)

@Walt Payne You're spot on: My 20% ROI is from the long hours I put in to rehabbing low-end units, not the actual investment/property itself. It's active income in reality - but only for the first year of ownership of the property.

@Bill Sargeson I'm doing similar to what you are doing.  The only way I can think getting to financial independence in less than 10/15yrs is siphoning income from a high paying W2 job into the real estate investment.  The math for this scenario makes sense.  Agreed, it's a lot of work when you first acquire a unit, but after fixing it up, it's quite carefree.  But apparently some investors are able to grow at this pace even without a W2 job.  I'm curious how that works.  

@Walt Payne Yes, I do include a larger amount for maintenance, in addition for an upfront rehab cost (sometimes up to $25k). Even after accounting for those expenses, the C- homes still have and ROI of up to 20% compared to 5% or even less for B+ homes. The problem is the amount of time I put in to vet for quality tenants and fixing up the homes, and more maintenance calls. Time is money, and that's where I'm starting to think the 20% ROI is not from the property but from the hours I'm putting in. And I'm about passive income, not active income.

As far as appreciation goes, I think that's speculation. I know a lot of investors will burn me for this statement. But real estate is volatile nowadays because of MBS (even rents are being securitized!), speculator investors..etc. And because of such, equity or anticipation of equity from appreciation is 3rd important on my list after ROI and cash flow since those things are real and immediate.

@Dawn Anastasi Could you share how you did it?  Are you a strictly buy and hold investor? Or do you engage in rehabs & flips/wholesaling/other strategies that requires selling off the property in less than 2 years of owning?  I'd be interested in buy-and-hold strategies that have managed to quite their jobs in less than 5 years.  I can never get the math to work out.  

@Brandt Tingen ROI and cash flow is the main thing I go for, since property prices are too volatile (too many speculative investors) and may go down. Equity is 3rd on the list after ROI and cashflow numbers. I'm applying the value investing methods of Warren Buffet and Benjamin Graham on stocks to real estate.

@Larry Turowski I own 3 units, and gross rental revenue is about $22k/year. After expenses, property taxes, and other stuff, i'm only netting about $300/unit, very much the same as your situation on a per unit basis. Again, 50 units owned outright to be comfortable, and that'll take a decade at the rate I'm going.  Just wondering how those have done it in 2-3yrs.

@Eric Taylor  Enjoy the ride: great point. Thank you for the reminder.

@Chris Masons  The more I learn about investing, the more everything points towards what you are doing, and I'd be very happy to be in your shoes one day because it's an achievement to say the least. Your methods and ways are tried and true, and the math definitely makes sense to get to where you are.  I'm just curious how some veterans have managed to do it much faster. 

@Walt Payne Thanks for the input Walt, and I understand exactly your points. I'm griping about the number of hours I'm spending on these low end homes as I type, but again, the reason I do it is because the ROI is much higher on these low-end homes than B-/B+ homes in my area (rent prices are only about $100-$200 higher for B/B+ homes, but property prices are 200% to 400% higher than C/C- homes). Managing the C/C- renters is no problem to me, I've got it down to the T... fixing up those homes is a different story. But once fixed up, these units are not too bad to manage. But there is definitely initial headache to get to this more carefree state.

@Peter Dascoulias II Of my 3 units, 2 are at the stage you're at with your 5: very few calls, I usually just collect rent. However, my units are lower-end, and takes a lot of work to fix and get them in shape to the point where I get very few calls. Until then, these units require 5hrs+/week for me to work with rehab contractors. Again, I go with low-end because they offer higher returns than middle/higher-end units, which are offering low ROI (single digits) in my area, and at those low rates, I would rather put my money in an index stock fund that returns 6-7% average over 10yrs and not have to deal with a single phone call. Maybe I'm in the wrong location?

@Sharad M. Excellent point, and makes a lot of sense to me.  Thanks for sharing.  

@Account Closed Thanks for asking exactly what I was trying to get at, but couldn't because I tend to be too long winded and never get to the point.  :-)

@Kyle Kelley Good points, and I agree with you.  I spend about 10-15hrs/week on just 3 properties (I'm rehabing 1 of those units), and it's hard for me to imagine my properties as a "passive" investment, at least not like stocks, where I do literally nothing except review my holdings once a year.  Thanks for sharing.  

@Jean Bolger I would have to say I agree with you, as my experience shows so far.  But perhaps I'm not as efficient or as creative as I can be (good chance since I'm newer in the business), and I keep hearing about people who've gone from living in their car to filming their guru programs at their beachfront mansion in Florida.  Even real-life, more credible people such as @Joe Villeneuve attests to this.  I guess that's where I'm trying to get at with this post.  If $200k/yr passive income is possible in 2-5yrs with buy-and-hold strategies, I invite the veterans to give some examples of strategies and paths to achieve this.  I just can't imagine a way yet.