All Forum Posts by: William Collins

I am avid content consumer who is "on the sidelines". Listening to the most recent podcast with Brian Burke, one of the statements struck me about the time period you start- and the time you make that your main career. So a little about me- I am currently employeed in a day gig- climbing the ladder and well compensated. The down side is the gig is a 45-55 hour/week gig.

Like Brandon Turner has said in previous blogs- one of the side ways to make passive income is through buying- or in my case building a business. I have one break even business a homebrew/wine making shop which has led to my second business- a fairly successful brewery. The brewery is on track to be able to almost replace my "day-jobs" income within 2 to 3 years.

The crux of my issue is that time is the new commodity which seems to be shortest in demand. I have a goal of getting into real estate (buy and hold multi-family) to diversify income stream. Based on the successful brewery launch- I also have the opportunity to launch several more breweries with investors already lining up to back me if that is the path a choose. When a single business of this type could generate cash-flow= 30-40 units at $200 dollars a door- which would you do? Would you start down the path of real estate investing or would you spin up more businesses?

Looking for some opinions-

Cheers! Bill

@David Beard Thank you. Do you have any regrets now having done it?

@Jerry W. I agree that the bank will need to be involved, but the goal on this deal is to try to get the bank involved about 6 months out. I have great relations with the manager so it never hurts to inquire.

@Stephen S. Yes, the layout does allow some conversions. The property has 1 2 room unit, and 2 three room units (and a 6 and a 4). The goal would be to drop to a 4 units.

Now that my brewery is off the ground, and diversification of income have begun- I am looking at properties. There is a potential deal which I am inquiring on bundling which has 2 multi-family properties. One of them is deemed a commercial property due to the fact it is listed as a 5 family apartment. When there is a potential to convert to a 4 family due to some of the units being extremely small- 2 to 3 room apartments. I had some questions:

1) Could you get a conventional loan (non commercial) once the apartment is decommissioned? @Brandon Turner I know you went the other way from a 4 to 5 family unit. The thought would be to use private money to purchase and convert the house, repair. To then get conventional financing for long term hold.

2) If you saw the potential for an increase in occupancy through hitting the right size units for the market would you do so?

There appears to be a delinquent tax bill involved in the equation so I am still working on the numbers.

Thanks in advance for thoughts?

Welcome @Alex Smotherman you should really listen through the podcasts. They are great and will expand your mind. I would recommend a few of them out of order to start:

Ultimate Beginners Podcast

and

Four Newbies Stories

I would agree with @Dawn Anastasi that the win-win is a sell scenario which allows the tenant to stay until the point of sale. Some requirements would be a staged ready house as a condition of the discounted lease @David Jayne . The other condition would be to quit to the house in broom swept condition early in consideration for return of the security deposit. This gives her an early lease leave, time to find another abode, and a path to return of security deposit. For you this lets you sell the house, have it staged, and have the tenant help cover and minimize the loss until the sale.

Sometimes it is hard to tell who the smartest person in the room is.

@James Swan

I have been in multiple conversations to find out that the well of knowledge for people is great in different areas. They may know nothing about real estate, but they might know a great deal about beer (and one of the businesses I own is a brewery). Treat everyone with respect, and make sure that you seek the council of both the wise and the inexperienced. The insights from both can be invaluable.

I tend to separate investing from my household affairs. My goal is to be at 0 debt on my household affairs by the time I retire. This means my primary residence.

Now my businesses and investments are not the same as my household affairs. Working capitol is a good things and appropriate leverage in a business where it stimulate growth that provides a greater return on investments is a good thing. So I would plan on having cash flowing buy and hold properties which would have leverage at the point of retirement.

What this plan in my mind does it provide a considerable untapped reservoir in case my day job, investment real estate, or my 2 side businesses would go south or hit a major snag. Right now all of the businesses are LLC. and so the personal liability hit would be limited, but having one very large leveraged asset is not bad.

Does anyone else seperate the two in their head- personal vs business?

@Darren Sagger did you get the desired effect of making your apartments stand out by this feature/ see more qualified prospects?

From what I have seen, the Youtube feature by BiggerPockets is pretty spot on as to how to effectively use Craiglist: http://www.youtube.com/watch?v=9DK_AkyZQkc&list=UUVWDbXqQ8cupuVpotWNt2eg

I was looking for anyone's thoughts on non-conforming properties. Multi-family units which are not under the same rough. Some of the better bargains I have found in my research are non-conforming properties, which means that financing on them from conventional means is hard to obtain. From what I have gathered, unless you are buying to owner occupy- they require 50% down payment. Several of these properties I have approached and gotten positive reception on seller financing. I know that their entry is hard to obtain, but it appears you can free up equity through HELOC's to use to invest elsewhere.

This time I found where to put the maintenance costs in on Brandon's Excel ;). So I am very comfortable with the figures.

It is 2 separate homes on 1 parcel, each single family- shared driveway average rent of 950 between the two.