All Forum Posts by: Calvin Thomas

I don't invest in things I don't understand and I don't invest in things that I can't control. For those reasons, I've never got into Crypto so I got no friggin clue.

LOL me too.. my son in law is always telling me to buy it though. And I have some clients in Baltimore that were telling me to buy some when it got down to 15k a few years ago.. But I also had a client the year before get hosed with it.. going form 60k she paid and selling at 20k. I remember when it was 1 dollar and I do kick myself for not taking 1k and buying a thousand of them :) Even though I did not understand it then and done really now.. will stick to renting my money out to others for a fee that seems to have worked for me by and large for decades along with rehabbing or building new construction.. But like crypto can crash real estate was/is not immune from falling either.. we got hammered in 09 to 2011.

I look at it like this......If there is a random group of 10,000 people, I am probably smarter, better, and more experienced than 99% of them when it comes to making money in real estate.

Likewise, if there is a random group of 10,000 people, I am probably less knowledgeable and experienced in Crypto than 99% of them.

Only an idiot would invest their money in an area where they are on the bottom 1% when they could just invest it in an area where they are on the top 1%.

1 Vote

Denver, Colorado

Quote from @Brie Schmidt:

Quote from @Calvin Thomas:

Great. Expect this to come to NYC and NJ soon. Keep electing idiots to power. Makes great sense.

It is being talked about in NYC

Sadly, not surprised with the commies who run the counsel.

1 Vote

Chicago, Illinois

Quote from @Amber G.:

Considering selling a half dozen single family homes that cash flow well. Maybe $330-450k capital gains if I don't 1031. None of the passive 1031 things look terribly reliable to me (DSTs). What should I be thinking about doing with a half dozen chunks of money if I would like to replace the cash flow with different cash flow that won't urgently call me at 9pm Friday about something that's been broken all week? Current return on equity about 4.4%.

I'd be weary about the syndications in the current interest rate environment.

You can receive a safe 4% MMF with SPAXX, but that's not going to save you from the taxes. Have you considered a 1031 into a commercial property? Going the property management route may help with the headaches, but it's going to take 10% hit on your bottom line.

0 Votes

Well, my friend, they are accurate and correct. I'm sorry that you do not feel they fit your model, but that's okay. You operate in whatever city you work out of, which is fine. However, these are real numbers in New Jersey. Perhaps the numbers are different in your locale, and again, that is fine. However, in New Jersey, 1k a month after all costs on normal operations; most would find respectable. If you don't, no worries, that's fine; I promise you, I will not lose sleep that Dan doesn't like my numbers.

Do what works for you, and I'll do what works for me. Best of luck, I will not be going back and forth any further with you on this thread.

0 Votes

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Collin Hays:

I got a chance to read this over lunch today, and it really hit home some excellent points about investing in real estate. Thought I would pass it along.

The Myth of Cash Flow

Not sure what Andrew is smoking, but I can give you a real world example in NJ (NYC suburb - I don't know too much about MO, but I can use NJ since we just purchased another three family.

Price 700,000

Taxes - $11k (rounded)

Insurance - $1700.00 (rounded)

Water - $100.00 (rounded)

Common Electric - $50.00 (rounded)

We can use his 7% with 20% down.

Payments - $4,930.68

Apt 1 - 2 bedroom - $2,000.00

Apt 2 - 2 bedroom - $2,050.00

Apt 3 - 1 bedroom - $1,800.00

Total income - $5,850.00

Total expenses - -$4,930.68

==========================

NET $1,019.32 x 12 = $12,231.84

The cashflow "myth" is bullsh!t. I closed last week.

Of course, we manage ourselves, so even if you take off 10%, it's still a healthy return. We don't buy SFH's, as that's just a waste of time, money, and resources. Mixed-use and MFH are key.

Realistic sustained maintenance/cap ex, vacancy, uncollected rent, PM (if your time is worth anything then it should be reflected), Misc and your cash flow is significantly reduced/gone. I think yr underwriting is why you believe cash flow myth is BS.

Good luck

I've been doing this since the late 1970's. I am pretty sure on my numbers. It obvious, you've not read that we have our own team; which we already manage several hundred doors. However, believe whatever you wish. My numbers are real life actuals. Cap-Ex would happen anywhere, and that is where reserves come in. Everything else is in line. I made a mistake on the water, it's $100 a month, not a year.

I interpret “payment” to be piti. If payment includes your maintenance team, materials, cap ex allocation, asset protection, book keeping, etc then I think further breakout would helped clarify.

I do not see any maintenance/cap ex, vacancy,, bookkeeping, asset protection, PM reflected. 100 units, 1000 units, 100,000 units, own maintenance team or not, Your post does not reflect an actual estimate of cash flow without reflecting an estimate of expenses. Your cash flow after allcating for all sustaining expenses is less than reflected. Even having your own maintenance team has a cost.

I do believe with your own maintenance team, your maintenance/cap ex will be less but having w2 employees means additional bookkeeping and those pesky charges (SS, workman’s comp, unemployment, etc).

Your post does not provide an accurate representation and could have benefitted by details like that you have your own maintenance team due to having a large number of units.

$340/month per unit without reflecting those additional expenses is thin. It would not be worth the risk/effort for my if that cash flow was the primary source of the return.. I once had insurance go from below $1k/year to $6k a year in 3 years Over $400/month increase of a single expense item (Gulf Shores, ~20 Years ago, we made 2 large claims in consecutive years due to hurricanes). Fortunately my underwriting includes an estimate of all expenditures and had solid (more than $450/month) cash flow.

Good luck

I guess we look at things differently. In all of our buildings, we calculate the monthly gross costs and reconcile monthly. I used a real world example, as the building closed last week and already had tenants; which they are month-to-month, and raised 4% effective April 1st (NJ is a guaranteed renewal State).

There are no CapEx expenses at this time. We keep 20% in reserves per building to cover these potential issues at a later date. Again, third time, there is no management fees as we self manage, but I included a 10% fee in my breakdown above in case someone brought this up (I.E. you).

Not sure what you mean about bookkeeping or asset protection. Book keeping is done by our CPA, and we are not charged an additional fee for new buildings. Asset protection, that called insurance; which was included in the breakdown. One can purchase in an LLC or potentially transfer into an LLC once the deal has closed (check with a lawyer first). The LLC protection isn't truly protected unless more than one party owns the building. Again, check with an attorney.

All expected expenses are listed and are rounded up (listed above). One cannot plan for the unknown, but this is why people need to have significant savings or lines of credit to handle the what happens in life.

I viewed the insurance to be property insurance (fire, etc) and not asset protection. If it is inclusive of asset protection that was not clear.

I do not see maintenance expense, vacancy, uncollected rent, or evictions reflected anywhere.

Even if you have a CPA already working other efforts for you, they are not doing additional work without charging you. CPAs are not cheap. If you have W2 employees as you suggested by stating you have maintenance crew, that requires bookkeeping (payroll). Even using dedicated independent contractors as your maintenance crew requires book keeping (bills receivable, payment, bookkeeping to track expenses for tax purposes and warranty claims, etc.).

Having a reserve for cap ex, but not allocating any estimate for the cap ex cost means that your cash flow estimate does not include cap ex. Note I am not stating that you do not have the reserves or assets to cover cap ex (only that you have not allocated it in your expense estimates).

Your cash flow estimate is missing some very obvious expenses that will consume virtually all of that cash flow. However, even if that was an accurate cash flow estimate ($340/month per unit (which if I include your PM estimate gets lowered to $145/month after including your PM allocation)), that is very thin margin (but it is not an accurate expense estimate as I already demonstrated so in actuality is smaller).

At $145/month (including PM allocation) to make a modest (far from able to live comfortably on) $50K year would require 28 units. Using cash flow with accurate expense estimates would require many times this number of units to have $50K/year cash flow. I suspect to get cash flow from those units of $50K/year with accurate expense estimates likely would require over 100 units. This would be a lot of work even with the use of a PM.

I do not know why you invest in RE. I invest in RE to live a life of comfort that allows me to do what I want and to give money to who I want. If that purchase is relying on cash flow for its primary return, it will be challenging to achieve this goal with that type of purchases.

I do not know that this property is not in a great appreciation area or has a good/great value add. I am not judging the quality of the investment. What I am saying is that your subject property does not make a good case about cash flow not being substantial (the cash flow on that property is poor but cash flow alone does not dictate the quality of the investment).

BTW I have properties that I consider to have poor cash flow (but my underwriting includes best estimate of sustained expenses), but are still good/great investments.

Good luck

Whatever you say dude. Stay in your lane, and I'll stay in mine.

Is your lane creating deceitful posts? You left out significant expenses like maintenance/cap ex and vacancy to provide an inaccurate forecast on cash flow. I point it out and your response if "whatever dude ..." Not something along the lines that in your haste you let out some significant expenses or that admits the number is not an accurate even half a$$ attempt at a rough true cash flow number. I am not even stating your deceptive post was intentional but with you not owning up to the expenses that were not included, I am starting to question if for some reason you intentionally posted numbers that did not depict all expenses.

I want people to post corrections to such erroneous posts with so that newbies do not see similar numbers and think that the referenced property is good cash flow.

Again I am not stating anything about the quality of the investment. it could be a very good investment as I do not have the information to provided an educated thought on that. However, you did provide your cash flow calculation and it clearly was deficient some significant expenses and using your own numbers was not significant cash flow (Assuming that you do not consider $145/month unit with not all expenses included significant cash flow). It needs other sources of return to be a good investment and it may have those.

Good luck

Whatever you say dude. These are real numbers. If you want to call them deceit, knock yourself out. I've only been doing this for 40+ years. What do I know.

Best of luck in whatever you do.

>I've only been doing this for 40+ years. What do I know.

Apparently not how to include maintenance/sap ex or vacancy in your cash flow numbers.

>These are real numbers. If you want to call them deceit, knock yourself out.

What is your definition of real numbers? I think most of us would state that any cash flow numbers that are missing maintenance/cap ex and vacancy are not accurate numbers. So if it was accidentally omitted then it is a mistake, but that you keep claiming these are real numbers without maintenance/cap ex and vacancy (as well as various other expenses) leads me to lean toward deceit.

However, you look at it, $145/unit per month not including vacancy, maintenance/cap ex, and various other expenses makes the OP's case. Your example clearly does not have positive cash flow when properly allocating for all expenses. I do not understand how this is not apparent to someone who has been doing this for 40+ (BTW i have been in REI longer, but I suspect most people do not need 40+ years to see that with complete expense estimates the $145/month per unit is negative).

Hopefully you did not purchase this primarily on the cash flow.

Good luck

Do you have anything better to do than bother me? Go away and do as you wish. I do not get into online pissing matches. Do whatever you want. Believe whatever you want. If you need help, which you may, feel free to text the Bigger Pockets support line. 720-902-8552

0 Votes

Quote from @Kim Huynh:

Hi Everyone. This is crazy, but we have tenants claiming they have ADD and can't make payment on time, and need to make 2 payments each month for rent. Lawyer says law will protect people with ADD and we should work with them. These tenants have been living there for over 3 years. Keeping giving us sob stories about needing more time to pay rent. They keeping on getting worst and worst, making payment later and later until it's over a month due, and then they pay, but then they are late for the following month. We finally gave them a couple of warnings to make payment on time, and since they haven't we are filing eviction paperwork. Now they claim they have ADD, and need to pay rent in 2 installments. Is there something we can do? Is this even a thing? Never said to us they have ADD, and even with that, does not even make sense for them to claim and the state to allow them to do it? Any advice would be appreciated. Thank you.

It's really not a big deal. We have these tenants too. However, you have to weigh the costs of dealing with multiple payments vs the eviction cost. Additionally, in super lefty Hartford, you may lose and STILL be stuck with a tenant.

As always, consult with a seasoned lawyer.

0 Votes

Hartford, Connecticut

Quote from @Ryan Randall:

I got lucky, and bought in 2020. I secured a 2.25% 30 year fixed interest rate on a 4 unit MFH.

Now, I have a significant amount of equity in the property, and I'm wondering the best way to access it (if at all?).

I'm currently house hacking, but at some point my wife/I would like to buy a house of our own. As part of that, I'd like to tap into some of my current equity, but I don't know that it makes sense.

I guess I'm asking, for everyone w/ super low interest rates, what are you doing? Just sitting on that rate for the life of the loan? Refinancing? HELOC? Something else?

Any help is appreciated

Can you get a HELCO on the equity?

These two credit unions should be able to help/

https://www.quorumfcu.org/

https://www.signaturefcu.org/

0 Votes

Quote from @Jeffrey Fullard:

I have an investment property that I would like to take money out of by using a line of credit. Are there any Lenders this offer Line of Credit for investment property?

Yes.

Quorum Federal Credit Union

https://www.quorumfcu.org/

Signature Federal Credit Union

https://www.signaturefcu.org/

0 Votes

Baltimore, Maryland

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Dan H.:

Quote from @Calvin Thomas:

Quote from @Collin Hays:

I got a chance to read this over lunch today, and it really hit home some excellent points about investing in real estate. Thought I would pass it along.

The Myth of Cash Flow

Not sure what Andrew is smoking, but I can give you a real world example in NJ (NYC suburb - I don't know too much about MO, but I can use NJ since we just purchased another three family.

Price 700,000

Taxes - $11k (rounded)

Insurance - $1700.00 (rounded)

Water - $100.00 (rounded)

Common Electric - $50.00 (rounded)

We can use his 7% with 20% down.

Payments - $4,930.68

Apt 1 - 2 bedroom - $2,000.00

Apt 2 - 2 bedroom - $2,050.00

Apt 3 - 1 bedroom - $1,800.00

Total income - $5,850.00

Total expenses - -$4,930.68

==========================

NET $1,019.32 x 12 = $12,231.84

The cashflow "myth" is bullsh!t. I closed last week.

Of course, we manage ourselves, so even if you take off 10%, it's still a healthy return. We don't buy SFH's, as that's just a waste of time, money, and resources. Mixed-use and MFH are key.

I interpret “payment” to be piti. If payment includes your maintenance team, materials, cap ex allocation, asset protection, book keeping, etc then I think further breakout would helped clarify.

Good luck

Whatever you say dude. Stay in your lane, and I'll stay in mine.

I want people to post corrections to such erroneous posts with so that newbies do not see similar numbers and think that the referenced property is good cash flow.

Good luck

Whatever you say dude. These are real numbers. If you want to call them deceit, knock yourself out. I've only been doing this for 40+ years. What do I know.

Best of luck in whatever you do.

0 Votes

Great. Expect this to come to NYC and NJ soon. Keep electing idiots to power. Makes great sense.

5 Votes

Chicago, Illinois

All Forum Posts by: Calvin Thomas

Calvin Thomas has started 37 posts and replied 777 times.

Post: Putting $1M into Crypto

Post: Chicago Investors we have a serious problem : Call to Action

Post: How to replace cash flow

Post: The Myth of Cash Flow

Post: The Myth of Cash Flow

Post: Tenants claim ADD and needs to pay rent in 2 payments a month????

Post: Stuck - Never refinance?

Post: Line of Credit for investment Properties

Post: The Myth of Cash Flow

Post: Chicago Investors we have a serious problem : Call to Action