All Forum Posts by: Calvin Thomas

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

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

Hey everyone,

I'll keep this short and would love to hear from investors who have successfully leveraged a HELOC to scale their real estate portfolio for both short-term cash flow and long-term wealth building.

I’m about to unlock $200-250K in HELOC from my primary residence (a condo in NYC), and I know there’s a powerful strategy I can implement.

My current plan:

✅ Acquire a 10-15 unit multifamily in a mid-sized market (AL, TN, OH, etc.), targeting a $700-800K deal with value-add potential.

✅ Use 20% from my HELOC for the down payment and finance the rest with hard money.

✅ Force appreciation over 6 months, then refinance into a DSCR loan to pay off the HELOC.

✅ Rinse and repeat!

Has anyone executed a similar strategy?

What challenges did you face, and what lessons did you learn?

Would love to hear about pitfalls, lender restrictions, and any alternative approaches you’d recommend.

Thanks in advance for sharing your experiences!

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

 again where you invest is importnant. A lot of out of state investors try to go for "up and coming neighborhoods"

They are called up and coming for a reason. And if you're looking for "pockets" within a neighborhood you are generally already doing the wrong thing. NE Phila, W and E mount airy, roxborough, manayunk, east falls, chestnut hill cover large land areas - and there are plenty of surrounding suburbs there too that are great makrets. 

Sure if youre looking in Brewerytown because a local agent or article online told you its up and coming, then yeah, that market is risky. I would never invest in an area where I had to choose the right block and cross st. If I can walk to a sketchy side of a neighborhood - im not buying there. I need to be at least a couple minutes by car away

for those who have more experience with property managers or managing props. I have a property manager managing my 2 houses. are they supposed to send me the invoice for any repair that is being done on my property?  because last time I asked my prop manager for the invoce he said that was the last time he sent me the invoice for a repair.  should it be that way?  I'm a new investor so I need your help, I appreciate it

@Calvin Thomas I would disagree with your assessment of Philadelphia. The city has excellent fundamentals...strong Ed's and Med's which are some of the most stable employers, huge investments made in the life science sector,  proximity and easy access to NYC and DC, international airport, port city to name a few. 

Like most cities, there are some neighborhoods that perform better than others but to say only the center city area is worthy of investment is inaccurate. Unfortunately, 99% of BiggerPockets posters who are not local to Philadelphia and choose to invest in Philadelphia invest in the lowest tier neighborhoods, just as they do in most other distant markets where they invest because they are lured in by the inexpensive cost of housing. 

I also hear complaints about the city not being a "landlord friendly" city. Well, I can say from my personal experience owning only A/B located properties, if you maintain all appropriate licenses, take care of your properties, and are responsive to your tenants its smooth sailings. Its usually the tenants who live in the lowest tier housing that are most prone to play games and take advantage. 

Also, my worst performing project the past few years was a center city ground up project. My NW Philadelphia projects which are on the outskirts of Philadelphia (but still city proper) have been my best performers. Many others have enjoyed similar success there as well.

I have an applicant with an eviction from 2019. He has since restored his credit (740) and has stable employment. What measures can I put in place to reduce my risk as a landlord? What questions should I ask during the screening?

Thanks in advance for your feedback.