All Forum Posts by: Charles LeMaire

From my silver-plated spoon childhood (rich friends) it seemed that the totally passive concept was bearer bonds.  Old folks would go to the bank, open their box, use the scissors they kept in the box to clip the bonds and go collect their money from the teller. 

But alas today bearer bonds don't exist anymore.  That gave way to the Bond Ladder - a series of bonds maturing regularly.  But rates are low.  And when rates rise, bonds value decrease - I still bet they will go up more than down.  So this plan is no longer the answer.

To replace the above (and an echo @Jack Martin above), I have a MF syndication Ladder.  Several sell each year and I buy a some more, keeping what I need.  Like bonds, they typically have cash flow.  Unlike bonds, they typically increase.  OK, when there is a down time, I keep a fund to live on.  I have to admit, one has to put in some time to find and invest in these, so not really zero time. I do not find my involvement painful, but it is not zero.  And I often have to take those pesky checks to the bank.

Some other options I didn't see above.  Dividend harvesting - I am invested in a group that does all the work, they play in stocks that pay a dividend.  Has worked pretty well.  I talk to them twice a year.  I also have some with a fellow that does "active trading".  He does well, but the market is the market. I talk to him quarterly.  BTW, I know my limitations (do the opposite of anything I do with a stock!), so I play only in mutual funds.  This requires me to dig in for a couple days each quarter - again not zero work. 

Regards,

Charles LeMaire

There are a lot of folks that do not approve of Fee Based mentorships.  They are not for everyone; if you have access to knowledge, contacts, money, and properties, you don't need a mentor.  

But joining a good Mentor and Networking group can be advantageous if you are missing any of the needed components.  I had some money, but knew little about RE and had no access to sponsors and properties in 2010 when I met Brad Sumrok at Lifestyles. We followed him to his group.  Both Lifestyles' and Brad's training was/is excellent.  Brad wisely built a network which has allowed me to enter 40+ deals with dozens of sponsors.  In short, my membership fee bootstrapped me such that I have more than doubling my net-worth. 

I haven't tried others, so I can't tell others are better or worse.  I will suggest that a seminar that sells training materials only would not have helped me.  And I much prefer a group where the members are also getting rich (not just the organizer).

I am not paid by Brad! I am simply an "active" passive investor.

BTW, I am reading Joe Fairless' BEST EVER book and enjoying it.  

Regards,

Charles LeMaire

@Jason Merchey - I am a very happy student and member of Brad Sumrok's network; I call it Sumrok University.  I have been working with Brad since I walked in off the street, knowing very little about RE in 2010.

If you are interested, he has a upcoming recruitment event: March 9th & 10th.  And if you want more detail (I have plenty of opinions) send me a message.  

Regards,

Charles LeMaire

MF can be a GREAT investment.  All I am saying is to consider if you want to do it with qualified funds.  The same issue would apply if you bought Apple at $5 and sold at $505.  The profit is great, but you will likely hate the taxes (someday). 

Not a CPA, so take with a grain of salt!!!  The 1031, will delay taxes until the final sale (you still get the advantage of Cap-Gain) or until your demise (at which point inheritance tax kicks in, but the step-up in basis will happen).  Traditional IRAs and 401K return the money at earned income tax rates.

Charles

My take on this is that you are moving Cap-Gain earnings to earned income rates, which does not make a lot of sense to me.  

Say you put $100K from an Traditional IRA or 401K. Over time they send the distributions to your account and at the end the big lump goes to your account. Say, in total, you doubled your money, now $200K.

Outside of the tax advantaged account, you would have paid taxes on the $100K (a less really) at the Cap-Gain rate (15% or 20%). 

If you mostly fail and have limited assets in retirement - you win, less taxes!  There are financial planners that can get you to $0 tax if you have little.

But assuming you are successful, when you start pulling the funds out (RMDs) they will be taxed at earned income rates.  Today those vary by income, but for the successful, likely 25% or higher.  Do you think they will remain this low? 

If you work through the math associated with Traditional IRA/401K, it only really works if you are at a lower tax rate. That was the pitch when they were created in the early 80's.

HINT: With current low tax rates, limit IRA/401Ks contributions and/or go for the Roth options. Consider conversions and withdrawals.

Sorry, just my opinion.

Regards,

Charles LeMaire

Not a lot of hard numbers above, so let me help make it very clear that MF really works.

I am in a network of deal sponsor and investors; to date, I have invested passively with a dozen or so sponsor in the network.  13 deals have come to term (three are still calculating distributions) and in those I have seen the following IRRs, after the sponsor fees: 

• 79%  $100K --> $281K  in 19 months
• 58%  $50K   --> $159K in 34 months
• 45%  $100K --> $324K in 42 months
• 35%  $75K   --> $136K in 23 months
• 29% $125K --> $475K in 6.2 years
• 20% $150K --> $338K in 2.8 years

The rest are less impressive, the worst (so far) was 5.4% IRR (others were 18%, 16%, & 13%) -- Nope, have not had a loss (yet)! But I do know of a few outside our network - be careful!

Regards,

Charles LeMaire

@Andy Shah - you may not be ready for this.  No guarantees.  Though it is not easy, you could lose it all.  To date, I have not lost a penny in 43 RE deals and I have made great returns.  But I know of one in ATL when they got back only about 30% of their money.  Know your sponsor!!!!!

@Max McGuirk   I am a Brad Sumrok student, have been with him since the start of his mentor company, including the time when Mark Kenney was also his student.  I have found great success in Brad Sumrok University (my name for it)!   I have done involved posts on a couple forums - I hope this will get you to them:

https://www.biggerpockets.com/forums/79/topics/627563-brad-sumrok-rat-race-2-retirement?page=1#p3823635

https://www.biggerpockets.com/forums/79/topics/149974-looking-to-get-any-reviews-on-mentor-investor-teacher-brad-sumrok-on-multifamily?page=5#p3730386

Regards,

Charles LeMaire

I see many suggestions on this and many other posts about finding a local mentor.  If you have one, have all the investor contacts (money), have a team, have properties, etc., you don't need what I am suggesting.  But if you don't have everything, consider a mentoring group!  

On March 9th & 10th (2019), about 700 persons will attend Brad Sumrok's Rat-race 2 Retirement (R2R).  Over the two days, he will give a great overview of how a person(s) can become deal sponsors (GPs) and have other persons become passive investors (LPs) in MF deals.  There is a bus tour to visit some example MF properties so you get a better understanding of what you are investing in.  Deals are typically 70+ units (to about 450 units), typically B & C class.  Minimum investments are typically $50K to $100K.

And YES, there will be a sales pitch at the end of the second day - Brad is not a charity.  If you join the Eco-sphere (I call it Sumrok University), you visit more properties and attend networking events where GPs and LPs network in a "target rich environment".   GPs have help finding deals and preforming due diligence.  Funding is easy as there is a pool of LPs.  It just works!  

Brad has students, both GPs and LPs, from all over the country (and Canada).  MF deals have been done in 10 or 12 states.  

I started with Brad in 2010.  To date, I have entered 43 deals, 12 have sold.  Most are in TX, but I have b 4

I know there are a lot of "never pay for mentoring" folks on BP.  If you have another path that allows access to the needed components, great.  But if not, it is a way to get access.  I have found Sumrok University to be invaluable in my path to RE.

NO, I am not a Sumrok employee, he does not pay me!  I am a student of his.  I appreciate what he has done for me and I volunteer at his events.

Regards,

Charles LeMaire

Yes, I was accredited (barely) when I first invested, but many are not.  Reg D 506(b) allows sophisticated (knowledgeable) investors to invest.  

If you pay for a mentor, have enough to invest to make it worthwhile - Cosco Rule: you don't buy a Cosco membership if you have not money to buy stuff.

If you try to learn it on your own, be a very good student!  

Regards, 

Charles LeMaire