All Forum Posts by: Henry Clark

@Joe Villeneuve

Your totally correct.

But in this instance as you noted, @Trent M. has his properties fully paid off.  He plans to take it out 100%. The math you note, is not "his" situation or values.

My point to him is to stay invested in REI.

Sidenote,  I greatly appreciate all of your BP insights. 

@Trent M.

99% of all REI investors want to be where you are. Two deals under your belt. You have gotten past the Big One, jumping off the cliff and getting in.

Thus something is wrong. You have gotten past the hardest part of REI. Financial Independence doesn't seem to be a target for you. Plus your investments are fully paid off, as noted above, that doesn't fit with REI, which is about leverage.

You might be a Med student who is just starting their Internship, and wants to dedicate themselves to their career. Could be a MLB player who just got called up. Who knows. Not going to try to convince you to stay in REI.

So lets do Stocks.  You want a 10% return.  Although you said the S&P500, lets use the Dow since more people have a historical sense of it.

34,000 Today.

37,400  10% year from now

41,140  10% 2 years from now

45,254  10% 3 years from now

You got to love compounding on a spreadsheet.  This assumes you don't take any out and don't pay taxes "yet".

But lets go back to the S&P500 and lets reference it since you mentioned investing in it. Currently the P/E for the S&P500 is say 37. That means the Price is $37 versus an earnings of $1 before tax. Used dollars as a reference point. Lets tax affect it, whereas for REI, I would try not to pay taxes (1031, Die, Refi- cash out). Tax affected P/E ratio is 37/.75= 49, we will call it 50 to make the following math easy.

Lets compare it against REI. For magnitude several options for REI investments.

$50,000 investment and annual return of $1,000  Appreciation and cash flow

$100,000 investment and annual return of $2,000

$200,000 investment and annual return of $4,000

$300,000 investment and annual return of $6,000.

Summary:

If you expect the Dow to reach 45,000 from 34,000 then you should invest in the Stock Market.  Please note the S&P 500 has been three times higher than it is right.  Make sure you understand what caused that home run.

If your rental properties, both Appreciation and Cash flow are making less than $6,000 on a $300,000 investment, then you should divest into the stock market, disregarding the tax implications.

Realize you want a less Passive investment and a lot of the BP team could point you to solutions on your current investments.  But that doesn't seem to be your objective.  

If it was me and I wanted to get out of REI, I would go totally to cash immediately. Do you have the strength to "Sit" on it for about 3 years? Then pick up the pieces after a financial downturn.

Options:

1. The economy was already hot. Now throw $3 Trillion of gas on it with Transportation, Covid, Shipping and Labor issues, we will go into hyper inflation. Great time to buy long term bonds at 18% interest. My worst financial decision ever was not dropping out of college and doing $2,000 per year IRA's at 18% fixed. Problem, your sitting on Cash, which will devalue.

2.  Go to silver when it hits $14 again and then sell at $25, 1 year later.  Not Gold.  This play only occurs about every 10 years, thus you need a job so you don't get bored.

3.  Invest in ?????, but that takes a totally different skill set than any of the above options.

@Jason Cooper

Post your contract and ask for any suggestions

Join Indiana SS assoc. Get their standard contract and compare

Talk with your local police.  They should tell you to treat as abandoned

Take a lot of pictures

Take pictures of your signage and post.  Ask for suggestions

No Trespassing. Customers only

Unit considered abandoned if contract not received in 30 days. 

5 MPH

Slow

Review all of your procedures.  What is your legal process for auctions in Indiana?

Lien and lockout dates

Fees, etc

Insurance coverage. Real versus personal property

Customer insurance offering 

Etc  Etc

@Amy Silva

Ask a Financial planner, banker or estate attorney for cpa recommendations

Ask the cpa about primary residence and 2 out of 5 years residency. Can discuss 1031 but don’t think you need it

The real issue will be the financing on your purchasing or assuming the loan.  Them staying on the title.  Do they have enough collateral for their new purchase.  Avoiding Gift tax if they transfer loan to you. 

@al 

Loopnet Maryland Lease has 500 listings.  Some show and don't show rate per sf.  The rest just find similar properties and call.

@Al Cavitt

@Colin Williams

One horse will be $3,000 per year.  Need at least three acres or more if your soil is rocky.  Otherwise they will be in a mud pit.  You will need to clean the stalls and barn out weekly.  My brother just got divorced.  He doesn’t do horses but did all of the work for 20 years.  That was one of the issues.

We have always had horses but they had plenty of pasture. This is black soil   Your probably in rock  

I have done truck farming vegetables on two acres and did peppers on 6 acres for two years. It’s a lot of work. Paid my first two years of college. Make sure you have a plan otherwise your trading $50 per hour work for $8 per hour.  It’s fun but not with the dollar per hour trade off

I would go for non crop items   Very labor intensive.  

Check out raising duck eggs for your chefs and bakers.  Can keep for up to two weeks easily.  Do khaki, runners or production Perkins  

Raise ducks or geese for the fall market or take orders for Chinese ethnic groups   Organic and free range    .   East coast your in that market   Do homer or Peking ducks or Chinese/white african geese for ethnic groups   Want the knob.

This way you have winters off.   Can ramp up easily.  Very little work once set up  Find a butcher and locker.  Or do it yourself if you sell in state.  Try to find land near a marsh that you won’t bother neighbors   This is very noisy and smelly.  

@Ross Y.

You either need to clarify what your CPA told you or you need to switch CPAs.   This is a pretty straight forward discussion with the info you noted.  

@Bryan Mitchell

As you well know being from GA, even a blind squirrel finds a nut every once in a while (country saying).  Hopefully one out of five of my posts, will be useful to someone.

Phase 3 getting started.  4 trucks arriving today to unload.  Erection crew on site.  More trucks to follow in about 2 weeks.

Been getting complaints from the hired help.  Wife (CEO) and son about all of the unit sweeping they have to do on the new units.

Not going to show them the picture below.  Just tell them, I swept with a push broom.

We have 8 locations in 5 towns/cities.  We use a 40 mile radius in which to build or buy.  So I have never wondered what town/city was the best in the US to invest in, all this time.  Helping some folks out, I named a few.  Later thought I didn't really give them any affirmable information.  Being a former CPA, Controller and CFO, I sat down and developed an analysis.

As I was building a "great and wonderful" template, I stopped; I realized there are really only a couple of overarching factors.  Unit Price, Land Price, and on the expense side Property taxes. Will let you research Property Taxes. Generally speaking all other Capex costs and Expenses are the same no matter what market you are in.

At the very bottom of this template is a ratio of Annual Revenue versus Total Capex. These are actual cities I have researched before.

- Only one of them has large REITS in them.  Populations 60,000 to 1,000,000.  Large REITS will buy you out once they reach your town.

-Two of them, the market really doesn't use Sparefoot.  This means both, you would be number 1 in marketing using Sparefoot, and two, they don't need extra marketing because they are full.

- Three of these, zoned land is readily available.

- If we weren't done investing in new Locations, I would be building in Location 1 and 3.  4 is good also.

No I didn't really answer which town/city in the US is the best.  But I have only so much money and these 4 look great.  This is not an investment analysis, but a market analysis tool.  There are several more factors once you pick the city you want to invest in. Demand versus supply.   You have the format, now do your data analysis.

Start small and Make Your Big Mistakes Early.