All Forum Posts by: Steve L.
Steve L. has started 34 posts and replied 1220 times.
Post: What is a realistic cash-on-cash return to shoot for?

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
I think you can do 15-20% cash on cash all day long. Usually the challenge for investors is coming up with down payments on 30 properties (or even 4 for that matter).
If you're buying a turnkey 100k house, 80k loan is a payment of $405.35/month. Let's say 20k downpayment and 3k in closing/misc costs. To earn 15% you need $287.50/month above $405.35 mortgage payment. To earn 20% you need $383.33/month. So you need to find a house that nets $692.85/month after expenses. For simple math, lets just use the 50% rule. To generate $692.85/month you would need at least $1,385.70/month in rental income. So to achieve these numbers you would target a house that you can buy turnkey for 100k that rents for $1,400/month or so.
The way a lot of us members on this forum do a lot better is: You buy the same house as the above example, except it needs 20,000 in work. You pay 55,000 cash (or hard money loan). You put in 20,000 in repairs. The house is worth 100k. You refinance 80k out after 6 months of seasoning. Now you have 0 cash in and your cash-on-cash is very exciting.
Post: Is a 25 unit apartment complex too ambitious for first buy and hold property?

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
In California, units that rent under $500/month are really tough.
The landlord typically pays trash and water. Management, evictions, kitchens and roofs cost almost the same of a $500/month unit or a $900/month unit.
My rule is not too buy apartments that rent under $500/month. Too bad I have learned from experience.
Post: What is a realistic cash-on-cash return to shoot for?

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
I think you should be aiming higher. Are you planning on using financing? Do you know what rate the financing will be? If you primary goal is to "build wealth" how do you plan to do that? Find deals under market value? Get great amortized financing? Increase rents on under performing properties?
Post: What to do with 80 year old tenant paying 1/2 market rate

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
I've bought plenty in this situation. I typically increase there rent $50-100 at a time every 2-3 months and leave them 10-20% under market. The house likely needs a full rehab, so you need to see if not doing that rehab is worth less rent to you.
Post: Black&White Portrait for Realtor Yard Signs? (picture inside)

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
Wait 30 years and then put that picture on a business card.
It seems many agents who have their picture on the business card use the best picture from a long-time ago. Maybe it makes them feel young.
Post: Real danger of asking for private money - long bitter post

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
Why are you taking this so personally? You don't know their side of the story. You don't know what they said to the police. You have never even done business with them.
Maybe the detective is a friend of theirs and following 10 different leads? Maybe they said they didn't think it was you to the detective?
At the end of the day you have to let your pride aside and think about what actual damage this caused for you? You're innocent and willing to take a polygraph. The detective looked through your house.
Move on. Learn from it. Since they have passed on 3 out of 3 deals what are you missing?
Post: 10-unit building deal

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
I would pay cash (using equity in your house). Once you have this new investment performing you can refinance it pretty easily get cash out and buy your next property. Performing, stabilized multi-family is the asset class all banks are really excited about lending on in my area.
Post: Partnership Structure

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
There are a million ways to do it.
My preference being in your situation is something like this:
- Any money invested earns a "preferred return." Any additional cash flow is split based on ownership basis. So let's say, it is a 500,000 investment and you guys agree to a 40% (partner A) for you, 30% (partner B + C) for each money partner and an 8% preferred return.
Let's say the investment makes 5,000/month in profit after all expenses and each 30% partner invested 250,000.
$3,333.33/month is preferred return and is split between Partner B + C. $1,666.67 is left over. Partner A would get 40% or $666.67. Partner B + C would each get $500 in addition to their preferred return payment. Now let's say in 3 years you refinance $500,000 with a bank at 5%. Partner B+C split those proceeds and now have $0 invested. The bank gets their payment $2,083.33 and the remaining $2,916.67 is split along the ownership percentage.
You can also negotiate a monthly fee or reimbursement for activities you do.
If you invested your own cash, this same scenario would also work out.
The things that are very hard to outsource in the real estate world are:
- Finding Opportunities
- Raising Money
Management, property knowledge and construction are all very important but eventually they can and should be outsourced if you want to continue to grow and spend your time efficiently.
Post: 10-unit building deal

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
The numbers look good and but just realize this is a "hands-on" investment. After a while, I think managing 10 tenants who pay $200-$450/month is a lot more work than people think. One eviction or semi-major repair to a unit and you probably won't make a profit on that unit for the entire year.
Why is the Seller selling it so cheap? What do other similar buildings sell for? How is he marketing it?
Can you refinance your entire primary residence and buy this building cash? That would be my first choice.
Post: Im 29 Years old... What Should I do?

- Investor
- Rancho Cucamonga, CA
- Posts 1,338
- Votes 684
I think you should move away. You can do real estate deals in almost any market. I moved from Canada to California when I was 19 and it was one of the greatest decisions of my life.