All Forum Posts by: David Sienema

Hey @Robert Belz

Would you mind sharing which banks/credit unions you found that offered this product and which was the one that had good terms? Many thanks!

I am currently doing my due diligence on a duplex deal that I've found. They have existing tenants and one of the tenants is section 8. In order to do the rehab part of the BRRRR strategy, is it necessary to first get rid of the tenants? If they're month to month obviously that's not too hard, but what have people done about this if the tenants still have time on their lease? Does section 8 add complexity to this?

Hello @Julio Gonzalez thanks for the welcome! Was just reading about your business, it sounds very interesting and I'm looking forward to the day when I am in need of your services.@Julio Gonzalez

Hello everyone!

I am a new investor based in Fort Lauderdale. Super happy to be a new BP Pro, after listening to well over 100 of their excellent podcasts and devouring all the books on their must-read list. 

I am part of a group and we have access to plenty of capital. We are breaking into the multifamily space and also short-term rentals. Currently in the due diligence phase of our first deal together. Would love to meet or talk with any other driven, mindset-oriented investors, wholesalers, contractors, etc out there in our South Florida area. Reach out! Anyone from Jupiter down to the Keys!

@Frank Gallinelli

Thank you for your reply again. That does clear things up! Hope this may help any others reading this also. Thanks again to @Evan Polaski also, your answer helped me bridge the gap between PV, NPV, an IRR.

@Frank Gallinelli

Hi, wow thank you so much for taking the time to answer my question! Your book has been a huge help to me in understanding a lot of concepts and for that I am definitely grateful. I also respect how you made this material, which could so easily be very dull and academic, actually incredibly readable and accessible. 

Your answer, however, brought me right back to the original reason for my question. You said, “if you had received all of that money at once, today, then you could have gone out and invested it all and made more money with it.” But what reason is there to think that you could actually have that money today to reinvest and make more money with? If you don’t have the money yet, you don’t have the money, so I’m struggling to see where the opportunity cost is for something that you don’t have and - in the case of the profits, at least - have never had. Unless you have identified some other investment stream that could net you immediate returns (in which case, surely, you would pick that investment!), then how can you speculate that there is even a chance of having your investment profits any sooner? I mean, $20k is only more valuable for me today than it is in a year if I actually could have it today, right? What am I missing?

@Evan Polaski after re-reading this chapter in the book while keeping your comment in mind, it makes perfect sense now. You are correct, I was looking at it wrong. I was looking at the PV calculations in isolation, when he was actually presenting them as a step on the way to NPV and IRR. Thanks for your help!

@Evan Polaski Thanks for your reply! I agree completely with and understand what you are saying. In this book, however, he is talking about how to view the future value of money and how to conduct a discount calculation to determine its present value. He says, "the longer you have to wait for a particular return, the more severely it has to be discounted and the less it is worth. A dollar received in 10 years is far less valuable than a dollar received in one year. You find the PV of each cash flow according to the length of time you must wait for it."

It makes sense that a dollar today is worth more than a dollar in 10 years, but in these calculations, it seems that he is assuming that you actually can have that dollar today, and I don't quite understand why that assumption is made.

Hello all,

This is my first post on BP and I am excited to dive in. Thanks in advance to anyone who reads this or replies.

I've been reading Frank Gallinelli's book What Every Real Estate Investor Needs to Know About Cash Flow, and I have a slightly technical question that I thought I'd put out to this community.

In this book, he talks quite a lot about money having a time element to its value, therefore, he reasons, in future projections, it becomes useful to discount money you will receive in the future to determine its 'Present Value' (PV). Future money is discounted by the rate of return you could expect to earn on that money had you been free to invest it elsewhere TODAY. My confusion is this: if you only have a certain amount of money to invest, why would it be assumed that you could invest that money or its gains elsewhere in the meantime, therefore netting another return, therefore justifying the discount of dollars received in the future? It's not like you can invest the same money in multiple places, and it's additionally very rare that you can get an immediate payout on an investment, so why would we discount future money by the rate of return, when there seems to be no reasonable scenario where we could actually have that money today, or any sooner at all?

I'm sure I've made my point about as clear as mud. I'll give a quick example from the book. If you were to receive $21,000 of profit in year 5 of an investment, the PV of that money, when it is discounted at 11%, is $12,462. But unless there is some magical way to actually have that $21k in hand at the beginning of year 1, rather than in year 5, why would assume that we might have been able to make a return on that money in the intervening years, when in order to make a return on it, it would have to be OURS, but in order to be ours, we (as investors) have to wait for our investment to earn that return?

Many thanks everyone! Glad to be part of this community, I will be participating more beginning TODAY!

David.