All Forum Posts by: Axel Meierhoefer

@Jay Yoo I think it is possible to do BRRR well.

I still like OOO TK better.

Please all, tell me what the hourly rate in $$ is that you apply to the time you spend on your Brrr?

Do you add that to the value calculation and comparison?

I believe you should

@Sachin Amin stocks can be great if you have risk tolerance and a lot of year until you want to reach your TFP ( time freedom point).

Most people I talk to want to hit that in the next 7-10 years, so risking a massive downturn and having to make previous gains back would be challenging.

The other thing I also always hope stock investors keep in mind is the fact that you normally need the full 100% of the funds you want to invest in a stock or fund. Even with options you need to be prepared to cover.

As a real estate investor I only need to bring 20% to the table fir my purchases and get tax benefits I too.

If your stocks consistent performance at least 4-5x better than my TK investments I suggest you keep doing them, especially if your TFP is much more than 10 years in the future. I hope you agree that timing the market to get out on top is a fool’s errand. We have had tops for 10 years, so when would you have left and liquidated?

By the way, when that day comes, hopefully with lots of profit, put that money in real estate and enjoy the great sleep TK investors have based on their passive income for life. 😜😜

@Max T. Yep

That’s probably true. That’s one way to stimulate the economy that totally counts 🤓

@Aiden Mil Yes, that's true

@Carlos Ptriawan Totally true, and that's where the discussion should go. If people accept that a balance around $100K in markets with generally lower than national average prices is a good starting point, then it really is a matter of the quality of the renovation.

Study the scope of work, look at the pictures of renovation progress (ideally visit the property while in renovation or one similar to the one you plan to buy at in the same location from the same provider).

Good TK's have established certain standards for pretty much everything. Check those out and compare to each other. That helps determining who just makes things look reasonable and who really does the work that adds value and creates a property that will last a long time when rentes.

That's also the reason why I only purchase from the TK companies that renovate, sell and manage the property under one roof. They know they will have to deal with the house they renovated and I require a 1 year warranty after closing, so anything that breaks they need to fix. That's a powerful motivator to renovate it well to begin with

I am investing in TK properties and some of the points raised here are valid. @Chris Clothier is right to warn because you have to ask yourself how a deal looks in totality. I, at least, want my tenants to stay in my properties for as long as possible. That reduces any cost for turnover but also indicates good value.

Good value comes from a quality renovation. You can actually find out from county records for any property you consider, what the sales prices were since it was first built.

If you accept that anybody who takes the risk and buys an older property and renovated it well to be able to sell it for investors as a turnkey property should be allowed to make 15-20% profit, just do some calculation.

Let's say you could find a $25K property in a neighborhood with great schools, shopping, access to roads and freeways that can bear about $800/month in rent. You claim you want to sell it for $75K and make some profit o $15K on the sale. That means you have $35k for everything, literally. New walls, new paint, new windows, new appliances, floors, new electrical, new plumbing, ceilings, possibly the roof, air conditioning, water heater, etc.

You might be tempted to say: "I am not sure that it will need all of that". Rest assured, a property you can buy between $10 - $25K needs all of that and more. (and we are not even talking foundation). The reason is that if it were even remotely usable, it wouldn't cost between $10-25K to start.

That's why Chris says that you are asking for trouble. Things will break when you don't fix them right from the start. More importantly, in my book is the fact that any fixing comes 100% out of your pocket. If, on the other hand, you buy a $115k property that was fixed properly, 80% of the cost is covered by the bank and your tenants allow you to put 15% of the rent into reserves for the first few years, so they basically build your repair fund for you.

That's one of many aspects of why I love my turnkey portfolio.

@Aaron Kyle Kinslow sounds wonderful. If you like to have a conversation, ask all questions you might have, etc., just let me know. If you like what I have done, I can introduce you to my providers and you could check them out yourself.

just PM me and we can find a time to chat

@Aaron Kyle Kinslow You are right about the point of who would most likely buy a triplex or fourplex. That brings part of the discussion back to your goals.

You might have seen posts from me where I describe the Time Freedom Point, a point in the future where your passive income is high enough to cover all your costs and give you the freedom to do with your time what you love.

With that in mind and assuming you had 5 fourplexes that are working really well, were bought for a good price from a TK provider that also manages them for you, why would you want to sell them?

People often compare real estate investing with other investments. That's fine, but most other investments are only considered working well when they appreciated in value and the owner could sell them for a profit. That is true for most stock investments, any collectibles, gold or silver, etc.

In real estate, your portfolio would not only allow you to have appreciation but also cash flow that can, over time, cover your expense and make you free. Yes, appreciation is also happening, but if it is substantial, I would always opt to use the equity to borrow more money and buy more properties to get to the Time Freedom Point faster. That's especially true when interest rates are as low as they are right now.

So, ask yourself if you want to reach the Time Freedom Point or if you want to maximize profit from sales. It's two different things leading to different investing strategies.

@Duane Alexander Yes, I totally agree. That's part of the reason for me to post my experience and views. Thanks for sharing

@Damien Lee Thanks for responding. Different lenders use different ways to calculate closing costs and in my experience, they are not always a percentage of the value of the property. My nationwide lender has another approach that keeps closing costs lower and applies a different formula.

I have seen the negativity about turnkey on BP as well and started writing about my own success. Here is a thread from a few weeks ago that got a lot of attention,  explains a lot of the aspects that lead to success investing with turnkey providers and refutes some of the myth:

https://www.biggerpockets.com/...

I like to caution you a little. Your approach as you have described it does not appear to be more aggressive to me than what I do with my turnkey investing. Your deals (so far) are not performing well enough and you carry all the risk trying to do something that turnkey companies have 100x more experience in.

That's not on you. That the media and the community as a whole. We are being told that finding deals, analyzing deals, renovating deals, financing deals, being property managers on finished deals - is all something one can do as a side job, maybe supported by reading a few books and then be as good or better at it and make more profits than the organizations that made exactly that sequence their full-time profession. The really good turnkey providers have been around for decades and find-reno-sell-manage properties at a rate of dozens/month. Why do we believe that we can do that better than these good TK providers can - as a side job? I don't believe it and like you to be careful.

If you like to discuss it, let me know and we can talk about it