All Forum Posts by: Landon Elscott

Just beware of fees that are unjustified.  Unless you're working with enough capital and wealth to justify the fees most financial planners charge, it won't be worth it considering the wealth of information you can get as a beginner just researching and asking questions.

I recommend getting a good CPA, but having a dedicated planner could quickly eat away at the money you have to invests and completely outweigh any gains they recommend.  Of course, if you can apply their suggestions in the future it could be a good investment.

Also, your local banker, insurance broker, and even the guy trying to sell you an annuity likely aren't looking out for your best interest, so find a financial advisor who isn't paid commissions on selling products you don't need and gets paid for performance.

I sold a 600hp 01 Mustang Convertible Cobra to buy my first rental property.  It was a sad day, but here's the sickening numbers.

I bought the car for about $17,000 - put quite literally 25,000 into performance parts (engine teardown, supercharger, yadda yadda).  Sold the car having only put 5000 miles on over 5 years or so for about $15,000.  The performance parts were hobby of course, but that was basically a realized loss of $27,000.  Unfortunately, unless you find the absolute perfect buyer, aftermarket parts don't affect value at...or very, very little.

I took $9000 as down payment for a $36000 house worth $50,000 to $60000 bank appraisal and cash flows roughly $275 excluding just PITI (not other expenses).

Then I took the other $6000 and paid off credit cards to become debt free with exception of some medical bills after my daughter was born and spent time in Intensive Care.

And that's the power of real estate!  Sure, I miss my car dearly, but now I have a 2004 Pontiac GTP (still a fun little car) owned free and clear with 120k miles.  Although, my daily driver while I had the Mustang was a beater Mitsubishi worth maybe $1000.  Being a car enthusiast, I'm sure I'll buy another in the future with probably even stupider money in it...but at least I'll be set up foe success firt.

Thats what I figured.

I've read the Iowa Landlord/Tenant laws from top to bottom, and it appeared as long as I'm not the one requesting shutoff and so long as tenants are in charge of utilities that it can't be considered a constructive eviction.

I did in fact let the tenant know that they need to contact the utility company immediately, I'm going to also send out a 7 day notice to cure as its plainly stated that tenants must have all utilities in their name and kept current at all times.  First time for everything I guess - so I panicked!

Thanks for the response!

This morning, about 6:00am I noticed I had a message from the electricity company.  They actually called Saturday, but this is the first I noticed I had a new message as service has been spotty.

The utility company said a disconnect was planned for sometime today.  I immediately called them and asked for details, but they would not provide for privacy purposes.

Long story short, the utilities are in tenants name and apparently they are behind.  My question is, since tenants have the bill in their name, I can't be held responsible for the disconnect - can I?  This is not something I requested, not something I had any part of involvement in and so I don't see that as being a willfull eviction.  This is is in Iowa if that's necessary.

Plus, I hardly think a phone call on the weekend from the utility company that they're shutting off service is practical notice for me to make necessary arrangements. 

At this point, at 6:30 am I contacted tenant and let them know I just found out about a planned shutoff and they need to contact the energy company immediately and follow up with me.

What to do?  Utilities in tenants name and getting shutoff.  I made no request for that action.  Do I have to start utilities up in my name and then send 7 day notice?

No, I think the stock market is a relatively good concept - even if it's often negatively affected by panic.  It allows people to invest in companies and I think that's a really neat concept, especially if people are willing to take some time to understand the fundamentals of the companies they invest in.  I often think it's unfortunate that the market can be so volatile from either fear induced panic or exaggerated hype, but overall I think the core concept is worth being a part of or at least diversifying into.  That said, I don't really need to root against the markets, the market naturally corrects itself time and time again for a variety of reasons - natural and unnatural.

I certainly think there are some companies trading at valuations far and above a realistic price point, but I wouldn't necessarily say I'm rooting against them.  I also guarantee there's companies out there performing financial schemes that's probably not in the best interest of shareholders, but again, I'm not going to just root against them and hope they fail - I just avoid them for my own investments.  It's the people's responsibility to due some due diligence, and sooner or later I think the market will in fact correct itself for those securities, but I'm not one to risk shorting a stock based upon my opinion that it's over priced - even if the financial reports propose that.

Most of my securities are actually ties into some REITs.  I know that sounds probably cliche to invest in real estate investment trusts as a member here, but I really do think the REITs I've invested in are sound - although Inland Real Estate company has been having some issues lately regarding their commission structure on internal sales that are apparently costing shareholders more money, but it seems like the funds are still remaining within their umbrella of real estate companies...hard to explain.

It's Judge Judy, Judge Mathis, and The People's Court's fault!

Okay, maybe not specifically, but just a couple of weeks ago I was talking to an uncle at a reunion about my real estate endeavors and his response was "Haven't you seen those court TV shows?".  Obviously, he was referring to the nearly daily instance on those shows of some sort of landlord/tenant dispute regarding damages and unpaid rent.  

What he fails to understand, and so many others like him who see these TV shows or hear stories through the grapevine is that in a lot of those cases, the individuals involved in the role of being a landlord are more or less placed into that position out of necessity - what I like to call "playing" landlord.  There's a reason that the vast majority of those cases consist of verbal agreements and lack of knowledge regarding landlord/tenant laws, and that reason is that for many, becoming a landlord was never necessarily an intent - it 's often just something that came about from a lack of being able to sell a house or being unable to afford housing alone and requiring a roommate.  Furthermore, not that low income people can't be successful landlords or that they shouldn't rent to other low income folks, but there's something to be said about the fact that beyond the lack of written contracts/leases in so many cases, additional problems usually arise from the fact that these low income "landlords" themselves are financially illiterate or lack financial responsible and the capability to mitigate the risks via decent capital.  To be blunt, considering the vast majority of individuals on those TV shows to be "landlords" is rather insulting to the individuals who take an interest and intent in becoming successful real estate investors.

And it isn't just these TV shows either, because that same uncle also had to tell me about a local farmer who emphasized how problematic renting out a farm house had been.  Granted, when you have an empty old farm house on the property, it makes ideal sense that a farmer might as well rent it out, but the problem is for many of the local farmers who find renting to be discouraging is that it's almost too convenient for them.  They have a house sitting there empty, figure they might as well make some money on it without putting much thought or effort into it, put it up for a cheap price hoping to may a quick buck - often in many cases never reinvesting a single dollar back into the property - and end up getting perpetually sub-par tenants.  And not to generalize our local farmers around where I live, but I know first hand that many of them are still living in this mindset as though it is still the "good ole days" and you can trust anyone who shows up exclaiming "they're just a hard working feller looking for a place to settle down".  Either that, or they're often stubborn and think that they'll take matters into their own hands and shut off the water when rent is unpaid.  

And those two reasons alone I think is why so many "landlords" have so many horror stories, they just sort of became over night property managers that saw renting out a house was a convenient solution to whatever circumstances they were in - completely overshadowing the many landlords out who go into the real estate business with a plan, a goal, an end game, and an understanding of the laws.

But then, aside from that, you have to remember that the vast majority of our population is fearful of risk and investing in general - there's a reason there's a higher number of employees than there are business owners out there.  Especially coming from an individual (that uncle) that worked most of his life with a single company before retiring with a nice little 401K nest egg, being an employee is so called safe, secure, and just the normal, traditional route.  In fact, in a lot of ways, it isn't specifically the fact that I was involved in real estate investing that was so alarming to him, the whole idea of investing outside of traditional blue chip stocks and mutual funds was completely foreign as well, and had I said that I was day trading Forex (I'm not, but know people who are successful doing so), had he the slightest clue of what I was talking about, he probably would respond in a similar manner as to what he did with my rental property business.

And had I been interested in starting a sandwich shop for example, certainly that also would have caused a certain amount of discouragement from.  The thing is though, since starting a business is outside his comfort zone and he would encourage that I should just be happy living a conservative life at a 9 to 5 job, it would have been a far easier business proposal for him to wrap his head around in comparison to real estate.  Sure, there's a lot of similarities between proposing a sandwich shop business or proposing a real estate company, but the way to grow and expand a sandwich shop is relatively easy to grasp onto, whereas real estate for many people is more difficult to comprehend - partly because there isn't a "trending sandwich market" in the same sense that there is a "housing market" and also partly because despite the fact that many other businesses equally rely on loans and leverage, real estate quite honestly is probably a more debt heavy business than other small business ideas and a lot of people still have a lot of fear regarding these collateralized house of cards that fell apart during 2007-2008 housing crisis.

Now, that's the reason I think many of the people I talk to have so many apprehensions, so I basically take those apprehensions and in a more concise manner than what I just did, basically explain to them that housing is a service, just like any other service and it's something that people are willing to/have to pay for.  Housing is a necessity and as long as you go into real estate with a plan and business strategy, you can find deals that make that service profitable, just like any other business.  The fact that there is so many other's who find real estate difficult is both a learning experience and a testament that there's a lot of people who have no business in being in this field. Just because Joe Schmoe became a landlord out of necessity and found it difficult to manage has no merit that success can't be found by someone who goes into it purposefully and well researched.

Also, are any of you part of an Iowa Real Estate Investor group or anything?  Even if it's just a little Facebook page or something, it might be neat to consolidate ourselves into a place where it's much easier to bounce ideas off each other or offer up projects.

I'm in Newton, IA - that's about 30 minutes east of Des Moines.  We've got some great bargains here for low priced housing that work well for rentals; however, if you start looking at the $150,000+ range, you're probably better off heading to Altoona, Ankeny, or any of the metro suburbs.  Despite the fact that you'd think cities like Ankeny would demand a huge premium for housing prices, I've found that you can get a much nicer house in a much nicer neighborhood that's been built far more recently for $200,000 or so than what that same money can buy in Newton - and that's sort of peculiar to me.  That said, it'd be an absolute miracle if you could get a cash flowing rental property here for that much money.  There's plenty of demand for rental units, just no one has the money to afford to pay rent on a $200,000 house and those that do are buying.  However, awhile back I secured my first rental property here and it required absolutely nothing in repairs, is cash flowing superbly, and was priced at a bargain.

Anyways, the city has been cracking down on slum lords and trying to revitalize the city through a vast number of development projects slated to tear down abandoned buildings.  Unfortunately, while their objectives are pretty good, the main problem I see at this point is that you have individuals on the board or that have become mayor and think that because they hold this position of administration that it somehow provides them the knowledge to make real estate development decisions.  Instead, what they need to do is tap into the local real estate investor community and those people with networking abilities to put those projects in the hands of experts so they take off.  But you know, that will never happen, I'm just a 26 year old "kid"...

I too, would enjoy getting together for coffee with some other Bigger Pocket investors, if for no other reason than finding some new friends that share similar interests.  And perhaps if interested, I've actually got some projects coming down the pipeline I'm hoping to secure by next spring, and as long as the partnership with this company works out as planned, I'll be looking to tap into some additional capital.  If anyone is interested in some equitable interest in these projects, let me know.  From a rental perspective, these projects are about as ideal as they get, and I'm in a unique position of getting early dibs since I have insider connections, so I'll just be looking for funding.

Very cool story.  I live about 40 minutes east of Des Moines, so that's cool to see such a story in my neck of the woods.  

Back when I was about 19 or 20, I was living the good life with a very well paying full time job, fresh out of a 2 year tech school and still living with mom and dad - no wife, no kids, no mortgage, no medical bills, none of the burdens or blessings of life I have today.  I graduated high school in 2007, started tech school in that same summer of 2007, accepted the full time job in 2008 and due to the condensed course schedule, graduated in the winter of '08 and was promoted.  So in the course of less than a year, I went from making practically nothing to what my "poor" college friends called "baller" status.  Meanwhile, my wife - then girlfriend - was still a junior in high school...so, even though I had often considered myself to be really frugal, I just wasn't at a point in my life where financial planning was a priority and was sort of thrust into an income that I quite exaggeratedly didn't think required me to be so frugal anymore.  Side note:  It's probably the same mindset people have living pay check to pay check and winning a million dollar lottery - it isn't a bottomless figure.  Anyways, I'm getting off track.

Instead of investing in real estate (or anything at all), I decided I just had to have this 2001 Ford Mustang Cobra.  I had always been a Mustang fan and owner since getting my license, so I figured at that point, it was as good a time as any to build my dream my car.  2 years later, several thousands of dollars in performance parts, a blown engine, a rebuilt engine, blah blah blah, I had a 600 or so horsepower convertible performance car and absolutely zilch in savings or investments.

Around that same time, circa 2008, as I'm sure many of us can recall, the financial crisis was in full effect.  Despite the fact that it was probably the greatest time in my life to dump loads and loads of cash into cheap, undervalued stocks, instead I kept pouring more and more money into a car and performance parts which were more or less worthless from a financial perspective when you sell a car - unless you can find an absolute buyer.  Of course, hindsight is 20/20, so I mean, of course I couldn't have predicted that Ford stock would go from less than a dollar at one point to over $18 a share early in 2011 - it sits at $13.79 today.  I often consider if instead of dumping $1000 here or a $1000 there into some pistons, supercharger, exhaust, etc and put it in a S&P500 tracking mutual fund how my life - financial or otherwise - might have been different.

But then, in that same breath, I often think of how perhaps everything happened exactly as it is supposed to in my life.  I can often wish I had never purchased that car and instead invested the money, but at the same time, my wife and I shared a lot of great memories in that car.  She's actually a couple years younger than me, so I actually took her to senior prom in it, we went on numerous road trips, and to be quite honest, that car was as much a part of our history and relationship as anything else - and I'm not sure my financial portfolio could have given those same memories and for that I'm thankful, even if a bigger investment portfolio could have flourished into other types of memories.  Then again, according to the butterfly effect, had I invested those funds instead of buying a car, I could be writing this today wishing I had never invested into some bad stocks or something and instead just bought a sports car - who knows.

Of course, that's what is interesting about the "woulda, coulda, shouldas" of life, sometimes they may not have been the grand successes they were had we taken different approaches - hindsight is always 20/20.  Look at a company like Google and Yahoo.  At one point in time, Yahoo turned down the opportunity to buy Google for one million dollars.  On one hand, we could say that Yahoo lost out on the opportunity of a life time, but on the other hand, who's to say that had Yahoo actually taken that offer that Google would have become what it is.  Perhaps it's possible that Yahoo could have made Google and absolute failure.

Oh, and that Mustang I was telling you about.  I actually sold it this past year to fund the down payment on my first investment property and so far, it's been worth it and a part of me wishes I had done it sooner.  But I'd be lying if I told that as much as I love cash flow, there's still bits and pieces of regret that overcome me when the skies are sunny and the temps are warm and I'm not behind the wheel of that convertible.