All Forum Posts by: Eric James

Investors Beware: My Costly Experience with Rent to Retire (RTR)

I strongly advise against blindly trusting the data provided by turn-key investment providers, including Rent to Retire (RTR).

I invested in a property in Texas City, TX through RTR, and it has been a financial disaster. Their projected numbers were wildly inaccurate, particularly regarding property taxes. RTR estimated taxes at $6,400, but the actual tax bill came in at $14,300—a staggering 2.23x higher! How can a supposedly professional company with an experienced team make such a massive miscalculation?

This unexpected expense turned what was promised as a cash-positive investment into a cash-negative one—the first in my investing career.

To make matters worse, I lost $21,000 due to the property managers recommended by RTR. While RTR compensated me $10,000, the remaining loss is still significant.

Bottom line: RTR’s data is unreliable. If you're considering investing with them, verify every number line by line to avoid costly surprises.

Quote from @Jay Hinrichs:

Quote from @Ray Hage:

Quote from @Marcus Auerbach:

Quote from @Ray Hage:

I don't think it will be crashing on the whole....condos, however, yes I see a crash that has already started months ago and going to get worse soon. For SFH, small MF, most commercial, etc should have a correction.

I just pulled MLS data last night. Dade has 5.6 months of inventory of SFH and Broward 5.1 months as Jan 2025. Don't get me wrong, it could get worse but I wouldn't freak out yet. I think we are just normalizing.

Just now out of curiosity, I just pulled Broward data for condos/TH and it is 10.8 months and 11.9 months for Dade! Data can be dangerous if you're not looking at the details.

Yeah, this is RPR data, so it's SF+condos combined. So seems like it's more a condo issue at the moment, which points me to second homes and not Airbnb as the main driver. 

As an investor, I am always looking for opportunities and you have a lot more leverage to negotiate in a high inventory market. In my market, anything good goes way over list. 

And for agents changes in the market mean more transactions, so that's good in my book. I work mostly with relocation and higher-end clients and consumers think a super hot market is good for agents. It sucks, I'd rather have 2 offers on a listing and a day to review than 12 offers and 2h binding acceptance! And on the buyer side it's just brutal without inventory. So I'd love for my market to cool off a bit!

The question for me is what are real specific reasons WHY this is happening in S-FL? When you understand the reasons you can form an opinion on the extent of this situation and what will happen next. What do you see?

For the "why" regarding condos...high HOA fees (like 1000/mo...something like 400-500 is now "very low"), high insurance costs, overbuilding (everyday it seems like new building is going up) and high property taxes. Regarding property taxes, they were always high but it's one thing when a condo cost 150k in 2020 and that same exact condo is 350k now. I don't see a good solution to prevent a further crashing for condos.

If they can get insurance rates and mortgage rates to come down a little, we would have a light correction imo for SFH. I don't foresee property taxes going down no matter what DeSantis says. I hope the property taxes go away but I don't think it is likely

talk of eliminating property tax in FLA  is that what your saying ??  Dont see how that could even remotely be possible when U have NO state income tax .. Unlike NV that has massive income from Gambling

 You're gonna have to talk to DeSantis and let him know. Eliminating property taxes has been in the news for about a week now. It is a goofy idea but it is currently being explored. I think it can certainly be lowered as in Broward and Dade, it is more than 2% of the assessed value of the property.

Quote from @Eric James:

Quote from @Don Konipol:

Quote from @Drew Sygit:

How much do you ACTUALLY learn in college that you CANNOT learn "on the job"?

How much of what YOU learned in college have you actually applied in your career?

College is mostly only about training to learn.

Drew, you seem to look a little young in your photo - LOL.
I guess everyone’s experience is different.  And since I finished school 50+ years ago, mine may have lost relevance.

But, my experience differs.  I actually feel like I learned a lot in college that would have taken me 15 years to have the opportunity to learn “on the job” IF I was even able to obtain the position to enable me to learn.  Further, not only did I learn numerous concepts, techniques, strategies, principles, etc that I used in my business career, but I still do so today.  For example, Almost every day I perform a “risk adjusted return” analysis on potential debt and equity investments we’re contemplating.  The type of analysis I run is a modified risk adjusted return analysis based on an analytical technique taught to be in an advanced finance class by a Professor long since retired.  I find that other formulations of the risk adjusted return analysis either (1) are too simplistic (typically the ones available through an internet search or (2) are so complicated and require so exactly an information input determination that to successfully use requires an advanced degree in statistics or analytics (usually ones taught in “top ten” college courses or (3) are so poorly developed that they can’t be relied on within 3 standard deviations from the mean.  

The above is one specific example.  If you mean that a degree in statistics or”gender studies” may not be useful in a career as a sales representative, you might be right.  However, I’m pretty sure obtaining a degree in engineering is pretty useful for someone who is an engineer and having a degree in accounting and passing the CPA exam would be useful for someone in a career in public accounting. 

Further, it seems to be popular for a segment of the population to “bash” formal education.  And there are a million legitimate reasons for doing so.  College tuition on the US is too high by a factor of 2 -3; not because the government doesn’t subsidize it, but because 60% of the cost is for the college “social experience”, not education; Professors salaries for the textured ones have skyrocketed while class load has shrunk; and tremendous debt is piled on for “questionable” programs of study.  However, just as a new real estate agent/broker will acquire a solid basic education in real estate principles, real estate law and real estate finance by studying and taking classes for the licensing exam, other careerists will have two legs up by spending time acquiring knowledge before embarking on paid working career. 

Anyway, that’s my story and I’m sticking too it! 

 You mention a couple degrees that are necessary to work in specific fields (engineering and accounting). Those are among the few degrees really necessary to work in their associated fields. There aren't very many. Most degrees are a waste of time and resources. I say that as a former university professor.

 Eric, thanks for providing your input; the fact that you were a professor adds to the value of your statement.  Can you explain a little further or expand with more specifics? As I mentioned I finished my post graduate education 50 years ago, so my experience may not be so relevant in today's world, with so much of the information we received in college courses available on line for free.  I am very interested in your "take" on the subject. 

Quote from @Drew Sygit:

How much do you ACTUALLY learn in college that you CANNOT learn "on the job"?

How much of what YOU learned in college have you actually applied in your career?

College is mostly only about training to learn.

Drew, you seem to look a little young in your photo - LOL.
I guess everyone’s experience is different.  And since I finished school 50+ years ago, mine may have lost relevance.

But, my experience differs.  I actually feel like I learned a lot in college that would have taken me 15 years to have the opportunity to learn “on the job” IF I was even able to obtain the position to enable me to learn.  Further, not only did I learn numerous concepts, techniques, strategies, principles, etc that I used in my business career, but I still do so today.  For example, Almost every day I perform a “risk adjusted return” analysis on potential debt and equity investments we’re contemplating.  The type of analysis I run is a modified risk adjusted return analysis based on an analytical technique taught to be in an advanced finance class by a Professor long since retired.  I find that other formulations of the risk adjusted return analysis either (1) are too simplistic (typically the ones available through an internet search or (2) are so complicated and require so exactly an information input determination that to successfully use requires an advanced degree in statistics or analytics (usually ones taught in “top ten” college courses or (3) are so poorly developed that they can’t be relied on within 3 standard deviations from the mean.  

The above is one specific example.  If you mean that a degree in statistics or”gender studies” may not be useful in a career as a sales representative, you might be right.  However, I’m pretty sure obtaining a degree in engineering is pretty useful for someone who is an engineer and having a degree in accounting and passing the CPA exam would be useful for someone in a career in public accounting. 

Further, it seems to be popular for a segment of the population to “bash” formal education.  And there are a million legitimate reasons for doing so.  College tuition on the US is too high by a factor of 2 -3; not because the government doesn’t subsidize it, but because 60% of the cost is for the college “social experience”, not education; Professors salaries for the textured ones have skyrocketed while class load has shrunk; and tremendous debt is piled on for “questionable” programs of study.  However, just as a new real estate agent/broker will acquire a solid basic education in real estate principles, real estate law and real estate finance by studying and taking classes for the licensing exam, other careerists will have two legs up by spending time acquiring knowledge before embarking on paid working career. 

Anyway, that’s my story and I’m sticking too it! 

not sure I believe that 90% of millionares get there with RE.  

Anyone reading this post.  
Dont start with a large project.  Buy a house with 5 or 10 acres then split and sale.   Move up to 10 to 40 acres and split up into large lots.  Dint do small lots.   Then stay about the same size and then do small lots.  Start with a country subdivision versus a city one.  Go for rock roads and no water drain or septic systems.   When you move up to concrete roads and sidewalks.  Water drain and septic pipelines the cost almost doubles.  
Learn location value first before doing a large project.  Be on the side of town towards the next largest town.  Near a school or towards a rec area.  People line trees, water, walkouts, boulders.  Try not to pick flat farm ground.  Look for cheaper waste ground with trees, ditches which can be converted to ponds, sloped ground for walkout basements, views.  

Above all else make sure you have sweet ground water if in the countryside.  Good cell phone reception and internet. 

Quote from @Scott Trench:

@Bruce Woodruff

I think this is a good push. I'll give two putbacks to my prior analysis: 

1) The yield curve could invert, and the market brace, for even two years, if Trump credibly brings a candidate for Fed Chair who will lower rates regardless of what inflation data reads, or the markets expect to be extremely dovish. Even if the current Fed keeps raising rates, this will result in the yield curve inverting again, in anticipation of the new Fed Chair changing things. I think that Jay Powell has thoroughly proven that he has no political allegiance, and is singularly focused on attempting to remedy the massive err made in 2021, and that he has, actually, done the least bad job by a central banker in the world from 2022 to 2025 (*hot take!).

2) If Trump removes the threat of tariffs, inflation will stop, and he can do this immediately and at any time.

This only somewhat addresses the points in your take, which I completely respect, but also respectfully disagree with. 

I believe that inflation already picked up on the threat of tariffs, and it immediately changed some firm's behavior in pushing up prices for goods and materials that might be affected. 

I believe that, excluding "immediate deportations" of folks who cross the border and are immediately sent back, that the impact of deportations is small, and is largely isolated to the deportation of convicted criminals in jail or prison in mostly red states. I would be willing to bet on a version of that, and will, in effect, through my real estate purchases this year.

Also - to be clear, I am not arguing that the policies will be "good" or "bad" in a more general sense for Americans. Just that I believe that they tend towards an inflationary effect on non-housing goods and services, and a slightly deflationary effect on housing by reducing demand for housing.

Trump’s economic policies will trigger a deep recession. Prices/rents will go down in real terms, and possibly nominal terms as well.

Quote from @Joe Villeneuve:

Quote from @Scott Trench:

Quote from @Joe Villeneuve:

The CF mistake REI make is they think you can accumulate CF properties starting from the beginning. You can't, and you shouldn't. Even if you could (and you can) find a lot of PCF deals out there, how do you buy them? It's not like you have an unlimited source of DP's available to you, and buying all cash is foolish. If you think you are accomplishing something just because an all cash deal is PCF, it's an illusion. All you are doing is playing catch up to your cost,...you cost being the cash you put into every deal. That's your cost. The more you put in, the more you have to recover before the PCF is actually a profit. That's one of the big reasons to leverage. You can spread your cash out, and each property then accumulates CF to recover the same cash you might have used on one all cash deal.

Buying for accumulating equity is also an illusion.  The equity is actually what you are paying for the property.  It's a form of cash that is locked up and useless to you.  Those that say it has value, I'll give you all of my sports trophies I've accumulated over the years.  I'll even through in my daughter's.  They are both the same value.

The power of the equity is the PV it buys.  When you initially buy a property, ad 20% DP, you are buying a property that's worth 5 times what you are paying for it.  As the equity grows, it's diluting the power of that equity since it grows on a 1 to 1 ratio to the PV growth.  Remember, that equity started out as a 5 to 1 ratio.

Here's my take on the roles of CF and equity, and why I say you must have both:

Role of CF - To accumulate within a property to equal the cash you put into it. As long as you have PCF, this really means you have a clear property since the tenant is paying for the rest.

Role of Equity - To grow from appreciation to a point where the growth is equal to the original equity, thus doubling it.

When both things occur (order doesn't matter), I sell.

Banking only on either CF or equity is a loss.  You have to have both, and to say you can't just means you are looking in the wrong markets, and/or using the wrong strategies.

Why is buying all cash foolish? I think that, right now, it offers excellent risk adjusted returns. 

Thinking you are ahead with all cash deals are an illusion.  It's bad, very bad, math.
If you buy a property with all cash for $200k, and that allows you to have PCF of $1000/month, that means it will take you 200 months before you break even.  That's illogical.  
Thinking that you can focus on the equity as an offset is even less logical, and worse math.  The DP is the initial equity you buy.  Added equity comes from appreciation, which has nothing to do with how much cash you have in, or how much equity you start out with.  Added equity is gained from appreciation, which is based on the property value, which starts out the same, and increases at the same rate, whether you ny all cash or no cash.

YOu have math and then you have reality and personal preference.. We all know we can run math and what the math tells us.. but tenants dont follow our math projections. And banks dont care about our math projections and how hard do you want to work to prove your math projections.. Honestly my wealthiest clients and friends with 8 figure plus net worth have little to no debt.. I get it starting out but there comes a time if you can afford it and it works free and clear is just a great place to be .. I mean right now with the price of rentals 6% or so is in reality a levered cash on cash return.. equity grows at the same rate.. now granted if you wanted to you can have more props growing equity if you leverage them but your taking on lender loan risk.. At some point free and clear is just fine for many investors. Many props that are bought for cash will return 5 to 6% COC .. So as you age out how many cats do you want to herd . :)  5 or 10  or 30 to 50 to get to the same spendable cash flow.. And is that not what 97% of BP members want spendable cash flow so they can live their life on that cash flow ? No debt makes that far more attainable than massive debt.

Quote from @James Hamling:

Quote from @Jay Hinrichs:

Quote from @Joe Villeneuve:

Quote from @Scott Trench:

Quote from @Joe Villeneuve:

The CF mistake REI make is they think you can accumulate CF properties starting from the beginning. You can't, and you shouldn't. Even if you could (and you can) find a lot of PCF deals out there, how do you buy them? It's not like you have an unlimited source of DP's available to you, and buying all cash is foolish. If you think you are accomplishing something just because an all cash deal is PCF, it's an illusion. All you are doing is playing catch up to your cost,...you cost being the cash you put into every deal. That's your cost. The more you put in, the more you have to recover before the PCF is actually a profit. That's one of the big reasons to leverage. You can spread your cash out, and each property then accumulates CF to recover the same cash you might have used on one all cash deal.

Buying for accumulating equity is also an illusion.  The equity is actually what you are paying for the property.  It's a form of cash that is locked up and useless to you.  Those that say it has value, I'll give you all of my sports trophies I've accumulated over the years.  I'll even through in my daughter's.  They are both the same value.

The power of the equity is the PV it buys.  When you initially buy a property, ad 20% DP, you are buying a property that's worth 5 times what you are paying for it.  As the equity grows, it's diluting the power of that equity since it grows on a 1 to 1 ratio to the PV growth.  Remember, that equity started out as a 5 to 1 ratio.

Here's my take on the roles of CF and equity, and why I say you must have both:

Role of CF - To accumulate within a property to equal the cash you put into it. As long as you have PCF, this really means you have a clear property since the tenant is paying for the rest.

Role of Equity - To grow from appreciation to a point where the growth is equal to the original equity, thus doubling it.

When both things occur (order doesn't matter), I sell.

Banking only on either CF or equity is a loss.  You have to have both, and to say you can't just means you are looking in the wrong markets, and/or using the wrong strategies.

Why is buying all cash foolish? I think that, right now, it offers excellent risk adjusted returns. 

Thinking you are ahead with all cash deals are an illusion.  It's bad, very bad, math.
If you buy a property with all cash for $200k, and that allows you to have PCF of $1000/month, that means it will take you 200 months before you break even.  That's illogical.  
Thinking that you can focus on the equity as an offset is even less logical, and worse math.  The DP is the initial equity you buy.  Added equity comes from appreciation, which has nothing to do with how much cash you have in, or how much equity you start out with.  Added equity is gained from appreciation, which is based on the property value, which starts out the same, and increases at the same rate, whether you ny all cash or no cash.

YOu have math and then you have reality and personal preference.. We all know we can run math and what the math tells us.. but tenants dont follow our math projections. And banks dont care about our math projections and how hard do you want to work to prove your math projections.. Honestly my wealthiest clients and friends with 8 figure plus net worth have little to no debt.. I get it starting out but there comes a time if you can afford it and it works free and clear is just a great place to be .. I mean right now with the price of rentals 6% or so is in reality a levered cash on cash return.. equity grows at the same rate.. now granted if you wanted to you can have more props growing equity if you leverage them but your taking on lender loan risk.. At some point free and clear is just fine for many investors. Many props that are bought for cash will return 5 to 6% COC .. So as you age out how many cats do you want to herd . :)  5 or 10  or 30 to 50 to get to the same spendable cash flow.. And is that not what 97% of BP members want spendable cash flow so they can live their life on that cash flow ? No debt makes that far more attainable than massive debt.

Yes, this is 100% true and works IF (and it's a very BIG IF) one has the spendable cash to buy 5 properties free & clear. On average were talking $2,000,000.00 spendable liquid cash. 

For the vast majority starting out in REI, and on BP, that's not remotely realistic.

Most can't even conceive how they will ever have just $200,000 sitting around in liquid cash to spend. 

For a great many, getting to just $50k saved up liquid cash was an achievement that takes years. So to wait another decade+ to save up enough to get 1, just 1, is not viable investing strategy. 

So to use LEVERAGE, to grow a portfolio, to snowball appreciation, to Pyramid up portfolio size to get too 20, 35, 50 on leverage so they can shift strategy too Consolidation, selling down to achieve 5 Free & Clear.... 

That is the most realistic and viable path for the vast majority. Investing there way UP, via leverage, to a place in life where they have compiled millions in equity position so they can consolidate down to the "Dividend" phase of life. 

To the "Hiltons" of life who have $250k+ a year they can throw at investing.... Well it's a totally different thing isn't it. It's not investing anymore in the earning sense, it's more so a high interest savings account. They already "made it" via what there doing for active income. 

Again, a million kudo to them, double high-5. 

But they are the ever so rare few. The vast majority are not there and don't have any prospects of ever having such. 

And for that majority, there is hope. It will take more work, more time, more intention of actions and yes more leverage. Leverage is how they can "hack" the math into there favor. So they can achieve WEALTH. 

Those who already start with wealth, it's not about creating any more it's about preservation and that is a totally different picture of things, right. 

There is no 1 universal path for all. It's about path's custom tailored to the persons. 

Most are in the rat-race, grinding it out in there 9-5 with no light at end of the tunnel and that is why they look to REI, for hope, for light at end of the tunnel, for there way out of the rat-race, for wealth creation not preservation.

The preservation comes after you have it to preserve. And 6% wont create wealth unless one lives a Vampires life of millennia in time scale. Most got maybe 30/40 years if not less to get from next to $0 too "retirement". 

fully agree starting from scratch with limited funds debt is mandatory no question. But as Scott is pointing out for others that can buy with cash that works to.. And as know about 40% of all SFRs are free and clear and thats got to be goal number one for your retirement years in my mind.. and to be fair and balanced like Fox news.. those i know with 8 figure or more net worths generally sold business they spent decades building they did not get there buying SFR rentals.. Or as you note high wage earners. There are millions of amreicans than make well over 500k a year in salary and commishs.. And a lot of them watch Bp but dont post.