All Forum Posts by: Austin Fruechting

I would pass as well unless they can be raised, which would obviously be a significant cost too.  It would be a deal breaker for way too many people whether selling or renting. 

@Jason Eberhardt

I own 107 rental units in Leavenworth/Lansing with another 32 under contract.  I've been looking in KC for a while now, and the only place I can match cash flow returns are in shady areas of KC.  So I keep investing up in Leavenworth. 

The property management company to use is Echelon Property Management.  This is actually a company I started because I didn't trust the managers at the time.  I then approached the current owners about buying it because I thought it would be perfect for them and they would do great.  

I don't know how much you have, but that seems pretty reasonable.  I spent ~$5,500 this year!

With your medical going up a lot in a couple years, I would focus on acquiring more that cash flow. Potentially if you focus on purchasing more, you could have your entire medical expenses covered by the cash flow, and be building more wealth by having others paying multiple mortgages for you. Seems like that would be a win all around. 

I've used my LOCs for the downpayment and rehab properties when BRRRR-ing.

For a single member LLC you can probably just get a basic state specific operating agreement from a place like legal zoom and file the articles of organization yourself on the state's website for a couple hundred total.

For your existing properties, a title company can switch the deed for a fee.  Just make sure to talk your bank that holds the loans that they will be ok with that and not call the loan due. 

If you were going to be doing a partnership I would definitely utilize a lawyer to set it up and $1,000 would be very reasonable.  

It's all trade-offs and finding balance.  Make decisions and budget cuts in areas that didn't add happiness to your life.  We drove old, high mileage cars until we hit our goals. We were conscious of spending in many areas like that, but wouldn't second guess spending in areas that did provide additional life satisfaction and happiness. 

We loved to travel and would do major trips.  I also love cigars and my wife likes to try out restaurants.  We spent money on those things even though we could have moved a little bit quicker along our investment journey had we not.  

In 2013, I was in a car wreck going 65 mph and was lucky enough to walk away. I know that anything can happen at any time and know that tomorrow isn't a guarantee.  Make the tradeoffs that don't add to your happiness.  Work towards your goals, but don't trade away all your life satisfaction now for the promise of having it all in 8 years, because you may never see that day. I would rather take 10 years to reach our goals and enjoy ourselves along the way than get to our goals in 8 years.

Here's how serious the wreck was that could have easily been the end of me...

I'm just curious how you are calculating $500 cash flow after all expenses and payment on $1200 rent. 

I like the BRRR strategy and holding. However, I'm hard pressed to think you'll be getting $500 cash flow on $1200 gross rent. What loan amount and terms are you getting? Can you post how you're coming up with that number?

Originally posted by @Roy N.:

Originally posted by @Austin Fruechting:

I think that cap rate and NOI for underwriting should be the long term average of expenses especially since I'm a long term buy & hold guy... and that number will usually look much different than the 12T P&L... so I agree and disagree, LOL. I fully agree with this last paragraph.  This discussion, even if I'm wrong, is of good benefit for anyone looking at investments to realize all sides of analyzing a property and to rely on their own analysis for their goals.

Since you are going through the effort of performing a discounted cash flow analysis out X-periods/years and are a long term buy& hold guy, why not ditch the affliction of CAP - even the lure of trying to calculate a stabilized CAP over a vector of inputs - and look at an internal rate of return {M}IRR or FMMR (pict your preference).

My driving factor has always been cash on cash return much more so than CAP, however a CAP based on long term average NOI can provide a quick comparison/benchmark and indicator of cash on cash return.