All Forum Posts by: Austin Fruechting

@Rich Hupper - nope. The math was so clearly in favor of real estate I don't feel the need to headge against it (especially since I'm a cash flow investor that doesn't care about appreciation at all)

@Jon B. - no guru programs, just a lot of books. Any and all. I've read at least 20. Pull little bits and pieces from each to create a system that works for you, your goals, and your market. 

 It's only risky if you don't know what you are doing.  I've used short term debt and credit cards before to make a deal happen and didn't feel it was risky because I truly knew what I was doing.  Do I recommend that to others? Not usually, but if you know enough, it's not risk.  

I'm conservatively aggressive.  I know my stuff.  I run all my numbers more conservatively than what I actually think (such as I run average monthly expenses when calculating cash flow higher than I actually think they'll be, I've run many remodels and I always factor high on the costs, etc).  If the deal is still a great deal I would be super aggressive and do whatever it took to make it happen. 

 I'm not concerned at all

1) My properties are already old and I have big cap-ex all the time.  My numbers factor a very high expense ratio that is representative of that. So my expenses should only go up along with inflation.

2) Inflation also helps.  Say it's year 18 of the 20 year mortgage.  My rents are now whatever 18 years of inflation puts them at.  My payment is still the same as when I started. 

3) 20 years from now:  not only have I had inflation to increase the rents, all mortgages would be paid off.   You can imagine how much I pay the bank every month. 

So I don't see a concern at all given those things.  Even if all that weren't enough, I've stated a few times in this thread that I will continue to search for deals because I enjoy that. So I'll have more anyways, but it wouldn't be needed IMA (in my analysis - lol)

@Account Closed - just keep trucking!  If you want some real encouragement on that issue and to see the snowball affect:

THE EXPONENTIAL POWER OF REAL ESTATE - (a post on my blog) I go through that and why it may seem discouraging with your first and you'll goals may seem very far away, but this explains how it really starts moving 

@Greg Moritz - it didn't change things too much, but I owned a little retail business so I had some flexibility. The reason I got out when I did was that was the time I found a buyer for that business. Even though I seller financed most of it, it was still tough to find a buyer. So my getting out of my day job was more about just having to seize the opportunity when it was there as opposed a need for more time in REI.

If you have a good property manager, and good systems on your side, it's pretty easy. Again, I spend on average one hour a week to stay on top of 107 rentals. The time is just in doing the deal, but that time becomes less and less with experience. If you're doing BRRR you'll need an excellent GC or project manager that you don't have to babysit as well.

@Eric Kindall - that is super open ended.  I'm starting up a blog (goodlifeinten) to try to share what I've learned and that will take a long time to get it all out on paper.  There's a lot of posts there now if you want to check them out.  If you have any specific questions I'd be happy to try to answer. 

@William R. - I am VERY selective in who I partner with.  I never sought out investors, they have come to me.  We line every possible thing out in the operating agreement and discuss exactly how everything will work and operate well in advance.  If I don't think I would get to run things my way or I get a hing that there may be a personality conflict, I would pass on them.  This included telling a high net worth guy that was wanting to do several $3-5mil apartment complexes that I didn't want to partner with him.  

No amount of money to me is worth dealing with people I don't want to deal with.  That mismatch came to light when I had just put a portfolio deal for just over $2mil under contract.  Took it to him, he was interested but I didn't like how he handled the meeting, so the next morning I told him thank you for your time but I'm not interested in partnering with you.  I didn't know where all the money was going to come from without him, but I wasn't worried. 

No never sued.  I rarely have to meet with partners/investors.  They get periodic updates and checks with reports every 3 to 6 months.  

AVERAGE HOURS PER WEEK?  Including the reports for investors, end of year quickbooks stuff (accountant does actual taxes), and the monthly upkeep... no more than an average of ONE hour per week.  

@Eric Delcol - Mutual Savings in Leavenworth KS - most of my properties are in the Leavenworth/Lansing area - just under a 40 minute drive from downtown KC

@Drew Eldridge - I'm working on a blog called goodlifeinten to help others.  The wife and I will do a lot of traveling, hiking ,and exploring.  I'll keep looking to put together deals.  I love that part. But I can do that from anywhere with a computer.  Retirement certainly doesn't mean you cease being productive! It's just that you get choose what you are being productive with.

@Michael R. - Sure man.  As far as our budget, the nice thing KC is relatively cheap.  We have a house we love in walking distance to a cool bar and restaurant area (Westport for those familiar with KC).  All in with utilities and repairs under/just at $2k per month. 

Then of course there's cell/internet/gym membership/insurance/wife's haircuts/etc all the other closer to fixed costs.  $1k per month

All the variable stuff we talked about if money didn't matter, what we do and how often, then calculated.

We love to travel.  We've done Iceland, France, Germany, Ireland, Mexico, and a good amount stateside.  That's something that was important to us.  Even though we could have bought more properties, you still have to enjoy life! So that was one trade off we did not make.  (a big trade off was up until January I had a car and a work truck.  188k miles on my car, 203k on the truck.  So I had 107 rental units and my vehicles both had about 200k miles)

Ok, so back to the travel... we talked about what type of travel, how often, etc we'd like to do.  Then tried to figure out approx cost of that.  We plan on one extended international trip a year, or two shorter ones, plus a lot of overloading to places to hike and backpack stateside (in the process of building my rig).  We came up with $1500 per month over regular expenses 

Grocery budget; $600 a month - we know that's the level that we don't have to think about prices.  We want to be able to cook whatever we want.  If we want to cook steaks multiple times we can.  

We're just at $5,100 right now.

I'm a big cigar nut - so let's say $300.  My wife likes wine, I like bourbon and beer - another $300. Entertainment (things like concerts/chiefs games/etc) $300.

Eating out - we like to eat out and try new restaurants, and drinks with meals - $1k.  We figured up to 3 meals out with drinks and tip, average $80 per meal.

So there's $7,500.

I can't think of anything else I'd want to do that costs money. And I shot high on the numbers, I don't think we will average that much. I calculated conservatively just like on my REI ! lol