All Forum Posts by: Gregory Schwartz

@Chris Seveney Assuming a newer investor. What is a realistic amount, $25k-$100k? Let's say someone is looking to scale a portfolio of single-family or small MF, long-term rental. Value add, so BRRRR type of model.
What kind of track record do you look for?

"Am I Experienced Enough to Raise Outside Capital?"

This question crossed my mind recently after reading a post and some comments discussing whether an investor is experienced enough to raise capital from outside sources. It got me thinking:

In your opinion, what are the minimum requirements someone should meet before raising money from investors (beyond family and close friends)?

What skills, experience, or track record do you think are essential to successfully and responsibly raise money from others?

Late rent plus lease violations. For me, that's a non-renew. 

But I have to ask, is this unit attracting this kind of tenant? 

 David thanks! 

 Why? Cash flow is great when your houses are paid off and you're ready to retire. But what does $200 a month do for you? IMO cash flow provides a way to mitigate the risk of unexpected expenses and loss of income due to vacancies. Cash flow is the buffer between keeping my property long enough to get rich and losing the property in foreclosure. 

So no the question is how much buffer do you need? Well if you ran realistic conservative numbers for maintenance, capex, vacancy rates, rental income, etc then you don't really need cash flow do you? The buffer is built into the conservative analysis. 

So as @Melanie P. said, any positive cash flow is enough. 

Lastly, if you want cash flow so you can quit your job then you might want to consider strategies like flipping, Airbnb, property management, and being a real estate agent. Because if you need to live off the cash flow what you're really looking for is a business. 

Congrats! Thats a solid deal!

If you're in it for the long run you'll learn that management makes a good investment into a great investment. I didn't put enough emphasis on these early on;
1. Quality of the tenants
2. Not accepting lease violations
3. Turning the property quickly (you have to run it like an F1 pit crew)
4. Avoiding accessive PM fees (personally I recommend most people self-manage)

These will eat away at your ROI. The difference between a 12% return and a 16% return compounded over 20 years will make you sick to your stomach.

In my market, we're seeing a shift from a pre-agreed upon % to provide to a buyer agent to sellers offering buyer agent compensation but leaving it up to the buyer to request how much. 

To make taxes easier we set up a business checking account and had all the rent paid into that account and all the expenses paid out of that account. This helped our CPA know exactly what transactions related to the house. Its also a good idea to keep any receipts (I use a google drive folder, they have a scan function that makes uploading receipts a breeze)

@Sam M. Great question. The world of commissions has changed lately and here in Texas they keep us on our toes by rolling out new contract forms monthly. A few things to know:

- The seller will pay the seller's agent whatever they have negotiated. I don't see a scenario that you'd be paying their agent 

- There are 4 ways your buyer's agent gets paid (at least here in TX):
  1. The seller pays extra compensation to the listing agent who then splits it with your agent (this is the way most transactions were done before 2024. We now use a form call the "Compensation Agreement Between Brokers for this. Ask to see this form before you submit your offer)
  2. The seller directly pays your buyer's agent. 
  3. The seller pays you via seller concessions and you use that money to pay your agent
  4. You pay your agent at closing (think of it as an additional closing cost) 

Depending of the situation and of these options can be used by you and your agent to negotiate with the seller. Your buyers agent should be asking if the listing agent or the seller is offeringd buyer's agent commission split. Sometimes they have a pre-determined amount they are willing to share, sometimes they say they are willing to pay but the amount must be negotiated. 

You want to look at paragraph 12 of the Texas purchase contract, called the 'One to Four Family Residential Contract'. This is how you ask for the seller to pay your buyer's agent commission via the offer. 

Some agents are struggling to understand this new way of negotiating for commissions. If your agent can wrap their head around this you might want to look for new representation.

Good luck!