All Forum Posts by: Jacob Sampson

Yes.  With a side of visit with the seller and find out what they REALLY need.  Put it under contract when you know what it's worth and can get it for significantly less than that.

Step 1.  Get a job.

Step 2. Prove that you can maintain that job for multiple years.

Step 3.  Save excess income.  Big piles of sweaty cash is the key.

I will be out of town this weekend, father-in-law getting married...ugg.  I am genuinely interested in a regular get together, though.

Just record the meeting and convert to podcast...no biggy.

I would not view rent as throwing money away any more than you will be throwing money away on your personal residence.  If in fact your market is in a situation where people are coming in and offering 20% over asking then be patient, that isn't going to last forever.  You want to buy when everyone is selling not when there is a feeding frenzy of buyers.  Didn't we learn our lesson in 07/08?

Other than in abnormal locations and periods of time your personal residence is losing you money, also.  It MAY be slower than renting but it's still a loss.  Appreciation is not going to beat out interest, insurance, taxes, and maintenance.  it just isn't going to happen in 99% of the areas.

@Kory Clark

I think that is a great goal.  A lot of it depends on what you need to "retire".  If you can live off $3k/month then that is significantly easier than if you want $20k/month.  Like any form of self employment, you need to have enough cash in your business for the lean times and enough cash personally for when the business can't pay you the income you need.  Large piles of cash is the answer to all problems.

I do think that by most peoples standards, yes I am conservative.  The other thing that slowed me down was the frst 4 or 5 years we had no plan or goal.  We would buy a property and then may not buy another for 2 years.

Before I will consider a property I calculate monthly rent - 30% (vac&maint) - PITI (on a 15 year note) = cash flow. That cash flow must be 12% CoC ROI. Those sorts of deals aren't laying around all over the place. I have and advantage in that we live in an area where a 3/1 home in a B class neighborhood can be purchased for $55k and not need more than a grand or 2 to be in rentable condition. That means that every $11k-$15k I get can buy another home.

We are at 16 units right now and purchasing about 3-5 a year so I would imagine we will hit our goal some time next year.  We should have the whole group paid off 5-7 years later.

Without a doubt. REI, especially buy and hold, is a grind. It is a business of time and quantity...and time. For me it's genetic, I can delay any benefit from REI for years and years, without a thought. So far I have been investing for 11 years and never taken a dime personally. I'm not sure if that is the norm but I am just fine with it.

My business partner and I look at it in phases.  Both of us are lucky enough to have solid jobs so consider ourselves in the acuisition phase.  All excess RE cash and all extra W2 income goes into growth of the business.  At the point we reach our goal of 25 units we will switch into the buy down phase.  We will pay off the property we own and this will give us the option of quiting our jobs if either or both chose to.

That being said, it's only one of many ways to do it.

If you are going to actually quit your job then I think you need to have a LARGE bankroll to float the downtimes.  I am horrible about saving a bankroll.  Anytime I have $10k saved up I emmediatley begin to look for another home to buy.

The 50% rule is one of many rules you can use to do a quick and dirty assessment on properties.  Not all areas provide true long term cash flow.  In fact, most don't.

In time you will develop your own numbers. For example, I do Rent - 30% - PITI (15 year mortgage) = reasonable expectation for long term cash flow. based on that calculation the cash flow needs to be a minimum of 12% CoC ROI.

Based on the bit of info provided the numbers look solid.  Even solid enough that I would be looking for a gotcha.  I'm assuming this may be a C or worse area?