All Forum Posts by: Jacob Sampson

I don't do inspections, other than the ones my handyman does for me.  But, you likely will have to pay for appraisals on all 6.  Guess how frustrating it will feel when you pay $2400ish to have the appraiser tell you that your properties are worth, to the penny, exactly what you agreed on, with the seller.

I can tell you, there is NO ONE better than me at offering EXACTLY what the appraiser comes back and tells me it's worth.  I literally, somehow, know the number before he even steps in the house.  It is uncanny.  It's also disappointing that after 11 years I haven't figured out how to pay less than what a property is worth, either.

 That's funny, I see so many similarities, as well.  I have been writing a little paper on the idea, that is how I crystallize ideas, in my head.  Here are some of the principles I think work for both.

1. Play within your bank roll.

If you have to get too creative then you probably aren't prepared for that level of play.

Master your current game and build a large enough bank roll so you can tip toe to the next level.  There are tools you will need to be successful at the next level that you aren't aware of, yet.

2.  It's more important to protect your downside than it is to maximize your upside.

Rarely, if ever, put your whole bank roll at risk.

Pass on marginal deals.

3. Nothing protects you from a bad run of cards like a big pile of sweaty cash.

Have cash or get cash as quickly as possible.

4. Emotion of any type is bad

Don't get excited about deals or disappointed when they don't happen.  All emotion (around real estate investing) is bad and will lead you to making mistakes.  It's just about the math.

5. You can't hang with the big boys (whomever they are to you, this is a relative term).

You can't make the same moves as the big boys, they are evaluating deals and taking into account variables that you don't even know exist.

They have tools in there inventory you aren't aware of, they can exit deals easier and with less loss than you and they can turn marginal deals into better ones.

Warren Buffett purchased shares of banks during the crisis.  If you had done the same you still wouldn't have gotten the same deal.  He had the ability to get himself a preferred dividend for his shares that was far higher than you were going to get for yours.

6.  If you are in it for the excitement, your playing wrong.

This business is a long-term grind.

7. No matter how successful you are or for how long, you aren't in control of as many variables as you think you are.

Sorry for the bad formatting and unintelligible stream of conscience ramblings.  Those are some rough ideas that I have been playing with, in my head, lately.

Not unlike AT&T, the only fans of PMs are PMs.

You get a PM when you are tired of making a profit.

@Joe Villeneuve has this game figured out.  I concur with all of his thoughts, though I only read about 60% of them.

Oh, and no area is going to appreciate 4%-5% long term.

No cash flow = no way.  That just means there is too small a margin for error.  I would never buy for appreciation, I buy for cash flow and nothing else.  The rest is just icing.  Especially if you are planning on buy and hold.  If this is flip then appreciation doesn't come into play. 

I am still a fan of always buying with cash flow in mind.  People talk about always having multiple exit strategies.  Great cash flow allows for many exit strategies.

Remember, this is a business, not unlike poker, of making decisions with incomplete data.  You want to make the decision that stacks the odds in your favor.  Equity, cash flow, location, quality of home are all things you want on your side, to stack the odds.  To me the most important two, are equity and cash flow, don't pass on either of those. 

Robert, I solute you for being able to save an emergency fund.  That sort of self discipline is what this business requires.  I suck at it, if I have more than a couple grand laying around I am immediately looking for a property to spend it on...my poor wife. 

Pet fees = income just as pet damage will = expense.  Similarly, if the tenants do $100 in damages to the property that you have to repair, upon them moving out.  $100 of there deposit will become income and you will refund the rest.

@Zac C.

Based on the information I can glean from your post and your profile, I chose option #1 and here is why.

I'm assuming as a contractor you are a reasonably handy dude, I think this is an advantage and you should capitalize on any advantage you can.  Option #1 lets you find a home that you can purchase under value, repair it (using your skills) and then rent it out.

Certainly you can put your skills to work on the other options, as well.  But I think it is important to step into the business slowly.  Get your first rental, maybe don't refi for the first year.  Learn how to landlord, find out if it's something you really want to do.  Then, if you decide you still want to, refi and go!  You will be moving forward with real experience.

The idea of leveraging up as much as possible is just gambling, it assumes we have more control over the myriad variables at play than we really do. 

Finally, as you are getting advice, I would take, with a grain of salt, any advice from people who have been investing for less than 10ish years.  Because, it means that all of there experience has taken place within a rare run-up in values following a rare tanking in values.  There is absolutely know way to know if their success is based on their knowledge, talent, and skill or if it is based on the fact that a rising tide lifts all ships.

And, by the way, that includes me.  I have only been investing since 2005.