All Forum Posts by: Jeff C.

I avoid trying to strike a deal with anyone until the project is nearly entirely done. I don't need someone else who feels invested in the project "checking in" on every little thing being done and offering their perspective. I know what needs to be done to the property to make it marketable. I don't want to deviate from that for anyone, lest that person should disappear for one reason or another. Deals have a way of falling apart. If I have someone interested ahead of time, I usually get their info and tell them they'll be the first person I call when the project is complete so they can come by and have a look at it.

I think there must be some organization that has this canned business model ready to go and approaches people who have names / followings and offers to implement it for them, given the near absolute uniformity in the advertising, and the convention / sell / upsell structure with all the exact same sales tactics, just substituting out the guru for the flavor of the week.

Simplisafe is where it's at. It's an unwired system and works over cell signal, so there's no need for phone or internet service to be on at the property. There's no contract commitment, and you can easily monitor everything online or from your smart phone. You can also easily change the address each alarm is assigned to. I have a number of their systems and move them from house to house. It takes me about 10-15 mins to set one up or take it down when we close. The downside is customer service can be a pain to reach if something does go wrong (not the dispatch people, theyre always around), but for the price, I haven't found anything competitive.

For REALLY bad areas though, I'll have someone stay in the property. There are some areas that are just so bad that even exterior features of the house are in danger at all times. Plus, generally someone has to kick in the door or break a window before an alarm goes off, and that's something to repair.. and sadly in some areas that will happen about every other day if nobody is in the place.

What constitutes smart strategy depends a lot on what the return is on the alternative investment you could make with the cash you're stuffing into equity on the rental. If the interest rate on your mortgage is 5% and you've got a reasonably reliable alternative investment you could make that will net you 10% you're losing money by using that cash to pay down the rental. Having a few paid off rentals for years and doing fix and flip deals for years I noticed that I was making about 6-7% net on the former and 25+% on the latter. I ditched the rentals all together, rolled the money into my fix and flip business and saw a big jump in my income. This of course came at the price of being a lot more active.

I guess that was a really long indirect way of answering the original question. What would I do with $275k? Fix and flip deals.

Hey Jason,

I was lucky enough to be laid off from my job in 2010. Turned out to be the best thing that ever happened to me. At this point I make nearly monthly what I made yearly then. I too had been doing some buy and hold investing while I worked there starting in 2006.. and I felt a layoff coming on long before it actually happened and started saving all my pennies. It took about a year or year and a half longer for me to get laid off than I anticipated. I survived two or three rounds of layoffs before the one that got me. That gave me some additional time to save cash. Now it was time to figure out what to do with myself.

After a lot of studying and a number of dry runs I picked up a property at trustees sale, and had a friend committed to buying it almost immediately, before I had even finished evicting the current occupants. As soon as they were out, we closed and I made something like $20k (and I had actually given my buddy a great deal). Not life changing but enough to let me know that there was something there. It was proof of concept. I did a bunch more deals over the next couple of years, moving up to two or three at a time, but at that point I was doing most of the work myself.. which assured the profitability of each deal but put a pretty low cap on the number of deals I could handle at a time. It was clear it was time to start stepping away from the hammer and nails part of the business. 

Hiring out all the labor greatly increased the number of deals I could handle, and I pushed it up to 6-7 at a time. Comparing the 7-8% net return I was getting on rental properties VS the 25%+ annualized returns I was seeing from the flips convinced me it was finally time to bring the money home and roll it into the business. I had been reluctant to put all my eggs in one basket, but the returns were just so much higher doing the flips that I just couldn't watch my capital languish like that anymore. I also finally had real confidence that I knew what I was doing. Divesting myself of all my rentals gave me the capacity to do about 11-12 deals at a time, and I started feeling like I was really making money.

I don't know if this will last forever (it certainly isn't getting any easier), but I'm in a much better financial position to weather whatever comes now than I would have been had I just grabbed another menial job and relied on the small amount of passive income that my rentals were providing. If I do want to go back to rentals, I have a heck of a lot more cash to buy them now (and I probably will again at some point when I don't want to be quite so active and / or want to diversify). 

Plenty of "mentors" do seminars. A seminar is an event. A mentor is a person. Do you know the difference? The seminar is where one usually gets sold on the very expensive mentorship program. I'm not saying this is how you operate.. not at all, but to say that this isn't going on en masse is to just be intentionally obtuse. To say that most of these guys make their money from REI and not education is also inaccurate. Anyway yes I understand why one would have to charge for education, in fact I said that an education that would actually do any good would be so expensive as to be astronomical because of the amount of time that a skilled active investor would have to divert from their trade in order to do it. As an aside, I have seen you posting on a number of these threads regarding education.. but I've missed the ones where you're talking about the deals you've got going on.

It's difficult for me to imagine a real estate investor who is truly successful to the extent that they should be teaching classes on the subject ever being interested in doing so. It would take a heck of a lot of time and instruction to even begin scratching the surface of what it would take to make someone self sufficient in identifying and carrying out deals. That's time that this smashingly successful investor mentor could be putting into doing the deals they're so great at.. meaning that education would have to be astronomically expensive if taken in a large enough dose to do any good, and from someone truly qualified to administer it. I know you certainly couldn't get me interested in mentoring someone for $10k. I'm not sure $100k would even get me excited. To make a true difference this is a process that could take a year or two or three. Nothing spewed at you over the course of a three day seminar is going to appreciably improve your real estate investing acumen so your money is probably better spent getting yourself into a deal. As Warren Buffett himself once said, "There are certain things that cannot be adequately explained to a virgin either by words or pictures." Simply talking about deals forever won't get you paid.. unless you're a seminar giving guru.  ; )

What are you paying for your property management in the St Louis area? Leasing fee, re-signing fee, monthly management fees, etc? I'm considering getting into some buy & holds there and I'm trying to line out my costs.