All Forum Posts by: John Blackman

The waste water lines run down every other street.  The line services the north and south side so you only need one line for every other one.  Unfortunately we are on the side of a lot that doesn't have a sewer line, so we need to go through the south half of our lot which is our neighbor.  So the city would run a new line down our street just to service us.

Oh and if anyone tapped into it in the future, we would not be eligible for any cost recovery.  It would now be a public line at our expense.

We haven't.  We are still trying to get the neighboring lot owner to cooperate.  Even cash doesn't seem to be working.  Before long we may have to go through a Service Extension Request at which point we may pursue litigation against the City of Austin as well.

Working in the business of new construction is a great place to start.  General Contractors know the ins and outs of building a new home from start to finish.  See if you can find a mentor.  The real world knowledge is always practical and can help you determining what to build.  If you show initiative and then follow through, most GCs will be happy to have someone help them out in exchange for knowledge.

For my first new construction build, I simply hired an experienced builder and financed the project.  I watched the projects and the books closely.  I was a real pain honestly looking at everything twice.  As I gained knowledge I became less of a pain to my GC because I knew what to expect. 

Tagging along in another project is also a great way to learn.  Ask who is running the project and absorb all you can.

ALWAYS buy title insurance.  ALWAYS.  The property may even be harder to sell without it.  You never know what can turn up and you want to push that risk off onto someone else.  Most investors spend a lot of time looking at the dollars, and they should, but many don't pay as much attention to the risk as they should.  Managing risk is in my opinion more important that going after dollars or yield.  Making less is better than a loss.  One bad deal can sink 10 good ones which is what happens if you aren't managing your risk.

Title insurance does just that!

Keep in mind your return on investment.  I have a college education in Computer Science which allowed me to generate some seed capital by working for a software company.  While I don't use that skill set exactly in my real estate business, it does provide me the ability to develop web sites and software for our business which is a key component. 

Having a degree is more than just the technical skills that come with it.  It can teach you how to focus and meet deadlines which is important in any business.

That being said, knowing how to manage a budget in a spreadsheet is the core of what you need to be able to do to be successful in real estate transactions which I don't think requires a degree. 

There is of course the marketing component, lots of legal water to navigate, and if you scale your business finance will certainly allow you to create more creative ways to get deals done and manage larger projects with creative financial instruments.  So I would probably pick a finance degree as the most relevant because it will help you scale and grow the business to more than a handful of deals per year.  The other skills can be hired out.  Finance can too, but understanding the financing will give you a lot more power in your transactions.

@Chase Dunlavey 

Another thing to consider when investing in over seas real estate is the exchange rate.  If you look at the Columbian Peso versus the US dollar in just the last 6 months there has been a 25% devaluation of that currency in that time.

http://www.exchange-rates.org/history/COP/USD/G/180

So if you are making 25% returns in value annually and loosing 50% annually in the value of the currency, you are actually loosing money.  Countries with autocratic governments like Columbia as especially prone to this kind of risk.  Make sure you are normalizing your valuations back to a standard currency like the US dollar to see what your real returns are.

Isn't BP great Chase?  These few posts have probably saved you several hundred thousand dollars and mountains of headache.  I love the informed responses I always get on this site.

All of the above advice is spot on in my opinion and I will add just a little more.  Grow slow.  You are in a precarious position because you are sitting on top of a lot of cash without a lot of experience so you have a lot to risk and a mistake can be very costly.  It generally takes a very long time to build wealth, but it can be lost very quickly.  So instead of executing your master plan all at once, try a lower risk investment and manage it for a while.  You will learn what you like, what you don't, and how to run that business with a lower amount of risk.

Once you have one rental up and running successfully, you will be far more empowered to purchase the next under better terms and conditions.  So you will bring a lot more experience to the table as you escalate your investment amounts.  Don't feel pressured to put all of your cash to work at once if you don't know how to invest yet.  A few percent in a bank may not sound like much but it's better than a loss.

For your puppy farm, you may be better off just purchasing the land/property you need to run the business.  You can deduct a lot of your expenses this way and dial in your month expenses based on how much you want to borrow.  You will also avoid the landlord issue.

If you can make $25k for a batch of puppies, you just have to 4x your biz and you would have a sizeable income.  I don't know anything about that biz or how hard it would be to scale.

You could also consider being a passive investor for qualified promoters of which there are plenty on BP.

It's a great tool, we use that to map all of our listings on inner10capital.com as well.  I'm going to look into this to see if the controls have been upgraded.  Thanks for the link.

A new LLC is about $300 in Texas. You can set them up yourself pretty easily from a Secretary of State point of view, but you'll need operating docs which may be a few hundred bucks depending on the lawyer.

I've never tried to move a company from one state to another.  You will be creating a new tax ID of course and even moving a company to Texas may be the same as just starting a new one.  Consult a lawyer, I am not one.

There aren't any hard and fast rules.  You can come up with whatever seems fair to you.  A simple solution if you're willing to do the book keeping is to charge an hourly rate for the time and pay for it out of the proceeds of the sale.  Although sometimes projects can run long, so a fixed management fee may be more appropriate.