All Forum Posts by: Jonathan Greene

Your goals change. In the beginning, it's all about buying more deals with not much capital and frankly, maybe that's not the worst thing, because you learn a lot. Probably even more from the bad deals..

Long term you are better off with better real estate. Financially, but also mentally. Fortunately, I was thinning my herd back in I think 2014 or so by getting rid of a few (experimental) investments in cheaper neighborhoods. They were not terrible, some people would call them C minus, and it wasn't even that much about financial considerations at the time (appreciation was not a thing back then in Milwaukee) but just not what I wanted to own or manage, so I sold them to them tenants - after quite a bit of financial coaching to get them to qualify for a loan.

My standard advice is always to buy the best quality property you can afford. Cheap properties in Milwaukee are fools gold (especially for OOS investors, people literally will scoff at a rough listing and then someone will say: eh, someone from CA will buy it..) The problem is these homes are 60-120 years old and because of the low value neighborhoods, nobody has ever made any capital improvements beyond duct tape. You can kick the can down the road only so long, at some point capex exceeds cash flow.

Also, stay away from weird properties. Don't buy a 2br/1ba without a basement and no garage on a corner lot next to the scrap yard, just because it's cheap and the seller is motivated. That will be you one day.

Your future self will thank you (in 10 years).

@Jonathan Greene  Agree 100%.  I do a procedure every year at tax preparation time.  I evaluate the performance of every income generating property that I own.  I call the process "thinning the herd", and each year I evaluate the property performance and either take actions to increase the individual property performance or sell the under performer.  For example I sold 2 properties in the same town that was more than 30 minutes away, just because of the travel time to get there and return.  Another time I sold a property that had no off street parking, because tenants didn't like not having no place to park their cars except the street. This resulted in longer times to re-rent and well as reducing the rental pool. The effect of this process is that the portfolio is constantly improving by retaining the best properties and jetison the under performers.

I've bought and sold over 1,000 properties, and people always ask me "How many doors?"  Honestly I never know precisely, as I'm constantly buying and selling, and frankly I neither know or care. I bought a house last week and am selling a house next week, but I don't know how many doors I have today, unless I effort a count.  Its either "enough" or "too many" depending on what's going on today.  But truthfully I don't know!

Unfortunately there's a ton of online content teaching novice investors that reaching XYZ number of doors equates to financial independence. Meanwhile that guidance pushes many investors towards purchasing in areas where they do nothing but accumulate terrible assets solely because they are inexpensive. Sadly these tend to be some of the most difficult properties to sell. 

Love it. I just went through a similar exercise. Just this week I created a spreadsheet for my portfolio with estimated equity for each property. I also have columns for cash flow (true cash flow after historic avg expenses) and the most recent month's debt paydown. That allows me to show ROI from both a cash flow perspective as well as total ROI (cash flow + debt paydown) when compared with the estimated equity.

The results were eye opening... there's a few on there that I'm likely selling off as a result of that exercise and a few others I'm going to do a cash out on. I'm not done with my estimates yet but I'm likely coming out a couple to a few thousand ahead per month when I'm done repositioning everything. It was definitely worth the time investment.

For context, I own two SFR:

Find a reliable and affordable handyman
Pay an extra 5k down on my highest mortgage rate (8.5%)
Rebuild cash reserves
Max out 401k and ROTH IRA
Improve my operational efficiency especially with bookkeeping.

Goal is to eventually end up with one property for each kid to help them get started when they start family formation. I would like to purchase the next property in about 5 years.

This is an excellent post. Should be read, and understood by all. REI is about collecting dollar$, not properties. If you want to collect properties, there's a much cheaper way. Take pictures of all the properties you like, regardless if they will make you money, and regardless of the cost. Transfer these pics to your computer. Then set them up as your screensaver.