All Forum Posts by: Joseph Hennis

@David Faulkner I went out of state as a newbie investor. I'm doing just fine... You are silly. If you live in California, you sometimes have to go further afield to find what you are looking for.

It is in an alley... But war zone? In Ogden? lol come to California I can show you some war zones.

The property has been remodeled and rents at 550 for the 1 bedrooms, and 675 for the 2 bedrooms. (contacted my property manager to find this out). That's 44100 in gross rents. If the seller claims a 9.3% cap rate at 330k, then that's an NOI of 30690. That's only a 30% operating expense ratio. Most buildings run 45-55% expense ratio so that number is a bit low. Perhaps it is that low because it has just been remodeled, but it won't stay that low. Also, owner pays water, sewer, dumpster. Honestly I don't see how it could be that low but I would need research the actuals to know for sure. Remember this is 6 units too, so any loan would need to be commercial and at a higher interest rate.

Working those numbers backwards, 44100 X 55% gives an NOI of 24255. At 9.3 percent cap that's a purchase price of $260,806. At that price this would be a good buy. At 330k purchase price, that's a cap rate of 7.35%. It seems to me the seller has valued the property as though it were a duplex + a fourplex and has looked at comps rather than NOI to value the property.

I'm not saying this is a terrible purchase either. 7.3% cap rate may meet your financial goals. But... the numbers posted are still off... They always seem to be off with 5-10 unit buildings. I've seen worse...

lol such weird advice. One guy mentions go with wholesaling, the other stocks and mutual funds. Really?

Neither of those create better passive income. Wholesaling is not passive. Period. Stocks and mutual funds don't often kick out big dividends (dividends are cash flow!).

So, to answer your question... Well first, my own question... An apartment for 25k? and it's only 1 unit? What kind of apartment building has only 1 unit? Do you mean a condo?

I'm going to assume you mean a single family home rental. In which case, $250ish a month is about right. You would need 20 properties to make $5000/month. But wait, all those headaches dealing with tenants, how can it be passive? It can be passive income, if you get a property manager.

There is a lot of math involved to figure out what price you need to buy at, how much loan you should get, what will be your cash on cash returns, your overall returns, etc. I can walk you through some deal analysis. To get an idea of what kind of returns you can make, use the bigger pockets calculator or the one here.

https://financialmentor.com/calculator/real-estate-calculator

That's already more than most would do. Good job.

@Kyler Berry how is it sketchy? The cap rate and NOI are way off.

@Melissa Szanati That's the part of Renatus I liked. Their information was real and specific. They gave all the pros, cons, and common pitfalls to avoid. A bit too pricey for me and I don't have the time to attend a bunch of seminars. I get more value from reading a book in bed at night, but I can see how this could be of value for some people.

@david dachtera Wow you have so many assumptions on me. Mostly false. LOL. I do have property managers. I do have kids. I don't have kids school supplies.

You have been clearly "SOLD" on this and you are doing your best to justify your purchase. If it was such a great organization, why would you need to get so defensive? Seriously, your defensiveness is definitely a red flag. A truly great product needs no defense. It sells itself.

I gave my experience and opinion because I hope it is adding value to the conversation. As I said, I have mixed feelings about the organization. There are pros and cons. Life is not black and white, and there are trade offs to everything.

I did say I liked the detailed information they gave. That is not standard in most organizations like this. Usually it is just hype. Even REIA's can be full of real estate hype. So the seminar I went to was great, no hype, real details. But it was a little annoying that they kept going back to their sales pitch. They even had people in the audience ask "questions" that were really just sales tactics. Questions like "Would you say that tip which saved you 60,000 dollars is worth the 15,000 to pay for the education?" Honestly, these kinds sales tactics are a complete turn off to me. Unfortunately they work for so many people which is why they are used.

If this education and coaching environment is what works for you and nothing else will... Well, this might be a good deal for you. It might be the only deal for you. But for most other people there are other, cheaper options.

I would rather a person spend 15k on their first rental property purchase than 15k on education they could have gotten for free. If you don't have 15k cash and were going to buy the renatus education on credit... there is the first problem. Get your finances fixed. Reduce expenses. Increase savings. Pay off personal debts (business debt is fine). You should have 15k just laying around in an account somewhere... it's really not that much money...

"If you did, you would even be able to deduct your children's school supplies and other expenses if you knew how to move the money through your business entity structure. You'd even be able to build your children's IRA, College IRA, etc. tax-free - if you knew how. Kids are grown? No problem. Pay your own offspring and have THEM pay their children (your grand-children) tax-free.

Try finding THAT in "free" on-line information."

.... I just found it, lol. You guys clearly have tons of hidden "secrets". These secrets are worth every penny. (sarcasm) Again, that's another sales pitch. "We have something no one else has and you can't find it other ways." That's a lie that compliance professionals use. It's called scarcity. Example: "this is the last washer/dryer of this type that I have..." and there are 20 just like it in the back room.

So I went to one of these Renatus seminars. I have mixed feelings about it.

The seminar was about flipping apartment complexes. The person presenting was an actual apartment flipper. It was all he did. He was PAID by Renatus to do the presentation and his presentation was both live and would go online for students across the country to be able to review it and learn from it. 

The information presented was extremely detailed. It is one of the biggest problems I have with internet gurus, podcasters, robert kiyosaki, and the like.. Their presentations are full of motivation and hype with little to no substance or details of how to actually do it. The presentation by Renatus was NOT like that. It was thorough and detailed. I could tell that this company was the real deal and would do their best to help you succeed.

HOWEVER, I did not join. Just because it is the real deal doesn't make it the right deal. The information I learned from the seminar I could also learn from reading a book. The price was wrong. If membership in Renatus was $100, it would be worth it, but once we are talking about thousands of dollars, I could buy a LIBRARY of books for that price. A book is dozens of seminars all packaged into one. A book can be easily referenced. 

Besides that, there is incredible value here at Bigger Pockets for free. There are also tons of seminars, podcasts, and other information on youtube. In the age of information, why would anyone pay $$$ for information that is free online?

There is one other reason I did not get involved. Time. It takes a lot of time to attend their seminars, meetings, etc. My time is limited. I prefer to spend that time analyzing and looking for deals, managing my rentals, and planning future business operations (I consider my real estate investments a business).

@William Hochstedler A friend's wedding in Ogden. :)

Somebody asked me some questions about property managers, and dealing with inspections and repairs while buying out of state. I am gonna post my response because I think it is relevant to the discussion here.

My property manager has been able to address any and all problems. That doesn't mean I am completely AWOL, however. I get emails or phone calls if there is a problem. If it is an urgent problem, they will just fix it and let me complain later. Some things they really have to take care of right away. To give you an example, they had a heater stop working in one of my units in ogden, UT. No heater in the winter in ogden is a death sentence. They tried contacting me but I was busy at the time, so they just fixed it and let me know. They have had owners complain to them about this, because maybe the owner wanted a different solution to the problem, but it was necessary to protect the people living there.

I do inspect the properties before I buy them. I trust professionals to do their job. Honestly, what can I find out about a property that a House Inspector cannot? Am I going to crawl through the attic, basement, or floor space? Nope, can't do that anyway because of liability issues... If it needs repairs, am I going to be able to accurately judge how much that will cost? I just send my contractor over there to give me an estimate. I know the work needs done because the House Inspector has identified the problem and the property manager has given me a list of repairs that need to be made to make the property marketable. So there really is no reason for me to see the property. What am I going to be able to "see" that they cannot?

Instead, I focus my time on interviewing (by phone) property managers, contractors, and House Inspectors. I am a manager of managers. Finding good help is crucial. I love my property manager in Ogden UT. They have been awesome. They have found me good deals, repaired them, and managed the tenants. I just get a check direct deposited into my bank account every month. That's worth every penny I spend on them.

Some people want to manage their own rentals to save money too. The question you gotta ask yourself, would you really be a better property manager? Kicking people out on the street (evict), screening tenants, taking care of repairs at all hours of the day and night, raising rent, etc. The answer for me is no. Maybe you would be a better property manager than the average one... but are you the BEST one? Because if you interview enough property managers, I am sure you will find one better than you, even if you really are that good. If you manage it yourself, you really just bought yourself a job. If the goal is passive income, that would be the exact opposite direction...

Anyway, just my 2 cents on this... Good luck!