All Forum Posts by: Ben Leybovich

Ben Leybovich has started 96 posts and replied 4169 times.

Originally posted by @Matt Said:

Originally posted by @Ben Leybovich:

First, what most people refer to as passive in real estate is not quite passive. Nonetheless, a better question is - do you want some breathing room or some wealth? $10,000 of income is very nice, but it won't make anyone rich. Nor will $20,000. Bor will $30,000. It will make you fairly financially secure and independent, but not rich. $1M in the bank, on the other hand, makes you rich...

But, more importantly, if you got that $1M the right way, chances are pretty good that it came with $10,000 of monthly cash flow. So no need to choose.

Ask me how I know about this :)

If you assume $30k/month, it won't take very long to be "rich" and the vast majority of Americans could "live off" of $20k/month. $35k/month basically puts you in the top 1% of earners. But I agree, at $10k/month and depending on your lifestyle, that isn't wealthy.

Agreed. However, the boogie here is that it's extraordinarily unlikely to attain $30,000 of cash flow without a significant balance sheet. This is the old chicken/egg argument, but the answer is not what most would think. The cash flow in the $5k - $10k range can be achieved without much equity, however, $30,000 cash flow tends to be a side effect of equity.

2 Votes

Originally posted by @Bennet Sebastian:

Thanks @Ben Leybovich. Could you tell me how much IMS costs?

No less than $1,000/month for IMS.

0 Votes

Originally posted by @Shiloh Lundahl:

@Ben Leybovich I’ll take the bait. How do you know about this?

LOL What do you think?

0 Votes

We use IMS. We also use Hubspot for a lot of communication/CRM tasks. Not cheap but can't do without.

3 Votes

But, more importantly, if you got that $1M the right way, chances are pretty good that it came with $10,000 of monthly cash flow. So no need to choose.

Ask me how I know about this :)

3 Votes

You are thinking about this all backwords. Think this through with me.

The whole point of cap rate reversion is to underscore the worst case, right? Well, if this is the aim, shouldn't it be teed up by historical data?

In other words, if a given city traded at 10 cap in the last downturn, but today trades at 5.5, doest reversing the cap rate from 5.5 to 6.5 (100 bps) intellectually honestly illustrate the worst case? NOt even close, right?

On the other hand, in a city that traded at 6.5 cap in the downturn but is trading at 4.7 today, 100 bps gets you much closer to the historical bottom, doesn't it?

We don't guess how much top reverse the cap rate. We are driven by the data.

2 Votes

OK, Ohio is great. I'm picking up my stuff in Phoenix and moving back...!

2 Votes

Originally posted by @Brian Burke:

@Benjamin Seibert on a full-recourse loan you as the sponsor will typically have to sign as a personal guarantor, as will anyone else with a controlling interest. Many lenders also require any investor that has more than X% of the capital in the deal to also sign as a guarantor (with "X" varying from lender to lender but 25% is a number I see a lot). The way to avoid that is to make sure that every investor is under that threshold, or negotiate that out with the bank and ask them to drop the requirement. Some will, some won't.

Non-recourse is out there for larger loans, yes. In this case, instead of a personal guarantee you have a carve-out guarantee. The carve-out holds the guarantor personally responsible for only certain things, which are all spelled out in the loan agreement. All lenders will require a carve-out guarantor and there is most likely no way to avoid that. The guarantor will typically be anyone with a controlling interest. The only way I've heard of to avoid a carve-out guarantee is with very low-leverage loans...I'm not sure exactly what level but I think it's less than 60% LTV, or somewhere just under that. Not many people do loans that small because it diminishes the returns, so this is something you don't see very often.

Well, if such a thing does exist, it's definitely less than 62% LTV. Closing a Freddie loan in a couple of weeks and definitely scratching carveouts. As I think about it, if I am Freddie or Fannie, what would be my incentive to drop the carveout...I can't think of any.

P.S. @Brian Burke I'm bored with seeing how high I can go, so now I'm seeing how low...

1 Vote

Originally posted by @Account Closed:

Hi Chuck ! My name is Larry Burr. I’m a real estate investment broker here in the Valley.

My entire business is almost exclusively investment properties. I concur with Whit that $200K is not a realistic budget.

However, you may have some options that would allow you to acquire a multifamily property with your $40K.

I’d be happy to share my insights and advise if you’re interested. Best of luck !

Larry, feel free to reach out. We source most of our stuff from ABI and CBRE, but always looking for more deal flow.

0 Votes

@Martin G., I am so happy you see value in what I've got to say. Especially considering the reality that my favorite subject is me, my extraordinary good looks, wit, and charm...and a little real estate, but not much :)

1 Vote

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All Forum Posts by: Ben Leybovich

Ben Leybovich has started 96 posts and replied 4169 times.

Post: Would you rather have 10k a month in passive income or $1,000,000

Post: Managing a syndicated investment

Post: Would you rather have 10k a month in passive income or $1,000,000

Post: Managing a syndicated investment

Post: Would you rather have 10k a month in passive income or $1,000,000

Post: Q. About Cap Rates and Compression/Expansion in Underwriting

Post: What’s the deal with Ohio?

Post: Syndication Challenges

Post: Advice Needed - Initial Real Estate Plan

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