All Forum Posts by: Leland S.

I'd be hesitant to pull out any more than the tenant is paying for. I did some research in Detroit and it was too scary to me to invest there. Any kind of market softness, I'm not sure how it would respond, but I would want to know what valuation downside is and make sure I had a capital expense budget.

My first mistake:

Don't be swayed by realtors trying to juice you on price based on "hot" markets. As an investor you don't care about gold chasers and idiots, you care about your conservative numbers. Offer what makes you feel comfortable and nothing else. There's a million deals to be had. 

My second mistake:

Don't take a wholesalers analysis on ARV or property condition by word. They apparently have an odd way of "analyzing" their offerings. By their numbers it looks like you'll make 50k. In reality you might break even.

I bought my first when I was 33, now 35 just bought my second from a wholesaler. Bought a lemon from a volume wholesaler and will suffer. The first flip I made 4k after 1.5 years of many many problems and ripoff contractors, HOA issues, stress.

I'd like to move out of flips after this based on market souring per latest CNBC headline. Still want to invest in the area but need to find a new avenue, maybe a large syndication where I do no work.

What resource do you use to find banks willing to lend for new construction, ideally 100% on credit? What kind of interest rates are typical these days and what are the typical income/net worth values used to calculate maximum loan amount? 

@Marian Smith - Thanks- the other houses that were rehabbed appear to have brick or hardie siding. But other houses in the neighborhood do have the asbestos. 

@Leo Poon We essentially took over the building and electrical permits from the contractor and put them in our name. We hired the appropriate contractors, in this case electrical and a handyman for plumbing, to finish the job according to what the inspector told us he had told the prior GC. The rough in inspection was already passed so the walls were closed.

@Luis Sosa Thanks for the reminder on the lien release waiver! I forgot about that. I will probably want to install can lights and I know that can be a problem because then they want you to run separate lines to the electric box. For electrician or plumbing or structure I agree, I want a licensed guy there to make sure it's code. For foundation I will hire a licensed co. Unsure if siding work needs permit, but I know removing asbestos does so if I end up going that route (I hope not) then I'll make sure they get permits. You don't have to be licensed to get permits, as I mentioned I pulled permits myself.

@Frank Wolter - great post Frank! Wish I had this knowledge when you did I'd be in a much better place. My only crutch is my sports car loan, which I justify due to the 1.7% interest rate. However it still is money gone each month.

Good summary Mike, except you can use Roth IRA's for after tax growth. Also stock market gains are compounded continuously, something RE does not do except for manual transactions into new properties. RE isn't liquid either, so equity is all theoretical. Transaction fees are much higher - imagine having your broker take nearly 10% of your sale price when you sold, and not just the profit?! Then the tax man is still waiting for you when you sell also. The stock market you can literally just automatically purchase without thinking for a second or adjusting anything leaving your time to do whatever you want. RE you have to work to hire people and address issues or constantly work to continually create income. The best case is rentals with a good property manager, but you still have to worry about vacancy or address other major issues and capital expenses over time for maintenance.

Annualized total return for the S&P 500 index over the past 90 years is 9.8%.  That's not bad for literally doing nothing.

Originally posted by @Gloria Sheridan:

As a person who was literally about to press GO on a rollover from my standard stock market index-based 401k (with my previous employer) to a self-directed IRA so I can do more REI, I feel sick at my stomach. Literally, about a week and a half ago, I decided to go ahead and take my profits and do the rollover. What a crap sandwich. Now I can't afford wait for the recovery as I'm under contract and need the liquid cash. Ugh. So irked right now. :-(

if you did the rollover a week ago then you shoud've been out before the drop and have all the cash sitting in an IRA account? I'm confused, did you then go and buy market indexes immediately in the IRA?