All Forum Posts by: Llewelyn A.

@Thomas S.

@Joseph M.

@Matt Mason

@Matt R.

@Andrew Johnson

Thomas: I would really have appreciated that you had tagged me into this discussion so I can clarify what you DO NOT UNDERSTAND.

I'm not sure where you are coming up with your numbers, "In the example value at $890K rent to break even would be about 8K per month." Let me CLARIFY so that you don't pull numbers out of a Hat.

I have put together a spreadsheet which will explain the numbers for you:

In 2004, the property was purchased for $890k, down payment of $240k, and Mortgage of $650k. The payment was $3,948.

Each apt was rented around $1,500 with Storage around $900 for the apts, total Revenue was around $5,400 monthly and expenses around $1,283. The NOI for the year was around $49,400. Minus the Debt Service, it cash flowed around $169 per month.

The Cap Rate at Purchase was around 5.55%

Back in 2004, this location was not really a good location. There were several areas that were known drug locations including a corner literally 100 yards away that even had a drive by shooting!

TODAY, the neighborhood, Clinton Hill, Brooklyn, is MUCH more popular and demand is much higher than it was in 2004. It is MUCH more safer and while there is still some drug activities, it's been cleaned up and there are GREAT options for Cafes and Restaurants that you would feel comfortable and save which are upscale.

Rents increased by more than double, but some of the expenses had significant increases.

Today's NOI of $9,550 per month or $114,600 per year gives a cash flow of around $5,600 per month.

The neighborhood Cap Rate also moved down dramatically as you would expect as the neighborhood gentrified, from 5.55% to around 4%.

If we Capitalize the Value using the NOI and Cap Rate, we get around $2.865 Million, which is approximately similar to comparable properties.

I have put together a very light spreadsheet so you can understand the numbers and highlighted the Cash Flow and Cap Rate so you can see it.

I tagged both Joseph, Andrew and Matt because both had interest from the previous discussions.

"Truth be told speculative investors do not understand the value of money. All they ever see is the dollar signs created by appreciation they seldom ever actually see any money." <---- honestly... you believe what you are saying here?

I've been doing this for 20 years. I've had students that did fantastic, one that made $2 Million in appreciation on a similar property like this one.

In Canada, from what I understand, Toronto did Fantastic with Appreciation too!

If in your mind the money isn't real, then think of it as that. Doesn't bother me. It lowers the competition I already have from very savvy Investors.

My Wealth Manager would also beg to differ and when you reach a certain Net Worth (notice, Net Worth and not CASH FLOW), doors that were previously closed are now open to you.

I have been using Equity Loans for all future investments. So basically the 1st Investment rolled into the 2nd Investment, and so on and so on. The ROI is phenomenal.

It seems to me you have never done 10 year pro-forma business plans which helps you put in the assumptions such as 6% Appreciation Rate, 3% rental Increases, 5% Expense increases, etc. And have it calculate your return based upon ALL the future cash flow. BTW, these are VERY conservative numbers. The Appreciation Rates I have been getting is more like 11% to 12%. But I only use Conservative rates.

Now, you can say I have been getting lucky. But luck has two elements, 1) Preparedness and 2) Opportunity. There is a famous quote, "Luck is when Preparedness meets Opportunity." If you have the Opportunity but are not Prepared, you cannot get lucky. If you are Prepared, but DO NOT RECOGNIZE the Opportunity, you cannot get lucky. That's the problem here..... Recognizing the Opportunity in order to increase the probability of getting "Lucky."  

I have done this 7 times in 20 years, each property has returned similarly like the one modeled above. My partners and I are in contract for a $1.890 Million 3 Family in Prospect Heights, Brooklyn, that we analyzed will be $3 Million within 10 years CONSERVATIVELY. It will most likely be $3 Million in 5 years and $4 Million or more in 10 Years. This will be the 8th in our portfolio.... most of the money was borrowed from Equity from the other real estate purchases.

What I find to be very speculative is the assumptions many investors have that cash flow always remains the same. I know for a fact that during the Financial Crisis, some personal friends of friends had invested in properties that were cash flowing, but that cash flow stopped very suddenly. That doesn't happen in very low vacancy areas like NYC to the extent that it does else where.

At the time of the financial crisis, I owned 4 multi-family properties. While the value may have dipped, the rentals were all occupied and life continued even though Wall Street was Ground Zero of the financial crisis and within 5 miles! How many Investors could say that they were virtually unaffected by 1) The Stock Market Crash of 2001 where Nasdaq lost 66% of it's value that year, 2) The 9/11 Terrorist Attack in NYC where my Properties are located 3) the Great Recession. And I have come out WAY ahead of most Investors.

Really, you cannot know a good Investor until that Investor can survive a down turn. I've survived 3 MAJOR ones without a scratch and in fact, increased my Assets Under Management to approximately $16 Million and soon to $18 Million.

Matt: is absolutely correct. A refrigerator costs the same for an apt in either a low or high rent city. Toilets, Appliances, etc. Not much difference.

Matt is also correct that expected initial cash flow and making your decision based on that is a HUGE disservice to investors. But again, that's fine for me because it keeps competition away even when I try to open their minds to take into account all the future cash flows for the next 10 years using intellectual guesses that are conservative. Even the Mortgage comes into play. when you take out a 30 year fixed rate $1 Million mortgage that disappears in 30 years, you make $1 Million / 30 years = $33,333 per year in the Mortgage reduction. Imagine owning 10 properties like that and you increase your Equity by $333k per YEAR.

Andrew is also correct. Having a high weight towards Appreciation versus higher Cash Flows means you can shelter high marginal tax rates. After a while, when your investment income goes up so that the taxes are significant, building wealth needs to shift. If you have enough Cash Flow to live the way you want, why do you want to make more in taxable income rather than increase in Equity which is not taxed until you sell... IF YOU EVER SELL.

I also want to mention that other than 1031 Exchanges and capital gains exclusions, when heirs inherit property (not sure which properties per se), they can also get a stepped up basis, eliminating the huge tax that would have been due had the basis not been stepped up. However, I'm not an Accountant and this won't come into play for me as I don't have children.

I just want the reader of this post to understand that if you really find something I said to be unbelievable, TAG ME and I'll explain it. But don't just post and NOT tag me, that's a bit inconsiderate.

I do want to thank everyone, regardless of their opinion, because this discourse enriches all of us.

@Andrew C.

All Business Plans are very subjective to the strategy that is being utilized.

In my case, I'm buying Brookyn Properties in very good neighborhoods.

There was a time when I used to take into account Vacancies, but it really doesn't make any sense after all the years of experience having properties in very low Vacancy areas that are in very high demand.

A story I like to tell is the time that I had been given 45 days notice from one of my tenants that was not going to renew her lease. I was going to increase the rent to $2,000.

I do my own re-rentals and have been for 20 years. This time, however, I mistakenly put $1,000 instead of $2,000.

In the 1st HOUR of having the posting up, I received probably 20 email replies, 10 texts and at least 10 voicemails and I took a few in person calls.

Something was up and I checked the ad to realize my one digit mistake.

What I found weird was no one who spoke to me or left messages, texts or emails even bothered to re-confirm the rent of $1k. I would have expected someone to say, "So... the rent is $1k right?" No one mentioned it. It's almost as if they really wished that they could find such an apt for so little and was pretending that it could not have been a mistake.

From this experience, it make it very obvious that Vacancies are dependent on where the advertised rent is relative to Market Rents and the demand level of the area.

If you advertised an apt for 1/2 of it's Market Rent, obviously you will fill it RIGHT AWAY. If you advertise it much higher than Market Rent, then you will have months of Vacancies.

For the last 15 years owning on average 15 apts (I current have 25 apts), I always price these apts just a bit below Market Rents in order to attract the best tenants. Give that, I believe I have had only 3 months out of the 20 years of re-renting apts (15 apts times 20 years times 12 months per year = 3,600 months of rentals) where I had lost ANY rent during a re-rental. Even when an Apt may need some renovations or re-painting, prospective tenants would either move in during that time so that I don't lose their rent, or were willing to accept the apt as is OR was fine with some of the renovations going on as the moved in.

So if I put in a ZERO Vacancy in my Spreadsheet Analysis, it's because I priced the Rent for the target Investment Property below Market Rents.

I don't really know Markets that have high Vacancies because I only buy in Brooklyn, so I cannot say even if you do advertise below Market Rents in those areas, you may not find suitable tenants because of issues that I do not experience in Brooklyn. For instance, a low populated area may not have qualified tenants for months at a time so even if you advertised it below market, you still may not find a tenant.

HOWEVER, that's not Brooklyn and is one of the reasons why I buy in NYC.

Again, it is my PERSONAL experience over 2 decades that Vacancy did not play any significant role in my properties.

Hopefully that helps explain why I don't have it in my spreadsheet.

@Rob Beardsley

Here is a real life example.

Around 2004, I bought a property for approximately $890k in Brooklyn, NY and had very little monthly cash flow.

TODAY, That property is now worth close to $3 Million and Cash Flows around $5k per month.

I'd like to Contrast that with a friend of mine, Steve.

Steve bought approximately the same Value of properties, but for Cash Flow in Bristol, CT.

He has been making $1k Cash Flow for the past 13 years.

The Value of his properties, which was similar to mine when I first bought, bearly move up, probably around $100k more.

His Cash Flow never really grew, mostly because the Property Taxes kept climbing with any increase in rent in his area in Bristol.

The Biggest problem that Steve had was that he lived in NYC.

In 2004, his apt that he rented was renting for $2,000 per month. TODAY, Steve's rent is over $4,600 per month.

If you think about it, Steve's rent moved up by $2,600, which is $1,600 MORE than the $1,000 he was making in Cash Flow from his Bristol, CT properties.

IN OTHER WORDS.... STEVE is actually LOSING cash flow by NOT buying his NYC Apt and instead invested in a Cash Flowing area where there was NO Apprecation.

So what's the lesson here? If you are RENTING in a high appreciating area, that mean your Rent will be moving UP over the years. If you buy in a stable Cash Flow area where the Cash Flow does not meet your rent increase.... YOU ARE LOSING.

I hope the readers of this post understand the risks that are involved by this scenario, which actually happened. To mitigate the risk, if you intend on living in a high appreciating area, you should first consider owning with a 30 year fixed rate Mortgage to lock in your "EQUIVALENT RENT" and prevent yourself from being Priced out of the Market.

Had Steve actually bought his Apt here in NYC in 2004, he would have locked in his monthly payment AND also made about $1 Million or so in Appreciation. BUT it's not all that bad....... at least he made $1k per month for 13 years..... so that's $1k x 12 months x 13 years = $156k in cash flow.... or is that bad in considering he could have saved $1,600 x 12 month x 12 years of rent payments and $1 Million in Appreciation? You decide.

Steve had to eventually leave NYC and rent in another cheaper area.

@Brad E.

Does the area commands high Credit Scores like the ones you are getting from the tenants? In my area of Brooklyn, that would still acceptable, but not normally the winning score since I typically get scores above 750.

HOWEVER, those are good scores and like @Nathan Gesner said, make sure your lease does have "Joint and Several Liability." Explain to them that regardless if one of them leaves, both are responsible for the FULL rent.

If there is a shortage for rent, you will take BOTH of them to Court. In my neck of the woods, even having a Tenant/Landlord case against you will severely hamper your ability to rent another apartment. It's one of the only way Landlords can combat these tenant friendly Cities.

What I also do is to ensure that they are in good standing by asking for at least 3 Month's Bank Statements showing proof of on time payments and I must see the current rent payment. That's evidence that they are not problematic or has not been problematic to the previous landlord, who tends to give a good recommendation just to get rid of them.

The Statements also ensures that I wasn't set up by one of their friends "Pretending" to be their landlord.

Of course a lot of Landlords don't go to my extreme, but this is NYC. Rents are very high and you don't want bad tenants that can live rent free in your apt for months.

@Andrew C.

Hi Andrew,

If you don't mind, I would like to postulate that the concept of "Cash Flow Properties" is actually slightly misleading.

Rather, I would like to state that it's the INVESTOR that actually Cash Flows, not the Property.

I would like to prove it mathematically. Consider a property which has a LOT of Cash flow as follows:

You can see in Cell B4, the Mortgage is ZERO. This is an All Cash Deal. The Calculated Cash flow is in Cell I5 and is $8,083 PER MONTH!

What a FANTASTIC PROPERTY!! THE CASH FLOW IS AMAZING!

Now, I want to change the Down Payment from 100% to ZERO %, meaning that it will be 100% Financed and the Mortgage will equal the Purchase Price of $1,890,000.

Here is the same EXACT spreadsheet but with that ONE change...

That one change gives us a NEGATIVE MONTHLY CASH FLOW of $940 per MONTH! OMG!!! THAT's TERRIBLE!!

But wait........ wasn't this a cash flowing property?! oh!! So.... it seems if I, the INVESTOR, buys it all cash I make it hugely cash flow. However, if I, the INVESTOR, use a 100% Mortgage, it is hugely negative cash flow!!!

While I'm sure you already know this, I just wanted to inform the readers that there really isn't a "Cash Flowing" Property or NOT. It's really the INVESTOR that cash flows the property, OR NOT!

When I look at a property, I generally use a spreadsheet that does Future Value (FV) calculations and first find out if it has great potential future value.

I then look to see what I need in order for me to Cash Flow the Property. I don't really look at a property as having the Characteristics of Cash Flowing or not.... that's for me to do if I choose to do so.

In most cases, if the future value criteria shows great growth in appreciation, I will work out the financing so that it will break even on Cash Flow. All I do is tweak the Down Payment %.

One thing to note, in Cell L10 I calculate the Taxable Income. In the 1st example where I make the Property Cash Flow, my taxable Income is $42,018. However, if I finance the deal with a full Mortgage, my Taxable Income becomes NEGATIVE $62,292... a really great tax shelter! All the while I am making a killing on appreciation!

I'm not stating that this strategy is for Jolene. I'm just showing the reader that there is much more to owning NYC Properties than just some calculation on Cash Flow.

I will also state that if Jolene was one of my Partners, she would not be disappointed in this deal as it will make over $1 Million in profit within 10 years, according to my calculations conservatively.

NYC may qualify as a "Nightmare" for those going it alone if they don't have anyone on their team with the needed financial reputation and resources. However, that's another reason why it's VERY important to network and know who to find for your team.

Something to think about!

@Andrew C.

@Jolene P. Neal

Hi Andrew and Jolene. I don't want to hijack Jolene's Thread but I'll try to answer your question because maybe Jolene and others are also interested?

In the year 2000, the Windsor Terrace property, specifically the block, was not great at all. There was a Drug dealer and his family who didn't care about his neighbors and was a real rowdy guy.

It's crazy how a small amount of people can bring an entire neighborhood down, but this group did.

The house came with a tenant that eventually stopped paying the $500 per month rent. I evicted that tenant. That particular tenant seemed to have fit the neighborhood as it was back then.

Because I learned how to do tenant screen incredibly well, even to the point of demanding 6 months bank statements to verify proof of rent payments that were on time, from the year 2000 onward, I never had to do another eviction again even though I now have 25 apts with 65 tenants (some apts has a bit of roommate situations).

The two small 550 sqft apts in that building both rented for only $500 per month.

HOWEVER, the economics were GREAT! The richer, surrounding areas, especially Park Slope, were getting REALLY expensive. Families were pushing.

By 2003, the house I bought for $140k was worth around $240k.... a huge improvement in prices.

Eventually, the Drug Dealer's family sold their place, probably made more money from the sale of the house than the money they collected in drugs.

From that day forward, the whole block became such a nice Brooklyn neighborhood!

The rents moved up every year up to about $1,500 by 2013. Now, it rents for around $1,900 EACH.

The block had been cleaned up for about a decade now and there are so many new luxury developments that the whole area has transformed to more wealthier families.

Each one of the neighborhoods I bought in were fringe but transforming at the time. I started buying in Clinton Hill in 2003. Then in Bed-Stuy in 2014. Was trying to buy earlier, but certain loans were unavailable after the financial crisis and I had to scramble for partners.

Each one of these neighborhoods are now higher on the class level than when I bought. Class C turned to Class B neighborhoods, basically.

I'm not an expert in all Brooklyn neighborhoods, but the two areas, Canarsie and Mill Basin, depending on exactly where, could have pockets that have not transitioned as well. But again, I'm not an expert in those areas, Brooklyn is a BIG place!

I do know that if I were to use my criteria for tenants in Canarsie and Mill Basin areas, again, depending on the exact location, over 750 Credit Score, income over 45 times monthly rent (so if your apt is $2k, you must make $90k combined), 6 months Bank Statements with proof of on time rental payments, at least 2 years of employment in the same company or 5 years in the same field, etc. I don't believe I would get qualified tenants nearly as easily as I do in my current areas.

I want to point out that it's not only about doing your due dilligence. It's also about having the ability to find good tenants. I have a friend that invested out of state and doing a credit check is irrelevant. Everyone is sub 600 Credit there. There's no point and you are just better off assuming a bad credit score and just do Criminal Background checks. So great due dilligence cannot be done in every neighborhood. I think that might be the issue with certain neighborhoods which can include Canarsie and Mill Basin. But Jolene can ask her friend about that.

But I'm not an expert there. I see much more gentrification in Bed-Stuy, Greenpoint, Bushwick, Ridgewood, a bunch of places in Queens, some areas in the Bronx, maybe South Bronx, not sure about Staten Island though, etc. These places are expensive for a reason. It's because of the outlook of it's Future Value appreciation.

I try to anticipate Future Value appreciation (which means BOTH Value and Rent appreciation). I generally want to see 3 multi-billion dollar projects that are going to start up. For instance, I bought into Clinton Hill before Barclay's Arena and the development of downtown Brooklyn. Clinton Hill is the next neighborhood away from the Arena.

Bed-Stuy is going crazy with very expensive renovations and large luxury apt renovations. It's also 4 express A Train Stops from Nostrand Ave to Wall Street, where the World Trade Centers have been rebuilt. etc.

So I actually go out and look for planned developments and buy in anticipation that some of these developments will not be canceled.

Anyway, again, my apologies if I hijacked the thread.

Hopefully I answered the questions!

@Jolene P. Neal

Hi Jolene. The $140k Investment in the year 2000 did contribute towards other investments.

However there were other contributing factors, especially by partnering up with a friend and at the time, which was before the Financial Crisis, you were able to get Mortgages just by breathing.

So I breathed a lot! haha!

The point I'm trying to make is that NYC is not a "Nightmare Market" if you were to think of it as a place where once you plant your expensive seed in the ground, it will grow into a beautiful tree!

You just have to know how to get that seed, maybe with another partner, and also know how that Tree is going to grow.

Even where I bought in Windsor Terrace, Clinton Hill, Bed-Stuy and Ditmas Park wasn't the best "Soil" to grow my tree. I totally missed Williamsburg, which would have had the best fruits had I planted there!

Can you imagine how many Investors who would have thought 20 years ago, 10 years ago, 5 years ago and even today, the same exact thought....... "NY Nightmare Market" and just never buy here while those of us that did reaped some great golden fruit?

I'm not saying that you SHOULD buy here necessarily. I'm just saying when you believe NYC is giving you lemons, maybe it's best to make some lemonade! But this time, if you hold on to the lemon in NYC, it maybe 5 or 10 years for it to turn in to a really fantastic lemonade!

Where ever you buy I wish you good luck, but I just wanted to let the readers of this post that some of us do fantastic in this "NYC Nightmare Market."

@Simon Ruiz

Hi Simon! Yes, I do! It's a really GREAT Book but will NEVER be on the Best Seller's list.

What normally is on the Best Seller's list is books with very little Math or Math that is very simple. It's not that simple math is wrong, it's just that you can open your mind up to much more possibilities, like investing in appreciating markets, once you become knowledgeable about 2 things, 1) Sophisticated Math and 2) Economics so you can read the future of the market.

Personally, I don't know how any Investor doesn't want to learn enough about Economics to get a gauge on how the next 10 years in their specific Area of investing may turn out.

Will it be like Detroit, which went bankrupt but you could easily have seen that if you paid attention to the 3 Big Auto Makers? Or will it be like Brooklyn...... that went CRAZY with sky high appreciation in the last 10 years?

The Book I recommend is What Every Real Estate Investor Needs to Know About Cash Flow

For Economics, I recommend reading things from the Economic Calendar from Bloomberg: Bloomber Economic Calendar

Economics is very difficult at first, but will take some time to absorb it. Sometimes, you can let others do the work for you, such as when franchises open up like Starbucks. There's a reason why they are opening up that store there. BUT, if you can get an understanding of both of the two links above over time, you may be surprised how much it can open your mind!

I also recommend understanding your specific market of investing. Know who the big players are and if they are vulnerable to a change or even if it can be affected by changes in Climate.

Getting a lot of these kinds of knowledge only make Common Sense.... but as the saying goes, if Common Sense was so common, would we be saying it that way?! 

@Jolene P. Neal

@Elliot Vann

Hi Jolene! Hi Elliot!

In the year 2000, I bought a 2 Family building ONE block from Prospect Park in Windsor Terrace for only $140k!! Can you imagine that!

Today, it's worth at LEAST $1 Million!!

Every time I tell people that story, which is 100% true, they say that it was a BARGAIN at that time!

Was it a Bargain?! 

Let's analyze a little bit. There were several housings on the same block that were completely similar. In Fact, cooking cutter. How much were they selling for? $140k !!!! oh.. wait.... I didn't get a Bargain?! OR DID I?

YES!! IT WAS A FANTASTIC Bargain! I made almost $1 Million from it!

BUT.......... it's not the same Bargain as the one you and most people are thinking about.

There are actually two kinds of Bargains.

There is the normal bargain, such as buying a pair of great shoes worth $200 for 50% off at $100! That's a Bargain!

BUT, this kind of Bargain is only know not from the purchase price today, but from the Selling Price of TOMORROW!

In other words, when it comes to an Investment, including Real Estate, the only way you know it's a bargain is when you know 2 things.....

1) The Purchase Price and

2) the Selling Price!

If you don't know those two things, you don't really know if you got an Investment Bargain.

I can't tell you how many times I was told starting from 1997 when I bought my first Investment Property in Brooklyn.

EVERY YEAR... without FAIL.... I have been told I was crazy to buy at these Prices.

Amazingly..... those people who gave me that advice never bought.... TO THEIR REGRET.

Now I own 7 Multi-Family buildings (with Partners, of course).

I am in Contract for a 3 Unit building in Crown Heights for $1.890 Million.

And, as it never failed for the last 20 years..... I am crazy to pay so much money for it.

BUT... in 10 years from now, when the Crown Heights Building becomes $3 Million or More...... it will change to "WOW!!! You paid so little for it! What a BARGAIN!"

The Reader of this post so consider that there are different kinds of Bargains. An Investment should not be thought of as the same way you buy shoes. It's a whole different kind of Investment and requires a different way of thinking!

You may also be asking how does one know the property they are buying will be worth more in the future?! Well... all you have to do is look through my posts to see why I am able to use different Future Value Calculations with 10 year pro-forma business plans, analyzing the probability that the Investment can appreciate in value! Somehow, most books and courses seem to miss these kinds of calculations. Maybe that's the secret they don't want you to know!

@Filipe Pereira

Hi Filipe,

You are correct, most people see REI as an opportunity to quit their full time jobs.

I really can't understand why though. If you have built up a skillset to a high level, then you can earn a good amount of Seed Money for your future Investments and your qualifications will be excellent!

I actually don't encourage people to quit their jobs, but use it as a spring board to become wealthy.

Now, if you haven't done well at the job that you have been trying to be successful at for a while, it makes me ask the question..... WHY?!

It's incorrect to think that REI is such an easy way to automatically become successful. There is a lot of hard work, disapline and studying that can propel you into a great future.

What minimizes the risk of losing it all is to continue building up your current profession until your Real Estate Investments make you financially free. It's at that point I say you now have the choice of quitting your job.

NOTICE, I said you have the CHOICE of quitting your job, not that you should!

Imagine you are a Medical Doctor, a Dentist, etc. Just because you are now Financially free from REI doesn't mean you should stop being a Doctor, Dentist, etc.

What it means is that you have the CHOICE of stopping or even scaling back your current profession.

What it also means is that because you don't NEED the job, the stress from your job melts from your shoulders and you can now enjoy what you spent most of your life trying to do.

You will even be healthier because of the lack of stress!

That's what Financially free means to me and REI was just the way I decided to achieve it.

The other issue is "people would love to buy assets in hot markets, but I think it comes down to the initial cost of investment and people's goals."

I can't agree with that more, except I believe if people were really educated to understand how Markets work, they would see how important it is to think more in terms of Partners instead of thinking that they should go it alone. The Stock Market, for example, allows millions of people to participate as Shareholder Partners, enjoying the benefits of the Assets they are buying.

Where the Education comes in has to do with the understanding that it's not about the PRICE of the Asset. It's more about the performance of the Asset itself and the number of partners you need to buy it.

As an example, let's say Buyer A can buy a property for $100k. He know that it will return 100% in a few years which means he can sell it at $200k.

Fantastic! That's a great return!

HOWEVER, Buyer A doesn't have $100k... but he has $50k. He calls his friend Buyer B and shows him the 2 year pro-forma business Plan which gives Buyer B the calculations needed to show Buyer B that it's a well thought out plan that will work!

Buyer B then comes in with his $50k. So, both Buyer A and Buyer B buys the $100k property as 50% owners.

Here is where the trick comes in.

When the Property is sold for $200k, Buyer A and Buyer B splits the proceeds of the sale, $100k each! GREAT! What kind of return is that? Well.... for Buyer A, he put in $50k and got back $100k!! So did Buyer B! They both made a 100% RETURN!

Hey, wait a minute....... isn't that the same return as the Property itself? YES IT IS!!!

The trick is that you don't bother with the price... you bother with the RETURN of the INVESTMENT. If the Return is 100%, 200%, whatever, it will be the same for all Partners in the deal.

The problem with most people is that they are asked to network to increase their ability to be successful but they don't really know how it will make them so successful until they see the math as I described it above.

So it's really the LACK of PARTNERS that prevents people from buying into HOT Markets... Markets that I continue to buy in with my Partners.

So the question I like to ask people who want to do it all on their own is why don't they have people they can trust and Partner with? What's the issue here? Is it a lack of money or is it a lack of having TRUSTWORTHY partners in your life? Maybe it's time to network in a way that is different than what you have been doing and find the right PARTNERS to help you open the doors to GREAT investments!

I hope the readers of this post can see how great opportunities can arrive if you can do 2 things.... 1) Analyze what Markets are GREAT and 2) Find Fantastic Partners!

That's What I specialize in and it's made me VERY successful.

Without my Partners, I could not have continued to buy in NYC at the level Prices are now. I'm in Contract for a $2 Million, 3 Unit Property close to Barclay's Arena and it will most likely be $4 Million with 10 years, if not 5 years. It's nice to make $millions for my Partners and I. So let's all do it together!