All Forum Posts by: Larry Turowski

@Matthew McNeil This is a good question but I'd add the caveat of "while you were an investor."  Two types of poor that still leave you at a huge advantage are:

1. Poor due to being young and going to school or otherwise "investing" in your future.

2. Poor due to having lost everything but having "rich" in the knowledge and network it would take to build it again.  Entrepreneurs sometimes lose everything but they know how to get investors, how to start a business, etc.  That is a far cry from someone working a minimum wage job.

I lived hand-to-mouth as a college student and for awhile after.  As an investor I have never been poor.  It is hard starting out with no skills, no knowledge, and no money.  You really need to have at least one of those, preferably two, and ideally, all three.  I started with some money to invest, gained some knowledge and have developed management and investing savvy (skills) along the way.

@Cameron Riley Go by these rules:

1. Tenants want to pay.   No need to demonize them.

2. Keep it business-like cordial, even if it comes to eviction.  It is never personal.  If they haven't paid, have late-fee, notification, and eviction processes in place and follow them.

2. Be consistent.  "For liability reasons we have to treat everyone the same.  We cannot play favorites."  (This has the nice effect of making them feel like they are one of the favorites, regardless of the whether they are or are not.)

3. We are always happy to work with tenants, even during eviction, though they will incur extra costs / penalties.

4. Okay, sometimes rules are bent.  This is easier when you are able to present a good cop / bad cop.  The good cop may be the manager not following the process of the bad cop, the owner.

Before all of this, you need to treat both your tenants and properties right.  Respond to repair requests.  Keep things in good condition, etc.

@Nick V. This is something you want to plan out.  

- Income replaced? CHECK

- Health insurance covered? CHECK

- Emergency funds in place for your business?  (What if you get a wave of expenses, non-payments, whatever?)

- Access to cash for acquisitions?  (Yours or someone's)

- Qualification for mortgages in place?  You can definitely get commercial mortgages and your W2 income and debt-to-income ratio may play a large role in that.  Have you spoken with a mortgage broker and presented your plan.

- Being able to work independently without outside structure?

- Goals written out?

- Pros/Cons written out?

I still work full time, and could theoretically easily quit, but I haven't answered all these questions for myself, especially the structure issue.

I'm beginning to remodel units in a small complex with concrete floors.  Here is a before picture of one of the units.  They all were kinda ugly and had rugs which would require constant cleaning or replacement:

Here is an after, with vinyl plank flooring: 

It looks a lot better, but this particular unit had a pretty even floor.   There are some that slope down a bit at one point, maybe where a wall used to be.

Any suggestions on durable, attractive, but not too expensive flooring?  I've considered linoleum.

@Jason Kimery Not crazy at all. That's smart. And after you pay down the mortgage on your primary, you can get a HELOC. That way you're just as liquid as before. You won't be paying interest on it while your not using it, and you'll be ready to pounce on the next deal that crosses your path (or better yet, that you hunt down).

TRUE!  It is an eye popping title.  Then the fine print often includes strategies that really are NOT no money down:

1. Using credit card advances.

2. Personal loan.

3. Borrowing against a property you have equity in.

4. Using your 401K or self-directed IRA.

5. Buying for cash, rehabbing, renting, and then doing a cash-out refi for 100% or more of what you have into the property.

@Darius Kellar Well, it was a very expensive property to begin with.

While I'm at it I should mention my worst deal.  I bought a house that I later discovered termite damage in.  I lost $25K on that house.  In some ways it is one of my proudest deals, because I took the hit and moved on.

@Darius Kellar My best return on a flip was six figures.  But that was the first genuine out of the park home run I had in 10 years of doing this.

For rental, I bought a house for $12K, put maybe $8K into it and it rents out for $975/mo.  Oh, and I took a $25K mortgage on it (bundling it with other properties in a blanket loan).  So that one put $5K tax-free in my pocket and still cash flows very well.  I'd do that all day long.

@James Suleski Inflation is pretty tame.  It is more about opportunity cost than inflation.  Having to keep money sitting on the sidelines means you can't put it to work for you.  However, someone like you, six months expenses is not a crazy amount of money to set aside and may be the smart thing to do.

As you grow, the most important thing is ACCESS to cash. I want access now, before I need it. I use a HELOC and money I cycle in and out of flips and BRRRs (not tied up for more than a few months). For you it may be a credit card.

If you have access to cash you can put your actual cash to work elsewhere.

@Juan Carlos Cabrera I assume you are going to attempt a short sale.  Besides the fact that they don't work out 90% of the time, banks are really difficult to deal with.  You might want to bring in a realtor or other professional who can help you with all this.