All Forum Posts by: Mark H. Porter

I’ve been in real estate now for 24 years and the first million was identified after about 6-7 years.  This has only been a part-time gig anyways as I’ve always had full and part-time jobs in addition to the real estate.

There comes a time when you’re working your numbers - maybe doing a PFS for the bank, maybe just checking what you can liquidate for, and all of a sudden it’s 7 digits.  I didn’t even know what to do when it first happened.

After that it really is “amount of smart work” = “greater possibility to hit home runs”.  Ive always been a hands in guy so I was the one running to Lowe’s getting contractor supplies so I wasn’t paying them $50 per hour to go shopping and catch up on their nicotine.

It still amazes me how and why it happened. I would say I'm still a small player in this game but I 'm buying my first NNN buildings for large chains. My wife gets quite intimidated by the numbers I banter around as neither one of us come from means.

My day? Well, I’m always “on”. I always take calls and respond to emails quickly.  As I still work as an IT project manager all my real estate stuff is done at night when I’m searching and running numbers in new properties.  It’s a bear and you’ll sacrifice family and friends time to get there.  It’s not free.

This is @Dave Foster territory.  I’m using Dave on a 1031 right now and have been very impressed with him taking my calls at any time.

I just refi'd with a local credit union at 3.2 at 75% LTV. Are you in an LLC?

In Multi family, there’s no difference in the analysis of a 2 unit or a 20 unit.  Same math - cap, cash flow, ROE.

Commercial assets such as gas stations, fast food, etc.. are a different game and require an extension of effort. Same three above, but in dealing with a NNN property you really need to check what is included. I've seen the claim of an "Absolute NNN" with "zero landlord responsibilities " until you dig in and discover structure and roof are landlord responsibilities.

You also look for a very different kind of broker.  A commercial broker will better understand price per square foot comparisons, cost to enter markets, rent/revenue ratios, and a bunch of others.

Just google some areas and you’ll see plenty of educational material.

Neil, any possibility of you going commercial? Either 5+ unit buildings or NNN properties?

In the last three years I bought a 10-unit, an 8-unit, and an 18-unit. I sold a 3, 4, and 4 and 1031'd them into nice STR IN north Myrtle Beach. I just sold the 10-unit I bought 3 years ago and am seeking a couple of NNN commercial properties now in the Carolinas. All while working a full-time job.

My point is don’t settle into a comfort zone.  Have faith in your decisions and push some limits.  If you do the math conservatively on the front end it will be very rewarding.

@Steve Vaughan. It gets interesting when you start digging into the expenses stated on a property as it often excludes management fees. I always add management to the tune of 5% of revenue to the Operational Expenses so I get a clean NOI. From that I'll subtract CAPEX (2% on new builds, 5% on older) and leverage costs so I can get down to a pre-tax cash flow. It's this number I divide by my invested capital to get to ROE.

It’s conservative, realistic, and a much safer play.  I didn’t always do this correctly, but I’ve learned that banks like it.

@Mike Crouse, @Steve Vaughan

Steve's on the money. I'm working on a commercial deal right now at 80% LTV with 5/25 and 3.33% and a $900 origination fee but it's taken a LONG time to get here. Steve's probably much more realistic.

@Kenneth Garrett Ken, you’re using formal finance terms to mean something else.  I know it sounds correct, but it’s not.

ROE is an equation Net Income / Shareholders Equity.  And shareholders equity is Assets-Liabilities.

Cash in Cash is an equation of Before Tax Cash Flow / how much you initially invested.

It’s not the formula no latter which way you want to interpret it.  

@Kenneth Garrett hey Ken, that's not CoC or ROE you're talking about. These are both based off net income.

Your talking profit or gain.