All Forum Posts by: Michael Moikeha

@Mehran K. 

Thanks! I do love the momentum, and for me all it took was a LEAP! I don't know if there is ever a time to feel "comfortable" in quitting a job, but part of the momentum is taking the leap over the edge. 

The way I looked at it was like this: The workforce is not going ANYWHERE!!! I can always go back to a day job, but the market is hot and investing in myself now just seemed like the right thing to do.

@Bill Jacobsen 

Thanks Bill!

@Bill Jacobsen 

Thanks for your evaluation!

Our principal payments are about $700. This plus the $300 cashflow would put us at $12,000 per year (if I understood what you were doing with the numbers). Our interest rate on the mortgage is 3.4%.

I believe this would cover the 3% that you look for, the only thing not accounted for would be the Property Management. I currently assign 20% (the $500) to reserves, but this also covers fees etc. Property Management is about 8%, so it would be $200.

We will be self managing for the first couple years, but I have 10% assigned to capital expenses though 5% is more than enough. This could be adjusted to help cover property management as well.

There is the $20,000 that still needs to be paid, but that is part of the 10% ($30,000) downpayment we were making that we got spread across 5 years. Technically that $20,000 should not effect the evaluation as it would be an expense on the front end as part of the cash investment.

Let me know if this effects anything, as I do like understanding the way people crunch their numbers.

@Jon Huber - 

Thanks! I have been on BP for a while, but I just quit my day job and will be investing full time. I love the tools here and have been using them!

@Curt Davis -

We have a promissory note for the $20,000 over 4 years, but there is no balloon payment or refi contingencies. I have the option to continue paying off the sub2 mortgage through the life of the mortgage. It leaves me with many additional exit strategies, though at this time I am planning on holding and paying down the principal. 

Best hands off investing would be giving your money to someone who is great with hands on investing. 

Example:

You partner with me. I find a crappy 10-12 unit. We invest your funds into the purchase of the property. $100,000 down on an owner carry/sub2 deal on a $500,000 - $750,000 property. I use other funds to do repairs and I increase rents and I create more value out of the property through renovations and proper property management. After a year of established higher rents, we take the property and sell it as a turnkey property and invest the returns using a 1031 and throw it right back into another property, but instead of having $100,000 to invest, we have $200,000 and we could have a 20-40 unit property. Rinse and repeat and when ever you want your cut, sell, take your cut, and then I keep the process going.

Simple example, but complicated execution.

Long time friend and partner with all the money is a scary mix. If I were to loan my best friend $100,000, and I saw him "investing" his time in anything else, be it work, leisure, even family, it would be hard to not allow resentment to creep in if the deal does not come out perfect. If it is perfect then no worries, but the one time it fails and you didn't do EVERYTHING, its going to hurt the friendship. 

(I am in a partnership with my friend right now, but we are both equal in work and investments and we still talk about the issues that come with being friend partners. being open and honest and always talking about the little issues is important.)

Welcome back and heres to a great 2015! If you haven't had an issue, then you haven't invested. 

Here is a little out of the box advice. I invest with a business partner. He is the kind who likes to JUMP! There have been so many "deals" that he wanted to move on and I could get the numbers to work. I over analyze things, and he jumps to soon. This partnership has created a balance where I am willing to move forward but I also am capable of limiting our risks through careful consideration. 

Without me, my partner would be negatively cash flowing or at best just owning a house. If I didn't have him, i would still be crunching the numbers.

I have my strengths and he has is. We balance each other out and we have found great success because of it.

Have the same exact conversation you had with this attorney with EVERYONE you know and meet. I found myself a private lender who put in 100% of the money for the purchase and the renovation and agreed to a 50/50 partnership. In some cases, it is worth taking a 40/60 split to build that relationship, and then adjust from there. 

Don't let people who don't understand hold you back. There is a box that society lives in, and investors live outside of the box. As you talk with confidence about your business goals, plans, how your investments are going to return said profits, you will find someone.

Don't look for the investors first and don't look for the deal first. Do them all at the same time. Network, market, and show your dedication.

If the deal is right, money will find its way to you. Even if you can not find a private lender you can always wholesale and thats not a bad thing!

A private lender would want to partner with you if you have a deal that can not be refused. They may find your lack of experience worrisome, but with good comps, good numbers, transparency and willingness to allow them to review all your information, if the deal is good they will lend on it. 

They need their security, so they will find a way to take it, but they won't miss out on good money just because the investor is new. Build your network, join local REI groups, stay active on BP learn the language, and FIND THOSE DEALS!

Even if you have a great deal and cant find a lender, you can wholesale it and still make some money.