All Forum Posts by: Tom Goans

@Nathaniel N.,

Why don't you manage your own investments?

@Jon Holdman,

To work from what you posted; as an investor, I find it more profitable to put all my funds towards investments and let the resulting cash flow pay the personal residence rent. The residence rent is also a tax deduction, but that is a different subject.

Thus, everything I own pays me money and/or reduces my tax burden.

It is a different approach and not a common one, but it has worked well and I know others that it has worked for them as well.

@Adrian Mata,

The numbers do not look good for my comfort level. In fact, I predict a negative cash flow for a long time. My thoughts are based on owing rentals since the 1960s. As an investor, my focus includes the return of my hard investment as quickly as possible. Many other investors want their money returned in a year or less.

First huge red flag in your presentation, never estimate numbers. Especially hard costs, such as insurance, repairs, maintenance, and enhancement numbers. Typically, I take the actual determined hard costs and double the amount to make sure the project is viable and no risk to me financially.

If I determine it will take a month to get the property ready to rent or sell, I factor in 2 months. Delays are to be expected. Now, do the numbers still work?

Another red flag, 3-1 should bring $600??????? Your success hinges on both costs and income. Do you know who the target market is and understand the target market's income, buying, and spending habits?

Have you factored in the annual increase in insurance premiums and taxes?

You stated you are responsible to pay the water utility, but have not included the cost in your analysis. This will most likely increase every year as well.

What about landscape maintenance?

What are the daily hard holding costs?

How many days does 8 percent vacancy represent?

Too many hard costs are not included in the list you provided. Moreover, too many numbers are guesses. As a long-term investor, I would not recommend this investment for you.

@Junior Salters,

This can be a great opportunity for all.

The trick is protecting your position - legally. Legally because if you are not a licensed real estate agent, problems could arise somewhere down the road.

My first thought is you may have an excellent opportunity to expand your personal investment portfolio. Commit to acquiring some, if not all of the properties. A lease with option could be the perfect instrument. Then, and here is where you should consult with an attorney, assign the lease with option properties to new investors as you find them.

This many properties could be a huge challenge to manage. Take this into consideration whatever you decide to do. I have never leased to anyone under the age of 25, but can imagine college students could be a big strain on properties and management's time.

Have fun with this one. You will probably talk about this venture the rest of your life.

Lucas,

My thought is finding a way to resolve the issue may be a much solution than filing complaints with everyone you can think of to contact. If you are not careful, you will become the main focus.

The idea is you can attract more bees with honey.

On that line of thought, let me share an experience to see if it sparks an idea for you.

My sister bought a single-family house - a HUD repo - in a declining neighborhood. My sister was making improvements inside and outside to make it her dream home. The neighbors on one side had noisy, unsupervised kids. The parents saw nothing wrong with the trash and noise at all hours. All the landscapes in the neighborhood were neglected and just plain unmaintained. If it was a dry spell, everything died that was not already dead.

My sister sought my ideas.

I suggested she complete her ideas and that I would assist with the landscape. We turned the property into a showpiece. Many days, people who lived in the neighborhood would stop by and ask how I made the grass so green or where I was finding all the trees, bushes, and flowers. In a year or so, the entire neighborhood did a complete 180. Even the challenging neighbor next door improved their yard and watered on a weekly basis. Everyone’s property values went up. In about 6 or so years, my sister sold her house and more than doubled her money and investment on improvements.

Everyone was a winner.

Lucas, maybe an invite to your place for some BBQ will go a long ways to begin the process of solving your challenge. Be neighborly and the same my be returned.

@Brandon Proctor,

Thank you for your service.

There is a group of retired Air Force Academy graduates that are very active in the Colorado Springs real estate market. What I am aware of so far are the two sports bars they have opened. Your thoughts might be leaning towards residential vs. commercial, but these people have done very well in a short time.

They may have some ideas or insights for you to consider.

The website for one of the sports bar is:

Colorado Mountain Brewery

http://www.cmbrew.com

Scott Koons, a 1993 Air Force Academy graduate, is the managing general partner of the group of investors.

Best of luck.

Your question does not provide enough information.

@Nik Smith,

First Step To Real Estate Investing

Education is critical to success and should be the very first step you take towards success. Too little education can lead to financial ruin or very overwhelming challenges.

Education. You cannot begin to comprehend how important education is to the complex business known as the real estate business. The more you know, the easier success will come to you. The longer you are in the business, the more you will value education. You will come to learn that seeking more knowledge on a daily basis is important.

Be the best informed and prepared person in the room.

-How well do you know basic business fundamentals? Can you write a business plan?

-How well do you know the laws that you must follow?

-How well do you know the governmental procedures and requirements?

-How well do you know accounting and other basic business fundamentals?

-Have you met with licensed professionals to plan your business and future (attorneys and financial planners)?

Being the best prepared and informed will help to make your real estate ventures easier and more profitable. It can also help you to have an enduring successful future. Seek broad education in real estate, business, tax law, government laws (federal, state, county, city), finance laws, real estate law and practices, and as much as you can think of that may or may not directly apply.

Education Sources

-Small Business Administration (SBA) (not just for loans)

This is a taxpayer-funded organization just waiting to give you guidance and education. The website is loaded with great articles to help you broaden your business fundamentals and skills, including creating a business plan.

The organization also conducts seminars and extended classes in local areas. Some, in association with local colleges.

-Local Colleges, School Districts, Businesses

Some banks and other local businesses conduct monthly seminars that are very economical to free. Sometimes, school districts do the same.

-Real Estate Trade Schools

-Books

-Recordings of Seminars

-Seminars

Be Paid While You Learn

A great way to be paid while you learn is to work with someone who has a long and successful history of real estate investing. They will teach you the fundamentals, and lessons learned from mistakes, and you will learn tips and better methods.

After a period of time, ask the investor to be your partner in your first several investments. This could allow you to become an owner without much or any money out of your pocket. You will also continue your education.

Education is critical to easier and enduring success. Education should be never ending. Finish each day a little smarter than you began the day.

@Kyle Clark,

You reap what you sow. This fundamental has been true throughout the history of humankind.

Lucas,

From what is stated in your post, it is possible the present owner wants nothing to do with the property or property management.

Send the owner a written bona fide offer to purchase the property. Not a “low-ball” offer, but your best price with no intention of negotiation. This way the owner realizes you are a serious buyer.

Before sending the letter, have your ducks in a row. Have the funding at hand so you can do a quick closing. And express your desire and ability for a quick closing.

You may also want to have a casual conversation with the present owner to discover the reason for owning the property. My guess is the owner enjoys the added monthly income. But is tired of the phone calls.

If the owner is enjoying a monthly income, offer to lease the property with the option to buy it later on. In the lease, you agree to take charge of any repairs and maintenance if he agrees to refund the hard costs. This idea continues the monthly cash flow for the present owner and greatly reduces the hassles. The other option is owner financing purchase.

Or, you could offer to be the property manager.

Any of these ideas puts you in control of the property and the values of your property, the neighboring property, the entire building, and even the immediate area.

These are just some of the options for your consideration.