All Forum Posts by: Nathan Frost

Ok, so you're arrogantly ignorant, got-that. 

I find it interesting your style of confidently assuming the future, then impulsivity based on that assumption.     Do you see the lack of fact/data based decision making here? 

You say that you had an assumption of the future, so you didn't just hedge for that, you completely changed everything and went ballz-out on things.     I read here that your doing the same thing again; assumptions of the future and making rash significant actions per.    

It's funny your use of Pace as the comfort-excuse that it's ok to be rash, impulsive, assumption, because it's "learning". Because yup, Pace's 1st several business went under and, he didn't do them again. He learned from it all and ADJUSTED. That's what I suggested you consider, an ADJUSTED measure of doing REI.

But as started, clearly you're happy to be in the arrogantly-ignorant club, fly that flag, wear the jacket, and by all means exercise your freedoms to do so. But let's not kid ourselves into some BS lie that it's "learning".     When arrogance is in charge, there is no learning being done, none.     

If you keep on this path of fear based assumptive emotional decision making, it's gonna burn ya. Fair warning. 

 It sounds like you have answered your own question. It makes sense to sell the worst performers, bulk up your reserves for the remaining properties, and then use your returned capital for something else. 

I started walking down the same road - buying smaller residential properties by myself. I learned the same thing: A lot of hassle for a little bit of profit. I'm also liquidating that (smaller) portfolio and have pivoted to larger properties.

Happy to talk 1:1 if you'd like.

@Nathan Frost are there any of them that stick out as a pain but also have some equity? I've always been a fan of selling the losers every so often.

Also 12 properties is totally manageable if you have good systems. I would fire the PM, suck it up and right the ship. Sell 1 or 2 of your problem properties and make sure you have $60-100k in the bank.

Do it now, don't wait!

@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.

First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.

I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms. 

Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.

I don't get it. 

Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?....... 

You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months?    The first 1-4yr is the grind-time. 

If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.     

I get the feeling that you already made your decision and did this whole post just looking for validation. 

NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach.... 

The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go. 

And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious. 

At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.

And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......

@Nathan Frost

Sell your worst 2 or 3 properties that you expect will be the biggest headaches and the ones you can live without. Reduce your debt load or sock away the savings into reserves.

Better to own your best 6 to 8 places then 12 that are not performing at the level you want