All Forum Posts by: Josh Caldwell

What part of PA, I can help you if it is South West PA, you would want to reach out to Attorney Matt Beam

Ready for a doubleheader ? 

This coming Tuesday is the main monthly club meeting. This month, we have not one, but two fantastic speakers.

Tuesday 5/21

3579 Masonic Way

Pittsburgh, PA 15237 

6:00PM Doors open – Networking 

7:00-9:00 Main meeting

First up, Expert Property Manager  Alex Deacon 

Alex will talk about where and how you should spend 20% of your time to get 80% of the results.

You have all heard of the 80/20 rule.

The 80/20 rule of Being a landlord. The most important things to focus on when handling the property management of your portfolio.

Next up, using 1031 exchanges or how to sell real estate without paying taxes. 

Attorney John Lee, VP of Investment Property Exchange Services

Will be talking about how you can take advantage of an IRS loophole which allows you to avoid capital gains when you sell a piece of real estate.This is powerful stuff.

We will also have some local news about the real estate market.

As always, first time guests get in FREE. All other non-REIA members are $10 at the door.

Come early and network with the movers and shakers in the Pittsburgh real estate market.

Capex isn't supposed to come out of cash flow, but capex is also a fund that builds up. If you take a major hit before you build that fund, it has to come out of cash flow. That is why you need to consider cash flow first and foremost.

I don't really bother to look at markets outside of my own.  What I see, is people all over America trying to invest in my backyard, so I haven't felt a need to look for greener pastures.  As a landlord I value cashflow above all other things  Not exclusively, but it is my #1 concern.  I have no problem finding property that will cash flow. The draw back to my market is that it is hard to find multi family units above 8 units.  We just have no inventory, but if you can deal with single family houses, we are among the best.

Full disclosure, I do mentor people. So my take on this might be a little different.  

I have never heard of this company, I know nothing about them. With that being said. They do seem to be providing value to your friend. I can make the argument, as many have here that your friend got a positive ROI. I can also make the argument that your friend risked too much.

The value of a mentor is measured in applicable skills that are taught to the student.  Skills that the student can use to make money long after the mentorship has ended. Once you learn the techniques, they are yours to keep.  So the cost is basically a one time charge to acquire knowledge.  

There are two ways to pay for this knowledge. You can either pay up front, with the confidence that you will make money from your studies, or you can pay as  part of a deal split on the back end.  Paying up front at a set amount is far cheaper for a successful student, but paying on the back end comes with nearly zero risk for the student. 

In general, mentors want their money up front.  There is a non sinister reason for this. Not all "students" will actually take action or do as they are told  The single most frustrating thing about being a mentor is the student who wont take action. I have one now.  Week after week, we keep discussing the same steps.  Every week, he has an excuse for why he hasn't taken the actions needed from the previous week. I am actually going to fire him as a student today. 

The deal split model, is a little more interesting.  In this model the coach gets half of the deal.  This works like a hook to make sure your coach wants you to be successful and it has some value.  From the coaches perspective; if I have to tell you how to do the deal, I can do the deal faster and better without you.  So, the 50% of the deal is a way of compensating me for slowing down my own process. The benefit to the mentor, is that the student acts as a bird dog/acquisitionist or even free employee. So it is a mixed bag for both parties.  Anyone who has the skill set to be a mentor, has no real use for students. mentorship has to be something from their heart. 

Lost in this discussion is the fact that a good mentor will speed up your learning curve.  There are good and bad in both methods of payment to your coach.  My suggestion is to interview the perspective mentor and get to know their personal story.  Does this person have the skills that you want?  Can he teach?  Is his heart in the game, or is he just after you for a paycheck? 

STOP, DONT BUY THAT DEAL !!!

The deal you described will make your bankruptcy attorney very happy.  That deal ONLY works if your property appreciates over the life of the loan. What happens when there is a market correction?  You will suddenly find yourself upside down in the loan, and unable to refi out. Then you will lose the property and destroy your credit. 

The super weak cash flow at $25 wont cover any major repair and at some point you will need a roof. You would be far better off investing out of your market and getting a decent ROI with less risk

Even as an owner finance deal, this deal sort of sucks.  The advantage in an owner finance deal is that you would just default privately.  That would keep you from destroying your future credit. 

The only way I would touch this deal is as a sandwich lease option or something similar where someone else was holding all the risk.

Lou Brown will be doing a deep dive into the world of trusts. With QnA Session.  

This is the stuff your lawyer doesnt know.  I know none of my lawyers understood it before I explained it to them. Then they thought I was a genious!!!

We can use trusts for asset protection. This is as close to being law suit proof as you will ever get. I like to use trusts to structure owner finance deals and mortgage take overs.  This is really cool stuff, you dont want to miss this.

See you soon 

Josh 

DONT MISS THIS ONE

April 16th - the REIA Monthly meeting will have a living legend in attendance.

Lou Brown will be in town to teach us how to use trusts. HINT there is more than one way.

If you want to learn how we are able to buy a house before it goes to sheriff sale, or how we can take legally assume a mortgage, or even how to make yourself law suit proof, then you want to be at the meeting on the 16th. 

Since Lou is in super high demand, he will also be doing an advanced class for us on the 17th.  Same location, 9 AM till 1 PM. 

Mark it down, clear the day, call off at work (nobody can say that you didnt have a stomach flu), make sure you are there.

Tou your success

josh 

PittsburghREIA.com  - sign up for our FREE newsletter. 

@Jay Hill Hey Jay, the date is up at the top, it was the 19th.  The next meeting is the same time and location and it will be held on the 16th of April. We are always on the 3rd Tuesday of the month.  I might as well announce my guest for that meeting while I am here. We have the legendry Lou Brown coming in to teach us about trusts and how they can be used to safely take over mortgages without triggering the due on sale clause.  Also a lot of really cool asset protection stuff, and it even avoids probate for your next of kin. If you really want to be in the loop, go to PittsburghREIA.com and sign into our free newsletter. 

To your success

josh 

Personally, I don't do bad areas, but that is a personality issue. I have a low idiot tolerance.  So to keep myself out of jail, I shouldn't own war zone property.  

With that being said, there is fantastic cash flow in horrible neighborhoods. There is actually an inverse relationship between neighborhood quality and cash flow.  That is why people tend to flip in great neighborhoods and buy and hold in crappy ones.  

My personal strategy is to buy and hold in blue collar neighborhoods where people have jobs, but not high paying jobs that would allow them to become home buyers.  I like dealing with adults who can take care of themselves.  For that privilege I am willing to sacrifice some cash flow, in order to maintain my sanity. 

I hope that helps

Josh