All Forum Posts by: Ryan E.

@James Schindler I am planning on starting a very similar DM campaign with the idea of buying one 2-4 unit a year, possibly to house hack as well. When you got your list back from listsource did you have to find the property owner’s mailing address by cross referencing county tax records or is there some easier way? 

Well the downside is mostly not having that extra money available for more deals or as an emergency fund. Your cash on cash return will go way down. Not sure what your new cash flow numbers are if you leave 55k in it as opposed to just 1k as before but it will be way lower than the 65% you have listed above. 

Above you also say you accounted for a 4% vacancy because of any missed payments. This will be a weird concept to investors in the US. If you are worrried about tenants missing payments then I would recommend doing a more thorough screening and background check. If tenants miss payments here it usually means they get evicted and those evictions will usually show up on background checks. Also, if rents are going up in your area each year can you perhaps  find a different tenant that will sign a shorter lease. Even better would be building in rent increases each year into the lease agreement for this current prospective tenant. If you can increase the rent each year, even by a somewhat small amount, it will really add up over those 8 years. If you have 50 euro per month increase each year, your monthly rent would be 1250/month by year 8. 

Are 8 year leases normal there? I ask because that is something I’ve never heard of here in the US. Besides a rent to own situation anyway. 

@Fabio Busatto it’s very interesting to hear about a deal from Italy! Your cash flow looks small but I think there’s more to a good deal than just cash flow. 

My first question would be is there a really good chance of appreciation on the property in the future? What are the fundamentals of the town/city where the property is located...population growth, unemployment, job growth, etc. Is the property in a great area that attracts the best kinds of tenants or in a not so good area? Have properties in the area gone up consistently in the past? What about rent growth? Is there a good chance of rent increasing? 

Are eight year rent agreements normal in Italy? In the US many assume rent will grow each year by at least a little (depending on the area). 

You may consider just flipping the property and using the profits to find one that has better cash flow numbers if that is your goal. If you can afford to leave more of your money in and it’s a great area that has an excellent chance to go up in value/rents then you could possibly do that as well...leave more of your money in to keep the monthly payment down. 

Cash flow is one of five wealth generators in real estate...cash flow, equity growth from renter paying down mortgage, appreciation, ability to leverage using other people’s money at low interest (the banks), and tax benefits (tax benefits are probably a lot different in Italy). 

Really the only way you’d probably want to hold is if you are very sure that value and rent will go up and you are in a personal financial position to cover any “negative” cash flow in the mean time. 

Your quote above about discipline is spot on and I agree with it 100%. Jocko Willink is a retired Navy SEAL...has his own podcast called The Jocko Podcast. It’s all about leadership, discipline, ownership, etc. I love it. He also wrote a book called “Discipline Equals Freedom”. I highly recommend that book along with his other book “Extreme Ownership.” 

@John Casmon @Todd Dexheimer @Brie Schmidt @Mike H. @Elbert D. I recognize each of you as local experts in the Chicago area as I’ve read many of your posts on BP and I always appreciate your input. I’ve read and heard a few times that certain areas in the Chicago MSA are seeing big population declines while other areas are growing and doing very well. Can you list some of the areas that are experiencing solid population growth? My good friend @Shane Barker and I have been analyzing various potential rental properties for the last few months but don’t want to pull the trigger on an area that’s declining. 

@Eric M. yes, I apologize and definitley misspoke on the problems being easily solvable. I agree that it’s incredibly complicated. 

At the end of the day there are lots and lots of investors making money in IL and Chicago. 

@Eric M. I tend to roll my eyes a bit at the doom and gloomers generally and specifically as it relates to Chicago. At the end of the day the Chicago MSA is THE THIRD LARGEST in the nation. As such, it’s economy is probably larger than many nations’ in the the world. Let’s look at some stats yielded by a two minute google search: 

Population of Chicago MSA: 9.5 million. 

Chicago MSA population loss in 2017: 13,286. 

Total population of IL: 12,802,023

Overall IL population loss in 2017: 33,700

This may be somewhat of an absurd example but if you had 9.5 million dollars and lost 13 thousand, would you claim that you are losing your money in “droves”? There’s a lot of hyperbolic speech when it comes to the population loss of IL. Of course you want to see your population increasing. Of course the property taxes are way too high in some areas but overall I think the third largest MSA in the #1 best country of the world will be just fine long term. 

What’s seems frustrating to me, being on the outside looking in, is that some of those issues seem easily solvable. Property taxes are too high? Let’s start dropping them. Oh, we are losing people every year? Let’s do things to entice people to move here...attract employers (Amazon HQ2), lower taxes generally, improve crime as much as possible, etc. Again, I’m not from there and this is a total outsiders perspective who has only researched the Chicago MSA. 

@Chris Clothier thanks for the reply! I’ve been able to talk to some companies/wholesalers who offer something similar but they don’t call themselves “Turnkey” as they either wholesale you the deal and set you up with the contractor or the brokerage has access to foreclosures and connect you with contractors, law office, property management etc and get paid commission from the bank. Again, it isn’t Turnkey and not billed as completely passive like Turnkey but it’s sort of a one stop shop for all the critical “team” members. 

@Chris Clothier do you think it would make sense at all for a TK provider to have the client fund the purchase and rehab up front in exchange for some percentage of equity on the back end? Maybe not the full 20-25% required for a fully successfull BRRRR but maybe something like 10%? That way it takes some of the risk off the TK provider and allows them to keep more of their capital for other deals, marketing, etc. An added benefit to the client is being able to recoup a portion of their capital for future deals.

Maybe that wouldn’t be something you’d do at this stage of your business but would it have been a fair trade off in your earlier years as a TK company? 

Maybe another reason it doesn’t make sense now is because it seems money is plentiful and deals are more scarce at this point in the economic cycle. Im very curious to hear you’re response as I always like your posts in the forums so thanks for chiming in here.