All Forum Posts by: Salvatore Lentini

@Nick Halula - the 3% vacancy is way too low.  Real world scenario.  Tenant stops paying, it takes you 2months to get them out, while they don't pay their rent, then you get them out and have to dump money back into the unit because of the damage they did.  Yes, you have their security deposit but it you need all of that and then some.  Then you have to put it back on the market.  You get a bunch of low quality tenants applying, bad credit scores, bad references etc.  Same thing happens again.  You could easily have 3 or 4 months vacancy per unit per year.  Not saying it will happen every year but it's not hard to have a string of bad tenants.  This isn't as big of a deal as your portfolio grows but when you have 1, vacancies can sink you before you get started.  Not hard at all for your cashflow be negative in a 12 month period on a class C property.

@Zachary Samuel - if you have substantial capital and income and don't want to anything high maintenance I would suggest private lending, jv or syndication.  It won't be the highest return on investment but you can probably get better returns than the stock market at potentially lower risk if you do it right (money secured by real estate).  Early on (10 years ago) I think the private lenders I worked with made more than I did on certain deals!  On my current larger commercial deals I usually bring in 1 or 2 money partners.  They put in money and get equity along with a nice return.  In the next few years I will probably being doing that myself by investing in other investors' deals along with my own.... because there's only so much time in the day and when your money is working for you...it's working 24/7 and can be working in tandem with you effectively creating an unlimited return.

@James Carlson - there are always the doom and gloom people out there.  Depends on what you're looking to do in real estate.  If you're trying to do flips, it's a shorter time frame which can be good and bad.  Good in that the chances of the market turning while you own the property are smaller but bad in that you are more affected by it.  If you're buying rental property, the actual value of the property doesn't matter all that much (at least on a short term basis).  It's all an unrealized loss unless you sell.  So if your plan is long term... then, no worries.  I mean, even if you were to have purchased a rental at the peak, prior to the Great Recession, if you held onto it, you would've cash flowed all these years, you would've paid down the mortgage and it would still be worth more now than you paid.  And the whole time you owned it your tenant was paying your mortgage off :)

@Zachary Petrak - have you gone to any local real estate groups or meetups?  I found my first RE attorney there.  He drew up my wholesale and purchase agreement docs early on.  As luck wold have it, he also happened to be a private lender and funded 90% of my first flip (I came up with 10%).  I also met my first realtor there.  She happened to be a fellow investor so my first few wholesale deals were flipped to her.  She also became a private lender of mine (to this day - 10 years later) and I bought my first dozen or so single family flips and rentals through her (pocket listings).  Long story short, if you haven't already, those meetings can be really helpful in building your network!

@Frank K Hwang - I use RentRedi for a mixed use property of mine.  14 retail units on bottom and 13 apartments above.  I don't have any complaints other than I'm paid through September and just received notice they are raising their prices.  Is it really included through BP Pro?

On some properties I have property management (they all seem to use AppFolio) on others I self manage with direct deposit and have a bookkeeper that handles the bills and gets everything ready for my accountant.  All depends on the deal, how close to home it is and who my partners are.

Starting out smaller is generally smarter as you don't have experience and every mistake you make is that much more expensive. I am a huge fan of bigger deals. The bigger the better. But you need to have deeper pockets. One of my properties needs a new rooftop HVAC. I'm looking at $80,000. I'm due for a parking lot resurface at another property. Last time I got a quote pre-2020 it was $40,000. Can't even imagine what the quote will be now! That being said, the rents coming in are a lot bigger too but once in a while something big comes up that you didn't have projected in CapEx and that's when you need to have the ability to access alternative funds temporarily. Line of credit....your own bank account, a refi of another property etc. But in the long run, bigger deals can get you to financial freedom much faster than the smaller deals. They both work but the smaller deals just take a longer time frame and more hours per week from you.

@Brandon Ribeiro I have a portfolio of multi family, retail, office and last May acquired a 27 room motel.  We do a combination of daily and monthly rentals depending on time of the year.  I see this post is a little old but to others, if you're in this space or selling something in this space, feel free to message me.  We're actively looking for acquisitions.

@Nupur Kohli - what if the market softens?  How long can you hold the property while losing money?  A $700-$800 loss per month is quite substantial.  Am I missing something?

@Brandon Stiles - ahhhhh.... Analysis Paralysis.  I suffered from that affliction for 9 years!  Get started :)  That's one of the biggest lessons I teach.  You'll learn more on your 1st deal than all of the past 5 months combined.  By the time you do deal #2 you'll feel like a pro and you'll wonder why you didn't start sooner.  Just make sure you set yourself up for success prior to putting your offer in.  #1 on that checklist is having an Escape Plan for your money!

@Stephanie St. Germain - you don't need to decide now. You can change the purchase agreement. There's no right answer on this one. You'll get investors arguing both sides. Yes, it limits options with conventional financing but maybe you're not planning on going that route. Personally, I had zero income when I first started out because I was self employed. So I had to go with a direct lender. Rate was about a point higher but I was able to get 10 properties in year 1 and as time went on I moved on to bigger deals and now I'm able to get loans with traditional banks. If you buy in your name personally just make sure you get a hefty umbrella policy in case you get sued. That should put you on even playing field as an LLC liability-wise.