All Forum Posts by: Sam Yin

@Jim K.

I second that!

Jim, I have seem some of your older posts and I know you are a hands on guys in all fronts. I respect that. Because I do it too. It takes a lot of sweat equity to make up for lack of capital in order to keep the REI momentum going.

I am always weary of posts that could lead a newer investor down a risky path.

It takes lessons in life to see and mitigate risk before it's too late. I'm able to do about 90% of my own maintenance and repairs. I have reroofed, repair all sorts of plumbing, frame, electrical, dry wall, windows, etc... I have battled with inspectors, code enforcement, and utilities companies. I have had to drag out my old tractor to rip out trees and weed and junk just to keep the county off my back, even when it was not technically on my property/land. I keep my auger, rototiller, disc, and ripper all ready to go when I need to load up the tractor. thus I am able to absorb a bit more risk than some investors. Don't get me wrong, I hardly do any of it anymore. I probably do about 1% these days. I have a team to do it now, plus a few in reserves. But I do still go out to do it on rare occasions or when I'm bored/in the area. I think it keeps my team on their toes. I started out 100% managing everything myself.

I have yanked out several tenants, transients, trespassers, and illegal gangsters off my property, never having to break leather, but it was at the hip, loaded and ready to go. That's on the extreme side, and I know most investors need not care to do. But it is an example of my sweat equity to make up for my lack of funds.

Some investors do not care to learn to do any of it. Not even to PM or basic maintenance. They rely on PMs and Contractors and use math to justify. Nothing wrong with it, but I think that induces risk because you can be over reliant. I have heard some do really well, but I have heard some nasty stories from others, particularly the long distance investors.

The point is, most start up investors should be careful when they hear all the success stories. It's not all sunshine. It can take you out of the game or really delay your growth. Growing from zero to 100 units, or zero to $500k cash flow, in under 5 years are rare and require a lot of risk tolerance and PERSONAL KNOWLEDGE of intentional PM and maintenance.

This is why it is strange to debate location/appreciation versus price/cash flow. Most newer investors can be led to a not so optimal path for their circumstances.

@Bob Stevens

I think you need to add some parameters.

Early in REI journey (1 to 5 years): trying to escape W2 or dabbling.

Mid REI journey (5 to 10 years): have enough cash flow for FI, may or may not even hold a W2.

Experienced in REI (10 plus years) AND have more cash flow than they know what to do with. Just looking to accumulate for long term wealth.

I feel people in different categories will agree/disagree accordingly. If a guy working a W2, making under $100K per year, with a family to support, was trying to get into REI to replace W2, then cash flow all day long. Conversely, a guy with $200K plus income (W2 or REI) with excess savings would/should go for location all day long.

For me, I try to balance both cash flow and location/appreciation. But I weighed heavier on cash flow at the beginning to get me to FI. these days, I am weighing heavier on location, because I can based on the cash flow foundation that was already built.

Thus, its a matter of individual position and perspective.

@Faustin Hoover

I have done this very early on in my REI journey. Based on my experience, I would advise you not to do it.

Do not get too creative. Stick to the basics of professional landlord/tenant relationships. When you deviate, you only bring unnecessary drama and stress to your life... Either now, or later when it becomes an expensive expectation. Because when you cut it off, you are the villain who puts profits before people.

These days, my PM give me gifts. That's it.

Just be the villain from the beginning. Be professional. Be profitable.

@Carlos Ptriawan

It's needed because there are always those that play not so nice and gang up on others to shut them out. They form syndicates and force buyers and sellers into using only their crew over time... Taking over territories like a cartel. This is why the government needs to step in.

Not saying it's right or wrong, just an observation of the nature of humans in a society if gone unchecked.

 If that is the case, I would definitely do it. You have enough of a stable income base that you can justify buying in a luxury location and wait for the appreciation. This is one of those rare opportunities where you can buy hold in a prime grade. A location like beachfront property or a desirable class A neighborhood. A long-term hold in those locations will net you great profits decades later.

so much so that you'll be able to extract the equity when you need it and not be worried too much about the capital gains because the gains are so great.

@Katie Tran

Katie, first off, awesome stats. And I envy your eagerness to make the move to REI with those stats.

I have read all the responses thus far and they are all well intentioned, just as mine is. I think the other posters responses are great and work for many others on this forum.

HOWEVER, based on your stats alone, I would reconsider REI. Your savings rate is great. Your income is very good. You age, experience, and family make up is what drives my opinion. I feel, unless you truly detest your current work/life balance, or it has been you dream to be a part of REI, you will find it very difficult, if not impossible to build greater wealth from your position without significant risks and distribution to the stable family life you likely already have.

You are not going to make compatible money from REI in the next few years. It will likely take 5 or more years of aggressive and intentional investing. This is get you close to 50 years old.

There will be a learning curve to achieve maximum efficiency. Or else you can extend that 5 year time line to 10 years. This will put you into your 50s.

If you feel it will be a slow transition and you plane to concurrently carry your current source of income, that will eliminate you free time and add stress to the family dynamics and your health.

In the next several years, the most crucial child development years in my opinion, you will not be there for your kids ... Not if you are investing to replace your income. By the time you will be able to get into a stable routine, you kids will begin to outgrow you.

That last one is what weighs most in my decision making. I would not be writing this if you told me you were making $200K/ year and have a few 401Ks, a 457B, and under $200 in your savings. Or if you were childless. But that is not the case. You guys are making good money. You have 2 young kids. You have a sizable savings and retirement accounts.

But then if you really hate your current source of income, by all means, take the plunge. To be able to making the type of money you are, I will take the chance and say that you have the altitude to absorb the nuances of REI quickly. This does not include your mechanical altitude, but I do not know those details base only on your post.

This is only an opinion. If you chose to pursue REI, go for it!! Seize opportunities and give it 100% effort. That's the only control you have, so do not waste it. You control effort. Can it be done, YES. Will it be easy, NO!.

@Jay Hinrichs

Ditto. Stick with what you know.

@Anthony Siconolfi

I have never found "the one". There has never been a perfect property. I have found properties that I was willing to invest my time and money in.

But if I was allowed to be loose with the term of the perfect property... The old lady has been my perfect property. She was always the one.

Seriously, I have never wasted my time to find the perfect property. I still keep searching for the most profitable in my current state, whenever that time is.