All Forum Posts by: Sam Yin

@Bill Brandt

Wisdom at its finest. I agree 99.999999%!!!!

The only hickup is the 100K gift. You better keep that quiet if you have other children. And you better stand your ground if your new bride questions it. Also, resolve in yourself that it's a gift, you have no say in what they do with the money, and they should not ask for more. In fact, they should find a way to make it back up to you, but that's more specific to cultures. Do not let the grandchild in the formula tug at your heart strings.

Remember, you have a new wife. That is now your #1. If that is not the case, she should not be your new wife. If your kids are truly your #1, then just keep dating. Because when you misunderstand the ladder of importance in relationships, you only bring pain to everyone involved... spouse, children, grandchildren, parents, siblings, etc. It may sound harsh, but juggle that around and you will only find trouble.

Just sayin...

@Giora Sela

Keep shopping around. Look at your local credit unions. If you are looking at bigger deals, try Agency debt.

For reference, I got Freddie Mac 2 weeks ago at 6.83%. Got Fannie Mae last week at 6.71%. And a few days ago locked in a local credit union at 6.61%. All loans were above $1M. LTV were 80%, 76%, and 75% respectively. All were 7 to 10 yr with some prepay. I think I could have gotten a 50 basis point discount if I did 60% or less LTV, but I wanted more leverage and keep more money in my pocket. Broker is charging me 1.25% or $1900 flat fee, which ever is greater. Only caveat is that the Agency Loans have a hefty application fee... like over $9K.

I know that a few other credit unions have even better rates with aggressive DCR, but they require a 12 month hold back, thus that did not fit my needs.

Keep shopping. I bet you will find something better than you ate finding now.

@Edward Dandrea

I know this depends on specific markets, but buy 8%+ CAP brings me pause. I usually look for 5%-6%. But it all depends on your strategy too.

My question is why not look at a different deal that fits your criteria? Or why not negotiate the deal to fit your criterias? You can always offer a lower price pr ask the seller to make adjustments to the current lease prior to closing.

I have to believe that if your market had offers at 14% CAP within the last several months, there are still out there and possible. And even if it dropped to 8%, that is still darn good for the current interest rates... unless you were planning less than 20% down or some other sort of creative financing where you were looking to use 100% OPM at rates that are higher.

In the markets that I chose to invest in, CAPs are around 4%, at best, and investors are clawing at it. They dissapear fast. The only ons that linger are the 2% - 3% CAPs, but they sell too. Because there is a market for it. Because there are huge profits to be make even when interest rates are almost double the CAP.

In any case, the CAP rate is only one metric and should not be the biggest factor. Or may be I'm missing something in MY deal analysis?

Any time! I have always preached that. But few ever really understand it. And that's OK too. It keeps the world turning and interesting.  If everyone did the same thing, it would be boring and the jig would be up.

We all go through similar phases of life. Some skip and hop pass a phase while others get lost in it way too long. 

When I first landed in America as a kid, my goal was to have a house paid off and $1M in the bank to live off the interest by the time I turn 30. I worked hard towards that goal and bought my 4rd home before 25 years old. I was not an investor of any sort. I was just pursing the goal. But then I got married and that pushed the $1M back. I plucks away at it while working like a machine. 

One day, my supervisor called me in and said I lost a bunch of vacation time because I had not taken any vacation in several years. The fact is, I did not know what a vacation was nor did I understand the concept. The notion/idea did not exist in my culture. Be booked a week cruise for my wife and I with a 3 day train ride back home in a sleeper car. First vacation we had ever had, and we had been married a few years by then. That very moment, it dawn on me... this is what life should be like. This is what all that work is for. This is what I need to get to do more often. 

We take road trips and cruises ever since, but limited to mt savings and vacation time. In the last few years, after investing for cash flow, we do extended the summer trips to 5-7 weeks at a time, while kids are off. Adult cruises sprinkled in. Now the wife wants to do one of those round the world cruises with the family.

That was all made possible by investing for cash flow. Appreciation is a nice bonus, but it doesn't pay the bills. It would not have allowed me to leave the W2 world behind. Like Jay, I do still want to keep busy. But I do it on my terms. I'll go teach motorcycling at the local college here and there, pick up a few bike rebuilds once in while, and teach the kids some Jujitsu in between our travels. In fact,  we just got back from a road trip a few hours ago. I have 1031x in the works, all done via the cellphone that took less than a few hours put of the entire trip.

If I was single, then may be I would keep working full time and invest for appreciation... may be not...

@Joe S. It's hard for me to say that Cash Flow is Not King...

 Joe, you give out just enough to be dangerous. I love that strategy.  It's another tool on my belt. But if an new investor is not careful,  they can hurt themselves. 

Thanks for always be consistent. I hope more members take the time to analyze the education you provide.

 Well put. I strongly feel that since there are so many variables in family/health dynamics, many posters forget to incorporate that into their wealth-building model. You must keep up your health and enjoy your wealth while it is optimally enjoyable. That way, you can share the experience together with your loved ones while it is most meaningful. The constant chase for more riches often blinds many to the loss of time.

While I was still working, I had a co-worker who put in about 40 years of service to the organization. The last 10 years were really unnecessary. However, there was an incentive program to keep tenured workers for their expertise. The offer amounted to roughly a 500K bonus to work past their normal retirement tenure of 25 to 30 years of service. This co-worker jumped on it. He calls me now and again telling me he is cruising with his family/extended family. Everyone is enjoying the trips. I ask what activities he has been up to and the gives me the same answer all the time... he is lying around on the ship while the kids and grandkids are out and about. His health/fitness is too fragile to do any more than sit around and watch the world go by. Those last 10 years of his version of wealth building are now only for the next generation, not for him. This is one of MANY similar examples I know of firsthand.

Obviously, this is different for everyone, but the one thing that is the same for everyone is that you cannot reverse your age and your health often deteriorates faster as you age. I wonder if a section for married/family investors might benefit the community. The different viewpoint might open a few eyes to those younger and up-and-coming who might need more guidance from those on the family path they might embark on as they invest. This may not resonate with some BP members. Because everyone has a different upbringing and set of life experiences. Not many people have been put in a position to possibly lose everything, or life/death situations, or see the world outside of the US. And that is OK too. 

Thank you for bringing clarity to the discussion. 

 With a little delay, I just want to come out looking super cool.

Seriously though, I think it's been cool knowing that the investing and reinvesting paid off. All the delayed gratification was way worth it. I never felt uncool doing it, I just had a goal in sight.

Funny thing, I found the dream truck back in March. Perfect everything,  down to the color. Even struck and awesome deal with the seller. I backed out because I wanted the money to go into reinvesting. Ended up picking up an additional 6 units in April. 

As much as I regret not grabbing that truck,  I know I made a better choice with those funds. I experimented with the knowledge I picked up from BP. Raised $160K, put in a small bit of my own, and nabbed the apt. I retained 100% equity stake and still had enough for cashflow using 90% OPM.

@John V.

Awesome stuff! I have been laboring to do the same with my kids. They are quite a bit younger. Got my youngest started at 9 years old. I gave her a laundry room to manage at one of the apts. My boys were a few years older but passed on it. As they saw her account grow $500/m, they got jealous. They fought for the other laundry rooms but I made them all share it as punishment for not taking on the first offer.🤣😎

Part of it was to get them to manage money. It's been almost 2 years and they are on their way. I push more financial intelligence down their throat everyday. The baby girl will be 11 yr old next week and has enough to begin hunting for a small investment of her own. She may be the first to buy a small property.

I'm hoping at least one of the three will want to take on the portfolio when I want to step aside.

Your boys sound like they absorbed all that you guys taught. They sound like they will make their fortunes much more wisely than their peers vs slaving away to live pay check to paycheck. That's all I really hope for as a father.

You bring me hope and reinvigorate me with your story. I hope to hit 15M in 2024. I wont wait until 20M to splurged. I have not splurged any profits and have only reinvested. I plan to buy myself something nice next year... looking for a 2006 to early 2007 Cummins Ram 3500 manual shift with 4x4 that is under 200K miles on the odometer. We all have dreams, that's been mine. We been driving our car for almost 20 years and its almost time for another vehicle. I'll pass the old car to my oldest son when he gets his permit next year.

Thanks for the awesome thread. So many golden nuggets.

@James Hamling

Agreed.

@Arn Cenedella

I'm going to have to disagree with your math a bit. Based on you assessment, you are assuming no movement/exchanges in the initial capital used. Whereas in reality, the strategy should be to continue to work thay capital to get to your FI number.

In your example, it would seem impossible to generate 120K of income without $1M+ in capital.

If you take a step back and consider all the facets of REI, and employ sweat equity, value add, 1031x, I will argue that you can easily cashflow $120K with a lot less money, AND leave a large portfolio for generational wealth in short order.

I have done this recently, with a start up capital of about $130k, initially spread between 3 SFRs. Using what I described above, it has grown close to 100 rental units, well beyond 120K of cash flow, over $10M in assets, and still growing. Children college is set, if they want to go, but I hope they do mot waste their time with the college scam. As the portfolio grows, I grow the reserves to at least 5% to 10% of the valuation... but I get caught up and reinvest when opportunities pop up and start the cycle over.

This is a great thread with good education. Like many on here, I am still new at this and learning all the time. But I wanted to present a different perspective so that cash flow is in the forefront. Remember, cash flow keeps you in business, not equity. If you have 10M in equity across a large portfolio, but the cash flow is minimal or none, a small emergency can wipe out your business. The unforeseen environmental costs can snowball and wipe out your assets.

If the model is to invest long term with partnerships or syndication or REITs, then that's a different story.

In the end, it does really depend on the goal of the individual.