All Forum Posts by: Sam Yin

@Michael Higgins

I believe the question is contradictory.

But first, to the title: The most general answer is NO. You cannot make money in REI while making a difference in that aspect, in general. You will lose money to inherent issues that plague lower income populations. There will generally be more wear and tear, abuse, and neglect by the tenants, because they cannot afford to be on top of things. Additionally, and obviously, you will make less potential profits.

To the OP: You will not be able to "grow" your portfolio at any substantial pace with this model. It will likely work out better for you if you already grew your portfolio to a place where you are fulfilled and just want to give your excess.

It is an admirable goal. I believe my investors will not be able to achieve this in the first 5-10 years of investing. That is the general timeline I feel it takes to achieve $10M-$50M in AUM. And if they are 50-70% leveraged, AND the equity is performing at 5-7%, then most people would be living off of most of that come and have only about 10% of it to donate or sacrifice. Otherwise, you would shoot yourself in the foot to try and do it earlier. But there are people who do because they either had some wealth handed down or have other sources of income and REI was less of a business and more of a hobby.

@Henry T.

It's just a proposal... For now. Hopefully it remains a proposal.

In any case, there is no verbiage that states the Landlord MUST accept the applicant with the pet. Additionally, there is NO verbiage that states the Landlord cannot impose verbiage in a Lease of a non-pet owner to prevent future pet ownership... The simple lack of it can constitute a violation of lease terms if they bring in a pet later.

I still love CA and I still invest in CA. I HIGHLY doubt there will ever be law a forces any Landlord to accept a pet owner over a non-pet owner. That would be discrimination. And in this day and age of of PC, DEI, etc..., that's not going to happen anytime soon.

I hope I'm right...

In the end, you have to decide where you want to plant your seeds. There is no argument that wealth can be built everywhere, whether its CA, NY, WI, or OH. There are expensive and inexpensive areas in every state. 

People will argue that politics and local rent control laws can be a deciding factor. And the list of other reasons can go on and on. You just need to pick a location and get moving. You must accept the pros and cons of local and distant investing. If you are choosing REI as your vehicle, then it is likely that you want more control rather than just stock investing. Thus, by virtue of that statement, there should be a tendency to stay local. However, a good team can make OOS investing worthwhile, and it's been proven.

There is only one question left, are you a hand's on investor willing to add sweat equity, or are you a hand's off investor who wants to leverage money to buy labor and skills to achieve your goal? What personal time commitment are you willing to put in? What is your goal's time line? 

Personally, I believe that you can reach FI faster locally. But that was my initial focus. I want to be free to do what I want in my 40s with my family and guide my children now, not in my 50 or 60s. It may not be yours. Youay really love your work and your W2/schedule may already be awesome. If you are more focused on building wealth and enjoying the benefits at the traditional retirement age, you should choose a different path. I wanted out of my 9-5 as quickly as possible and enjoy the benefits while I'm young and able. I felt that life and longevity is not guaranteed and my kids are only kids for a brief moment in time. There was an urgency and I was willing to put in a lot of sweat equity to accelerate the journey.

Im a big believer in CA. Rent control and politics can be overcome. I completed an Eviction last week, one this week, and will start another next week. Lately, it's been a few every year. But it is by design because I focus on those types of properties that have the most upside. I have been running about 5-7 vacancies since September. That's over a $100K in loss rent. Buts it's perfectly fine because it's part of the strategy and by design. It's CA. It's local to me. It's all a matter of expectations and perspective.

I know you will get some great honest advice from other members. We all just want to see others succeed and share our experience to help you get there quicker. Best of luck.

@Jay Hinrichs

Ditto!

The state is huge and very diverse. You can find similar markets in CA. Just sayin.

OP is worth a reread. Then reread it again.

So many golden nuggets.

Thanks.

 A few years ago, during Covid, it was allowed up to $100K. I wish I seized that opportunity, but I was too naive.

I would like to chime in because this is near and dear to my heart. I made the mistake of not touching my 457B for many years. I was misguided and under the worker bee delusion that many 9-5 workers are institutionalized. I kick myself in the butt because I could have deployed it a decade ago when the market was ripe for the picking, but I believed the finance guys the employers provided at their seminars.

I have done it. I regret not having done it sooner. Sometimes, it is that little extra that gets you over the hump to acquire/control a greater asset than you would have without withdrawing those funds.

Take a moment and think about all those numbers that have been thrown around. The funds you put into your 457B were pretaxed. Those funds grew in value on top of the regular allocations from your paycheck. All of it is yours. You borrow from YOURSELF. You pay back with interest TO YOU, granted they are posttax funds, but does it matter? You gained interest/value on pre-taxed funds that you just borrowed from. Then, on top of all that, you just controlled or improved some real estate with it. Unless you totally threw all REI strategies out the window, which I highly doubt since you are getting into the weeds of Def Comp, you will blow that 457B out of the water in due time. That $50K likely elevated your value by $100K-$500K, based on your payback term. On a side note, any tax you pay later in life when you draw out your 457B is really meaningless, because you still WIN either way. You are taxed on money that should have been taxed and you are taxed on gains of the untaxed dollars... you made out with a 457B account!

Here is my example that I just did, which I wish I had done years ago. At the end of last summer, I pulled $50K from my Def Comp (my max). I also had my wife pull $25K from hers (her max). I used it to assist with my downpayment and costs to stabilize 3 parcels, all acquired at the same time, totaling 9 units. I used 80% LTV. Improved the asset with some cosmetics, such as better signs for address numbers, locking mailboxes, minor landscape, and trash clean up. Just got some stuff from Home Depot and some scrap wood around the house. Shaped the wood really nicely and had my wife paint it so she feels like she contributed, which made her feel important/needed (HIGHEST ROI!!!!!!). I did have to install a few clean-outs, but its was necessary. I increased the rents as well as spruced up the curb appeal. Currently in the process to refi and cash out roughly $200K, ON TOP OF the original $280 I put down. In fact, $100K of that original $280K was not even my money, but that's another story.

All that occurred because I pulled some 457B loan out, from myself to myself. All within 1 year. There is no way that 457B can perform close to that. Don't even use a 30 year timeline for 457B, because in 30 years of reinvesting that money that was pulled out, there is a high likelihood that I would have turned it into $Ms through 1031s and depreciations, etc...

@Jay Hinrichs

This would be most appealing to me if I had cash and did not care to put any work in REI capture all the other benefits.

@Connor McGinnis

OfferUp

 I feel you!

keep going and don't let it stop you. My kids see what I do and I know they will learn to follow their passions too. As long as she doesn't force you to stop, it means she still respects your individual desire to achieve more.