All Forum Posts by: Michael Spindler

Karen Margrave

I think you are very spot on. Effort vs. reward makes this a poor strategy.

It is not that I can't get into SFR... REOs/HUDs are available by the boatload. Was just trying to think of ways to accelerate earnings to build my business.

I think before I waste more mental energy, I need to get with my REIA and see what they are doing in the real world.

Thank you for sharing your insight on this. I really appreciate it.

Elizabeth Colegrove

Thank you for that perspective. You and I will be in considerably better positions when it does come time to buy... vs. the guy with $50k to spend with no knowledge.

Are you physically going to properties to evaluate? Kind of a warm up...?

Thank you and best wishes. I have no doubt your first will be profitable. : )

Perry Apawu

Finally! A topic I can relate too. : )

Everyone has made some great points about getting out of debt. Additionally, you need to weigh the stress and psychological impact your debt load has on you. (Bad) Debt is a poison on your mind.

How badly do you want to change your mindset and quality of life? Your mindset directly impacts your goals... which might be why the 2 years of hitting walls. imho. Don't be hard on yourself, it took me a decade to figure this out.

Personally, I was like a whole new person when I paid off the last of my consumer debt. It was liberating and a key factor in changing my thinking and actions toward abundance and wealth building.

What worked for me. Debt snowball (Dave Ramsey) and a spreadsheet so I knew where every dollar was going, every dollar had an objective, to pay off debt. This immediately gave me a feeling of empowerment and I was less consumed by it. Freeing me up to see the big picture.

Opening the door to new ideas via a ton of books from Amazon. Let the snowball work itself and read as much as you can in the meantime, to prepare your mind for a life of abundance, achievement and success.

Best wishes.

Deborah B.

Hi,

Thank you for the clarification. I have been reading your blogs, regarding your experiences with the tenants. You are an incredibly patient person. My hat off to you kind soul.

That said, it is another brick in the wall for going with a property management company, for me. Though I have read a number of equally disturbing horror stories regarding PM's.

I will definitely be researching this angle very thoroughly before picking one. With as much care as screening a tenant. : )

Best wishes and continued success to you. Can't wait for more blogs from you.

Mehran Kamari This is twice in one day I get to say "Thank you" to you. : )

I guess that is what I needed to hear. Confirmation that doing what I am doing is what I should be doing until I have the bank in place.

It is easy for me to get distracted by articles, books, or posts of other people achieving goals using OPM. Which I am unsure of how they are doing, if they have no experience. Personally, I am not comfortable with OPM, which is why I am saving. No one said it would be exciting.

Thank you for the suggested reading, there are a couple of titles I have not read yet. Ordering now. : )

Mehran Kamari and Don Konipol

I really appreciate your replies. And as you pointed out, the parameters I laid out was a one time observation of duplex I was watching from afar. I guess lotteries do happen, but not wise for a business model.

The more I ran numbers on what dups that are currently available, the less viable this approach seemed. So I will stick to the Buy/Hold strategy. : )

Thank you for exploring this with me. Best wishes.

Hi BP,

Hoping to get some feedback on this, as this stage of planning is crucial to my strategy and the source of many headaches… Sorry this post is so long.

First, I am guessing the reason targets are still on the MLS is because they are not a deal? When I apply an honest 50% rule, the monthly NOI on 3 doors is $188 ($62 each) and it would take 92 months to recover my cash. Example outlined below.

Is it normal and expected by real estate agents to get offers of 20-40% less than asking? When my Grandmother was an agent, it drove her insane and she stated that her reputation suffered for the low ball offers she was forced to submit. That kind of bothers me as I want agents to take me seriously. What is your approach?

To better aid in my analysis, is there another rule of thumb you work by or in conjunction with? Like minimum dollar amount per door?
I know it would be a bad idea to fudge on the 50% as my targets are 80-100 years old with flat tar/gravel roofs. It is only a matter of time before an expensive repair/replacement. 35% and the numbers look great, but I think that is a recipe for failure.

The other problem is 4-plexes in my price range are not common. Than why do I want them? More doors per mortgage, but I am running into the same problem punching numbers on duplexes (MLS) when I stick to the 50% rule and calculating 15% below asking. Do you have a standard % offer below asking?

I can only affect the NOI outcome on the purchase price and do not want to stray too high on rents, to avoid vacancy issues.

For Ex: A nice 3 story 3-plex, asking $76K. By some miracle, let’s just say they accept 15% less for $64,600. Still dismal results as outlined below.

ROI % 11.03% CAP Rate 4.04% CCR 14.14%

Ask Price $64,600.00
Loan $51,680.00
Down 20% $12,920.00
Closing 6% $3,100.80 (Estimated high for cushion)
Reserves 6 mth $3,214.69 (PITI only)
Touch Ups 2% $1,292.00

Property Type 3
Rent / Unit 483.00 (Based on reported annual gross)
PITI 535.78
PM 10% 144.90
Expenses 40% 579.60
Total Expenses 1260.28

Monthly Gross $1,449.00
Annual Gross $17,388.00

Monthly NOI $188.72
Annual NOI $2,264.61

Recover Funds $20,527.49 91.7 Months

Thank you for taking the time to read and I sincerely appreciate any guidance you might suggest.

Deborah B.

Hi Deborah,

Can you clarify what tasks would need to be automated? And what procedures I should be thinking about? I've already built my own .xlsx for crunching numbers (CAP, CCR, NOI, Returns, Mortgage, expenses, etc...) to evaluate a property.

If it helps in your feedback, my short term targets are going to be 4-plexes in need of minor rehab or already occupied.

I have my painter, HVAC, and Buyers Agent lined up. Researching candidates for electric and carpentry. Waiting for the next REIA networking event to find leads on PM company, CPA and Legal.

Thank you. I do appreciate your reply.

Hi BP,

Say you find yourself with a year to save. In addition to reading, podcasts and studying your local market via listings on the web...

I would really like to hear about actionable steps that one could be doing during this phase. What do you do to keep yourself focused, motivated and productive, while in a holding pattern?

Thank you.

Jon K. and J Scott

I completely agree. : )

On a side note, I do plan on paying cash for the beamer. When the time is right (i.e. $45k = 3 months cash flow). The things people finance off future EIC boggles my mind.

For now, I am focused on saving, cutting expenses, staying single and loving my Saturn more and more for being free and clear. I will have $20K for my 1st by 09/14.

Mr. Scott, it is funny you mention action. While I am in the saving phase, I am racking my brain developing my long term plans and balancing what is realistic and within my current knowledge level.

I have read the 7 years to 7 figures. But I am aggressive by nature and want to push or take a more active route.

Would anyone be willing to share their SMART plan they used to start off? I am looking for something to build around or upon. A wiser use of time would be to learn what works rather than wasting away on whimsical ideas not grounded in reality.

Though I would be grateful to anyone for sharing... I really don't want to hear about how you took $50k out of your mattress and paid cash for your first. : ) I need to see how to wisely yet aggressively grow with $20K savings and no margin for error.

Thank you everyone. I may be all over the map, but I can count on BP to get me grounded. Best wishes.