All Forum Posts by: Tyler Hampton

@Joe Villeneuve I guess we will agree to disagree. My whole point is, you don’t have to earn enough cash flow to pay for your investment before you make profit. If you purchase a home with cash and get a better cash flow, once you sell the house, you will get back your principle amount plus the inflated cash flow. I don’t see how that’s not profit. But there’s no use continuing to debate these things, as it just wastes time and gains no outcome. I will bid you good luck in all your ventures!

@Joe Villeneuve I think what we are missing each other on here is the definition. You are referring to money put into a bank account or a house or any other vessel as a “cost”, when I think what you mean is maybe “opportunity cost”. The minute you pay off your rental and collect the next rent check, you profit from it. You don’t need to make the money back to profit. But there is an opportunity cost to leaving your money in the house. And I think that’s where we are getting wires crossed. There is certainly missed opportunity when paying off a home. Just a matter of how risk tolerant someone is to know what’s best for them. Thanks for your clarification!

@Joe Villeneuve I’ve seen you say this many times and I can’t understand what you’re saying. I am new to rei so maybe it’s different than the stock market. How would you have to make all the money back you put into it before you start making a profit? You still have the capability of getting some or all of that money through refinance, home equity loan/line of credit, or just selling the house correct? So if they were to pay off the mortgage and make an extra $600 a month for a year or two then decide to sell the house, they would have made that $600/ month and got all the money back once they sell the house. So that $600/month would be profit. Not saying one way or the other is right, I just don’t understand your statement about having to make all your equity back before making a profit.

Take another investment for example. In your scenario if I invest $250,000 in a stock market fund that pays dividends, those dividends would have to pay me $250,000 before I start making a profit if I look at it from that point of view. That doesn’t make sense to me. I still have my principle even though it may not be as liquid as cash.

Can you explain your thoughts on that to me? I just see it as holding that capital in an investment while you make a little higher return with less risk and waiting to get the principle back once you sell or restructure the loan. Won’t make you as much as leveraging, but it’s another option for a risk averse person.

@Andrew Hogan yeah, it seems like a good option. Do you have to be an accredited investor to do a syndication deal, or are there options to do that without being accredited? I appreciate all input!

@Michael Bishop that makes sense! When you do these syndications, do you get to see what the preferred return will be, or is it just an estimate until the project gets going? And is it better to use a crowd funding site, or a single sponsor? I’ve seen a lot of people talk about individual great sponsors and crowd funding, but not sure what the difference is. Thanks for your input!

@Alina Trigub thank you for those! Great insight!

I hear a lot about syndication and putting money to work passively with good sponsors of a large deal. Is it totally passive? I am very interested in owning my own real estate and having the equity in the home, but it is much more active and is certainly risky. Why would I do syndication over active management of my own properties? I assume you can make better return doing your own properties, but it seems like if you can put the same money to work for 8-12% returns without lifting a finger, that would be a better investment anyway. Do you also get equity in the property when you put money in? Not sure how it all works exactly and would appreciate any feedback on which option would be best or any personal experience doing both. Thanks so much!

@Matthew Defore I would probably just leave it unless everything is worse than what I can tell from the picture. I don’t know that redoing it will add much actual value. It may add some perceived value, which does mean something, but if you can rent it out as it is, I’d wait to redo the whole thing before you try and sell it. If you are planning on holding it forever, then I would just redo everything at once. I wouldn’t hodge podge it myself. I’d get new cabinets, tops, and appliances.

At my store, I would figure maybe $2,000-5,000 for new cabinets depending on what you do, $1,500-3,000 for stone tops, and $2,000 for a stainless appliance package. Then labor for installation of the cabinets. Not sure what that would run.

Of course if you want to just paint the cabinets and do some little fixes to save money, but still show an increase in value, that’s totally up to you! Hope it turns out well!

@Matthew Defore it depends on what you’re going to do with the property after you remodel it. If you’re trying to sell it, I would do things differently than if you’re just going to continue renting it. I am a kitchen designer and do lots of flips/rentals for real estate agents and if you don’t know what you’re doing, it can end up costing you more money because of mistakes. If you let me know the goal of the remodel, I’d happily give my opinion on what to do.

@Dan Mahoney my man! Thanks for the info! Didn’t realize that! Appreciate your help!