All Forum Posts by: Anthony Thompson

Adam, a few months back we had a presenter at RIREIG who said that in his experience managing hundreds of units, at the end of the day (net net net all expenses), rentals make about $100/unit/month, and that sounded about right to me.

So using that rule of thumb you'd want to plan on acquiring about 35 units or so - just for planning purposes. And even then, a lot of times "things" happen with real estate (water heaters and boilers go, you have problems with the city or neighbors, etc.) producing un-anticipated expenses, so you might find more is actually needed (e.g., 50).

It's often been said that real estate, especially buy and hold rentals, is a "get rich slowly" strategy. I certainly think it's possible to retire on rental income, but 3-5 years seems aggressive unless you really have a very sizable chunk of cash to start with.

As far as paying down mortgages, for the first few years you'll need to decide whether you want to prioritize buying more buildings/units (greater leverage) or building equity by paying down mortgages.

If your goal is to reach a certain # of units, you may want to lean toward greater leverage until you reach that number - as long as you do so safely of course (say, no more than 75% loan to value on each property - otherwise you risk having mortgage payments that are so high you risk losing properties if the rental market turns against you in the future).

Also remember that unlike credit cards, mortgage payments don't automatically lower just because you pay down the loan balance. You'd need to refinance to actually change the payment amount - and it's possible that when you refinance, rates will be higher than they are today which will make getting a lower payment amount more challenging.

(It's also possible, of course, that the property value may have increased, allowing you to possibly pull money out which you can then use toward acquiring other properties. I think that's wonderful when it happens, but I never want to assume appreciation because that's one way to get in trouble in real estate, as many did in 2004-2006.)

Again, I certainly think it's possible to retire on rental income, but it's a grind, working up to the required number of units, and you'll need to learn some lessons along the way (many the hard way) to reach that level of sophistication. Real estate is a good investment, but it's also a complicated one compared to, say, treasuries or dividend yielding stocks.

That said, "a journey of a thousand miles begins with a single step", so I do wish you luck on your first deal. Let us know as you have questions along the way, of course :)

Jay, I can't think of a good reason for that, no. If you're using a buyer's agent you could have your agent inquire about the change, or if not I guess you could just ask the listing agent / broker about it. I don't think there's any harm in asking.

Do a search on the address first though to see if it re-appeared under a different MLS #; it's unlikely but remotely possible it was removed due to an error in the listing and re-entered as correct.

If you're talking about commercial property, it's also possible that they pulled it from the regular MLS and entered it into the RI Commercial Information Exchange (RICIE). It's a relatively new creation and the policy starting a few months ago is that any property that doesn't have a residential component must be listed in RICIE only - pure-commercial listings are no longer allowed in the regular RI MLS.

I hope that helps, and if you do get an answer please follow up here to let us know what the solution to the mystery was.

Marc, I've had good experiences with Pawtucket Credit Union, Navigant Credit Union and Coastway Community Bank. I had a closing with Coastway yesterday and attended the PCU annual meeting Monday. There are several good community banks & credit unions in RI, I'm sure others will be able to chime in with different names as well.

Besides general recommendations from other people, I'd also have to recommend (as silly as it sounds) picking based on convenience and proximity to where you live or spend most of your time.

There's nothing like being able to drive 5-10 minutes to the local branch to discuss new business or resolve an issue, and being able to make deposits in person (yes even in the age of mobile banking) does build up relationships over time.

One of my business partners does exactly that and when he had a minor issue recently, one of the VPs called him to let him know he's been put on a special list to be accommodated in the future.

Raymond, I'd recommend your buyer's brother try a two-pronged approach - hopefully one of them will work for him.

First, try small landlords, like 2 family properties. My theory is that some percentage of the ones that say they will do criminal checks won't, either they don't know how, they forget, etc. Obviously you'd like to stay away from property management companies.

Second, try public housing authorities - though I don't know how difficult those are to get into.

But recently HUD has been discussing the fact that categorically rejecting people who have been convicted and served their time may actually be a form of discrimination (perhaps under the "disparate impact" concept).

For example see Public Housing Advocates Take Issue with HUD's Memo Regarding the Use of Criminal Backgrounds In The Tenant Screening Process and Fair Housing Act: Criminal History-Based Practices and Policies.

I think the success of trying public housing will depend on the type of crime and how recent it was though.

Hopefully one of those two will work for him - please let us know the outcome if it does, of course.

@Joseph Murray you've definitely come to the right place, and glad to hear you're going to the upcoming RIREIG meeting - which is actually specifically dedicated to networking this time so it should be good. Be sure to say hi to me and several other active folks here on BP who are also RIREIG members/attendees, of course :)

Congratulations on your 4-unit purchase! I often tell newer folks that the first property is the hardest, but it sounds like you got right past that and are now working on a 3-unit too (nice!).

Good to know about your "blind guy" connection - I always prefer to deal with local people but a few years back when I needed some blinds for some very thin (tall height, thin width) windows I ended up getting them online. I'll definitely keep you in mind for the next one though!

As far as working for free or someone taking you under their wing, I'd recommend a softer approach and just approach things from a networking perspective and see who you have a natural rapport with, and go from there. You may end up with a partner or two instead of a mentor, and you may in fact learn more that way.

But you already said you're taking the networking tack, so that's great news and I hope to see you at the upcoming RIREIG meeting!

@Adam Michael My understanding is the same as @Jimmy Murray's - it can be anybody living in RI.

However I believe the main reason for such a requirement is that if you are ever served with a lawsuit, it is your agent who will be served. So you do want to use some care in choosing an agent and make sure s/he is reliable and will absolutely tell you if they ever get served on your behalf.

The natural choice would be an attorney if you're already using one in Rhode Island, however they may charge a fee for it so if you have someone else you trust who won't charge such a fee, I see no reason not to use them.

All of that being my understanding as someone who isn't an attorney, of course.

David, I'm not sure about the overlap between Loopnet and this site, but have you checked the Rhode Island Commercial Information Exchange (RI CIE)?

A few months ago the RI statewide MLS went onto a new system (Matrix) and separated out its pure commercial (no residential) listings into the RI CIE so I'd guess you might be able to find some smaller properties on there which might fit your needs.

Though I'd also say if you know a real estate agent you could have them check the regular MLS too because it seems like not everyone's gotten the memo that commercial-only properties go into CIE and not MLS; just last week I saw a property like that in the regular MLS.

And of course, if you're open to mixed use, then you may have more options and you should definitely be checking the regular MLS (which as a non-agent you can do via RILiving.com).

Adam, I'm in RI as well and feel the same. I pass on marginal deals and sometimes find out later they ended up working out OK for the person who took the risk, often because of a rising market. I refuse to assume a rising market in my analyses, it just seems irresponsible/risky to me, but others are at a different point on the risk/reward spectrum and that's fine too - everyone has to find their own comfort spot.

Angel, there are a lot of good ideas in this thread including private lending and getting some rental properties, or (maybe the best one yet) just waiting until you find something that does meet your criteria.

Another idea could include spending a little bit on educating yourself in any areas of real estate that interest you. An investment in education can pay off many times over BUT I'd urge you to be cautious and not spend a ton of money on "real estate gurus". There's a whole industry oriented around sales techniques and getting new investors to part with their hard earned money, for varying levels of actual education. (Bigger Pockets was, I think, created partly as a reaction to that industry.)

But if you do your research there might be some good educational opportunities which can expand your mental horizons to other ways of making money in real estate. I've been to Dyches Boddiford seminars and found that their informational content was higher than many other gurus/educators I've attended over the years, so I can recommend him, but certainly do your due diligence and find what you're comfortable with, and if you end up stuck in a sales presentation follow the rule "NEVER buy something the same day as the sales presentation, no matter what 'special deal' or 'limited time offer' they present - always wait AT LEAST a day and think on it, research it, etc."

(If you're thinking of doing private lending there is class coming up, which may be too short notice for you, but I think it occurs once or twice a year. On the other hand, one could argue that if you choose a good real estate attorney to draft your loan docs and guide you through the process, the money is just as well spent there.)

Another thing is that, as a guru Robert Kiyosaki (Rich Dad) is "information light" (on specifics), but I do feel his books have a number of "philosophical gems" (ways of looking at things) which are extremely valuable. In your case, a repeated theme Kiyosaki mentions is that "business is a team sport" (and if you're the smartest guy on your team, your team is in trouble).

If you haven't read it, I'd recommend Kiyosaki's book Cashflow Quadrant as it explains his idea of E-S-B-I (employee/self-employed/business owner/investor). The important point being that "S" people are smart and self-reliant but have a very hard time delegating - they're using to being the "star" - and it ends up hurting them because you just can't do everything and you do actually need a team to have anything other than meager success (in my experience).

I only mention it because 1) several of your comments (Angel) sound like they relate to those themes, and 2) I suffer from the same problem and constantly fight against it in my own head.

Finally, unless you have gotten a lot of experience with real estate in your own area / back yard first, I would be cautious about spending a lot of money in an out of state investment. In fact, for new investors I usually recommend the exact opposite, that they try to buy a small rental property within a half hour of their home and get their feet wet with a little small property management, and then expand out from there as their comfort level allows.

I'm not saying out of state investments can't work out, but it's a lot harder to do your due diligence on both the property and the company presenting it to you and/or managing it for you. Your mileage may vary, but for me when I hear "make great returns without any work, 'turn key', etc." it makes me want to be very cautious.

Yes that's right @Jimmy Murray it's blackdiamondrei.com and I've been to their meetings several times. The last meeting was about title problems and some ideas on solving them, and it was a good one :)

Luis, I'd recommend searching the Rhode Island CIE (Commercial Information Exchange) site and Loopnet. If you find what you're looking for, I believe both sites will provide you with contact information for the listing agent for the property.