As a real estate broker and short-term rental host...your story is dead on! My clients share how desperate they are to purchase multiple units, without the proper training of property management. No one understands the nightmares dealing with solely relying on tenants to service your lifestyle. Thanks for being transparent.
Too many real estate investors can do arithmetic and think they are genius. Real estate is all about assumptions and modeling. There was a rule of thumb is that purchase price is 100x monthly rent. Nowadays "investors" have totally forgotten this. Experts make up excuses why this metric does not matter. I disagree. Most real estate investors know nothing about depreciation recapture too--that should be deducted from equity.
@@testymann5045 Most wanna be William Nickersons, have no understanding of accounting. They look at "cash flow" as one can see in so many of these comments as well as the original presentation. Also, few have a solid understanding of tenant protection laws. In the end, one bad tenant can wipe out years of any cash "profits" and capital appreciation. I love that you mentioned the recapture. In my tax prep days, back when ACRS was allowed, I had to pick up a few clients off the floor when after years of ownership of multiple rental properties and, writing off all that depreciation as a loss against other earned income they had, I had to explain to them why their tax bill for the year of sale of those properties (often for some emergency purpose or end of life estate planning) was comparatively astronomical.
lol How about SCREEN YOUR TENANTS!!! ALL real estate investors rely on the tenants to service their "lifestyle". What are you talking about? Many make millions per year. Will you have problems here and there, of course, thats a part of doing business. And $200 a month cash flow Where? Maybe in the ghetto on a unit that cost 25K a door. Maybe learn how ot buy properties. And you dont buy when you are paying 6%+ interest.
Yes, sir. You are 100 % right on , 😵💫😵💫😵💫 I have a friend who purchased two properties in less than 2 years, the man was literally going crazy ! The people he rented to were calling 📞 him all hours day and night 🌙 7 days week!!!!! , in less than 3 months, he was taking pills 💊 😳 , he told me never been sick 😫 🤒 😷 🤧 until he purchased the 2 properties .............
It would be better to build a duplex with 2 car garage each. Its so much better due to being new and when there is a garage people store junk. They never leave at that point
She was trying to live off the income out the gate and quite her job, if she had one. You cant expect to live off the cash flow soon as you get properties. Doesn't happen like that.
That’s facts u have to properly vet the properties and possible upcoming repairs…you have to let that cash build up …and a huge issue is splitting profits that never works …22 units is more than enough on your own and when the deal is properly scoped out
She could on 20 houses, but it sounds to me like she can't do the repairs herself, she didn't realize it's a job in itself, and because she went into debt for all of it is losing a lot of capital to interest payments. I live off my properties just fine but I started slow and I do 90% of the work on them myself, I can do HVAC, roofing, plumbing, and electrical and do it right. My rentals are my job. I also put back 20% of my rental income in a repair fund....once it hits 30k then I use it for whatever I want.
You can't overcome no liquid wealth. This is the reason why we need reparations. See all of the investors made their money free and clear. Their cash made them cash and left her holding the bag. The bag of debt. Now she may not have the equity to sell her properties and make a profit because the distressed homes she purchased are not appreciating in the neighborhoods where she bought them. And you know how I know. Because she can't compete with the major companies like zillow who are spending real money in the good neighborhoods. Thats what wealth gets you. The good sht!!! This is why we as black people need to band together and fight for reparations so that we can have something collectively. She bought distressed homes in poor neighborhoods amongst tenants with no wealth with debt. How did yall think this was a great business model? I don't get it
, you probably need 300 a month just for taxes. Why nobody ever talk about taxes? This world isn't built for black people from slavery who's cash was thwarted and stolen for hundreds of years. $150,000 is not a lot of money to spread across 22 properties. Which means that she forced appreciation in a market where the neighborhood is not appreciating. This is our problem. We want to do everything but march together and make the government pay us the reparations they owe us. Because if you think that purchasing a bunch of debt is the way to financial freedom you are smoking thr crack of aspirationalism on steroids.
It is the truth about real estate when scaling without reserves and not factoring vacancies, repairs, and capex into your numbers. But It's not the truth about real estate.
She’s not managing her properties correctly and she is not crunching her numbers the way she’s suppose to. She brought all these units so fast and doesn’t even know how to manage them. The reason why she regrets it is solely because of her poor management. That is why so many businesses fail. If you don’t set aside for maintenance, repairs, business expenses, etc this will become a nightmare real quick. She should not be flowing $200/m/unit. I can tell she didn’t take into account the interest rate, the taxes, she didn’t look at the yearly tax increases (if any), she didn’t take into consideration the ages of the home and its interior and exterior. I can tell she just brought homes to buy it and thought SHT was sweet. Please young lady take a class on property management so you can learn some things you are missing. This is not a dig but just a warning the economy is just getting worst every given day and from the looks of it you are 1 inflation rate increase from going bankrupt. You and your friend need to sit down crunch all of the numbers for all the homes, inspect every single home (note everything about the home from exterior to interior and what may need future repairs) if it is of concern sell the home now. Do not wait till it gets worst. On thing about this business is that you cannot get attached to these homes you have to be willing to leave it behind to generate a positive cash flow everytime.
I've invested into small number of rental properties. Bmore area at that was always the strategy, but a near low condition property, add some cost to it, fix it up, get a renter, call in the bank to cash out equity in year 2. Take that equity buy another property, fix it up, sale it, take profits, pay off the equity loan, wash, rinse, repeat. Where did i go wrong?
We only have one rental, but we love it. We bought it while still working full time jobs. Now my husband is the only one employed. We had plenty of money in reserves just incase we needed it for the loan. We also got a separate bank account for all the incoming and outgoing expenses so we’re not commingling our personal money with the rental money. We also fixed everything that needed fixing which included a new AC and Heating unit, new tile & laminate flooring, new electrical box to bring it up to code and much more, but this was already included in the numbers before we bought it. The cashflow is only reused for any minor repairs & we use it to reinvest in other entrepreneurial endeavors we have, but never for personal use. My husband’s income is what we use for personal use. This works for us. We plan on renting out our primary residence one day & buy another little house later. And we’ll do the same with that rental as we did for the first one.
I own one condo in LA near the beach that I live in and when I rented it out in the past for about five months out the year, occasionally on Airbnb, I was making 7000 a month with a $5000 cash flow profit. So in essence it’s not how many properties you get. It’s the location location location, which is what they teach in real estate if you have a real estate license. So the moral of the story is if you can buy one expensive piece of real estate with equity or build equity in it, you will be better off using that as your income property and getting a large cash flow as opposed to having numerous rental properties with numerous tenants and numerous headaches and numerous repairs😂❤😊
@@hp7639well the strategy that she’s talking about, the strategy that your defending and everyone seems to agree upon doesn’t seem to be working. Like I said in my other comment. Northeast is definitely different. Location location location. Don’t partner up 🤷🏾♂️
Great video!!! I use to be a landlord and its everything you said. Also money lost when tenants don't pay, evictions, court cost, attorneys, damage apartments. Never rent to family and friends. I would rather invest in the stock market instead. Less headache.
Same here got burnt out and sold my 11 units. Tenants calling all times of day and night or property managers scamming overcharging for repairs. Brand new toilet clogged by toys and cooking oil. If I could do it again would only buy in middle class areas.
Residential rental properties overall are headaches especially in Jamaica and some parts of Europe for example in Germany .They is the main reason I intend to shift to commercial units .
I feel you on this. I used to own 2 single family units. From the beginning, things were great, I had to move to San Francisco to take a job in silicon valley 4 years into it then things started to go south and I hired a property manager that was a crooked. I decided to sell both units and took my profits which wasn’t that bad. Now as a stock market investor, I’m making money on a daily basis with peace of mind. Don’t have to worry about property manager called about A/C, water heater, or fence broke.
@@tarawalton6778 "Tenant did $40,000 worth of damage." With no hope of restitution. And all too common story amongst folks I've known to try and make bank on a rental property.
My thoughts exactly. I’ve been in the real estate industry for 28 years and to my knowledge a tiny roof repair might start at the $5k. But definitely not a roof replacement. 😂
I value the sentiment, especially as you get older, but that "free and clear stuff" puts a big target on your back and I would argue is more risky than having your properties properly leveraged.
@@ronbibb8162 I’ve heard that before too. Im sure there are benefits to that as well. But I have a large umbrella policy and a very strong legal team. I’m not concerned at all about that.
As an investor in Alabama. I agree with your points about scaling too fast. I made sure to flip for several years, building up a war chest of cash while also cherry picking fixer upper properties i set aside over the last 3 years. Now I'm using my flipping experience and crew to fix those dozen or so properties up and rent out while continuing to flip.
I plan to get into real estate investing this year and this was the strategy that I came up with. So I’m glad to hear someone thats experienced verify that this is a good approach.
Unfortunately not everyone has access to a team of repair professionals to flip/renovate homes. Some folks have other commitments too, like jobs and family...and not everyone is handy. Points to remember....
Being in the South, you're in a great market. We do Mississippi and Louisiana. Low property taxes and the homes are cheaper. Tenants also pay their own utilities.
You are courageous and successful because you have taken action instead of dreaming. You have learned a lot and going forward your lessons learned will reward you! Thanks for sharing your journey!💯
You took the words right out of my mouth. I made the jump earned money but not without some bumps and bruises. Meanwhile a friend of mine will talk your ear off but had yet to jump into real estate.
Determine how many properties you need to sell in order to pay everything off. And enjoy what you have done. If you bought well you should be able to keep about half of them
I’ve been studying real estate in general for years and this is honestly EXACTLY why I never got started in the first place. $300/mo as a landlord didn’t make sense to me if the house is not payed off because if something went wrong we all know it’s gonna cost at least thousands. Plus, if I miss my mortgage payment, heck, I could lose the house entirely and that’s a bad look on the portfolio. To me owning the house out right and then renting it out just made more sense to me, even if I have to wait until I can afford to do that. Rather save the headache lol thanks for this validation 🙏🏾
Everybody that's saying that they don't want to do real estate because of this I promise you you are short-sighted. Real estate is one of the very business practices a lot men and women have become rich. You just have to know how to do it.
Hey Ms S. I used to own properties too… too much headaches so I cashed out and starting an online store…I make $10k per month from home 🏡 no tenants no late calls etc. I can show how to do this too! ❤
I just moved from a large apartment complex with several buildings. The reason I had to move was every time we got a half inch of rain, my apartment would flood. I told management about it and took pictures right away. A year later the problem still wasn't fixed. The roof caved in flooding at least three apartment units, each with gobs and gobs of black mold on the walls and ceiling. Other buildings also had major problems. If a roof didn't cave in, there was a problem with the sewer backing up into the apartment. Not everyone was a model tenant like me. Some of them were a nightmare. The owners of the complex needed to refinance, and that was when interest rates had gone up, and rents were coming down a little because people had trouble affording the current rents, which were beyond what the market would bear. So when you buy an apartment building, these are things you must be prepared for.
I am giving you major Props for being so Honest and you are actually either clever and tactical or extremely sincere!!! I am going with the later so far! Thanks!
Thank you for being one of the few transparent content creators out here. I recently decided to mine my equity and put it to use by selling some properties to build more residual income-based businesses. I made the mistake in 2004 that you made by scaling too fast. It cost me 99% of my portfolio in 2008 and I learned a valuable lesson.
Yup! This is what I have said that the *Gurus* don't tell the truth. I had only two and this happened for me, because tenants call bse something is broken and several dollars out. I had to learn to do some of the work myself, thankfully the HomeDepot in the area I lived they were very helpful and literally the Reps in the Aisles were former or current Contractors or trades people that would walk you how to some of this. But getting a contractor to do all these repairs for you, will drive you bankrupt faster than even the repairs themselves. It is alot. Then you have others that say - Just get a Property Manager or Management Company - this will get you poorer faster than even what?? I don't know but not a good idea. All the story isn't given when they are pushing people to get invest in R/E...So glad you are telling the Truth! There are other Businesses that give more cash flow than R/E...Never again!
All great points, many of which I have experienced myself. I just will caution about the other businesses that give more cashflow. 97% of small businesses gross under $1M, and 90% go out of business within 10 years. If you are a small business, especially one that grosses less that $1M, you will likely be working in the business day-to-day and will have just as many headaches, if not more, than a REI but you won't have access to capital in the same was an REI would; which is why so many traditional businesses go under. I've owned three small businesses and I am a REI. The businesses are gone now, but I've grown the RE to 46 units worth $8.9M and $4M in equity. All done using 60K that I borrowed 17 years ago to get started. I would challenge the thinking that you get more cashflow from a traditional business than RE provided you stick out the REI for the long haul. I will admit that It is very difficult and it will probably suck for the first 10 years. But if you can make it the payoff is amazing, although still not without headaches. At historical averages my portfolio will appreciate by over $400K this year, not counting principle paydown and cashflow. My cashflow is not taxed because of depreciation, and when I want to tap equity I do a cash out refinance to access capital with no tax because its a loan. These loans are given without even submitting tax returns or bank statements, and paid back by tenants. Truly amazing if you can make it through the tough times.
Keep grinding. Everything in life is either a lesson or a blessing. The fact that you are getting this hands-on experience will help you pivot & adjust to how you move next. The real-estate game aint for everybody, but if you stay patient, resilient, & and hungry, you'll see that bag 💰grow Much success, prosperity & abundance to you. 🙏🏾
I bought three rental properties in 2019 and have all the three of them now in market for sale. It's the worst money decisions and headache of my life to own those properties. If I had left the money in the stock market, I would have made a lot of money. As soon as I sell them, I'm putting the money in the stock market.
@@justlikeyouful I've been investing in stock market for years. Over the years, the value of stock investment appreciates better than the appreciating value of properties. Yes, we are going to have a bear market this year, and that's exactly the reason to put some money in the market to reap the benefits of falling prices of stocks. I'm going to leave the money in the stock market for over 10 years. So, I'm not concerned about the ups and downs over the years.
@TheAdeJohn Given how long R/E sales take to close your timing might be right. I follow a lot of successful macro guys on RUclips. "Buy the dip and never trip!"
I regret NOT buying 22 rental properties... If I'd kept just the 6 I had I'd have well over $1,000,000 while being completely debt free. Timing and management matter. It beat my now job in every regard except cash flow...but I exchanged working 2 hours most months to 240 hours per month. Okay, after actually listening, I agree. I was doing exactly what you wished you'd done. Taking it slow to keep debt down and consistently upgrading what I had. I HATED debt!, plus I took opportunity for granted. You could simply sell off your lesser and/or more stressful properties to simplify. I would, but sticking it out means some day you could own 22 of those 30 properties outright with what you already control. That's probably 4-5mil for the future and 30k+ a month! Why ruin that future when the present already offers it!? Just stop adding stressful properties now! If you want something to do...wholesale or rehab to resell additional properties. Roll that money directly into your current holdings.
I feel you on that. I have 46 and there are definitely headaches, but it beats working for someone else. My portfolio is worth $8.9M. Just by holding on to them I will gain $400K in appreciation this year at the historical average rate of appreciation. I have a good bit of tenant issues at the moment, but right now I'm in my drawls typing this response, later I'll go have lunch with my mom, take a nap, and then pick up the kids from school and take them to their activities. The tenant issues will work themselves out, and more will come up, but I control my life.
Seems obvious but it needed to be said. If buying more properties is an expense that's puting you in the red, and you own 22 units, then simply stop buying more properties.
After selling two homes in 2023, I'm anticipating a housing crisis in order to buy inexpensively. As a backup plan, I've been thinking about purchasing stocks. What recommendations do you have for the best time to buy? On the one hand, I keep reading and seeing trader earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
Most investors can't handle a crash since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
The fact that the US stock market had been on its longest bull run ever makes the widespread worry and enthusiasm understandable given that we are not used to such unstable markets. As you pointed out, it wasn't tough for me to earn over $750k in the last 13 months, so there are chances if you know where to go. I hired a portfolio advisor since I was aware that I needed a solid and trusted plan to survive these trying times.
I tried researching strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your asset manager is by name.
This is why you must be a great business person, not just an individual who buys properties. I suggest this strategy for high income individuals looking for tax shelters.
I’m a real estate investor since 2007. My life consist of golfing, playing Madden at night and finish the night watching u tube real estate channels to further my knowledge. and many many vacations through out the year. That the light side. Now it’s time for the dark moments. Everyone should give big thanks to this young lady for sharing her experience. Oh my god everything she shared I experienced. The nightmare started a month before the pandemic I semi retire early because I had 24 houses at that time. Than the pandemic hit. Crushed my world. Thank god to this day I had a great job in middle management my 401K and pension saved me. Next nightmare came end of 2023 November and December I purchased 9 house’s bad decision that cost me she mentioned credit card debt I’m not going to mention the amount because everyone will throw up. 🤮. In closing the net profit numbers she presented was dead on. Now I have 48 and I managed them from 8 hours away. I already know what you’re thinking answer is I have good people helping with the work. Thank god for having a great job with benefits helped my journey. Once again to the young lady you’re awesome for sharing and good luck 🍀
I agree with scaling up a little fast. I was in a similar situation years ago. I would recommend that you get handy and you'll save yourself a lot of money. The big things that Stefanie mention roof, hvac, windows are expensive and hard to do yourself but are replaced rarely. When I started I had a full time job and picking up a hammer on some weekends while cash flowing little for my efforts. That got me by but now I'm in a much better place. 14 years later I have cash reserves, free and clear properties, and I pick and choose what handy work I want to do. This doesn't happen fast or by accident it was the long game that got me to where I am now.
I have a close relative who believed he’d strike it rich by owning 18 rental properties. However, things quickly took a turn when the maintenance costs of these homes began to nickel and dime him. Over time, he became increasingly unscrupulous and started coming off as a slumlord. It was a classic case of "robbing Peter to pay Paul," so to speak. He lost his handyman because he either wouldn’t pay him or couldn’t afford to, and now he either does the repairs himself or ropes his wife into helping-mostly with patchwork fixes. Watching his struggles and the compromises he’s had to make, I’ve realized the stress is just not worth it for me.
The only way to do it with little management is to own 2 properties. The one you live in and a rental unit. Only 1 rental will be easy to manage while bringing in profit since you have no mortgage to pay. But people will say not to do that, and to use the money as leverage for more. Don't do that, that's just greed. The end goal shouldn't be more money, but financial independence.
Less is often more. We owned three rental properties while keeping our jobs. We also assumed occupancy for each unit at 9 months per year and kept a maintenance contingency. After 10 years we sold three, bought a single investment property and shifted our investments to mutual funds and other vehicles. Lots of headaches with three never mind 22.
I am 53 and Last year I was working full time, budgeting groceries, unable to afford date nights, and missing time with my kids. Now I learned how to make money online. Now am a SAHM, homeschooling, and making profits every week.
Wow that's awesome everyone needs more than their salary to be financial stable. The best thing to do with your money is to invest it rightly, because money left for saving always end up used with no returns.
In every industry I hear about "scaling"....sounds like a double edged sword to me and or a trap 😂 in audio engineering school they taught us about finding the "sweet spot". Don't max out the gain just cuz you can. Don't hit the inputs hard just cuz you can. "Gain stage" and find the "sweet spot"....that's what I'm trying to do, while maintaining optimal performance
I'm a property manager, just bought 6 units. I think one advantage i have is i really understand the budgeting and financials of a property, so I woudo never scale like this. Thanks for the content.
Honey you are in a great position!!! Choosing to sell so you can get that equity is ohkay. We are not house hoarders we are real estate investors. When properties can make you $100k sell them and celebrate... than buy some more. Congrats on all of your success
Really good transparent video. I’ve been a Realtor for over a decade and see this happening constantly! In this market not only are you paying sky high prices but when you take into account your monthly expenses - the rent you can get, you’re barely breaking even, loosing money or slightly making a profit. All for the hope of future appreciation. For those “lucky ones who manage to cash flow a few hundred per month, all that is washed away with maintenance expenses, realtor commissions and the cost of paint/repair the property once the tenant leaves. In today’s world, if you have enough money to buy investment properties, buy Bitcoin instead, less headaches, no random expenses and a more guaranteed appreciation for the future! Now if the real estate market happens to crash, which it probably won’t, and prices go back to pre-pandemic levels, and interest rates drop below 4%, the formula changes and investments properties make sense again. However, Bitcoin will still reign King!
I sold my rental property and bought Bitcoin. I sleep peacefully at night. I had bad luck with tenants and them not paying rent(I managed my properties myself and I'm not a confrontational person). Then there were the municipal fees as we call them in country which were high, the maintenance and tax end of each year. I couldn't anymore. Like I said, I now sleep very well lol.
I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quiet mediocre neighbourhoods. Then you’ve got Better, average sized homes in nicer neighbourhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Personally, I can connect to that. When I began working with a fiduciary financial counsellor, my advantages were certain. I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2021 this time with guidance, Long story short, its been 2years now and I’ve gained over a million dollars following guidance from my investment adviser.
This is huge! think you can point me towards the direction of your advisor? been looking at advisory management myself.. seeking ways to invest and make more money with the uncertainty in the economy.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy’’’ for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Insightful... I curiously looked up her name on the internet and I found her site, which I reviewed and went through to learn more about her credentials, academic background, and employment. She has a fiduciary duty to protect my best interests. I sent her an email outlining my objectives and also booked a session with her; thanks for sharing.
Stefanie, great HONEST video! Too many times we just buy, buy, buy. After buying 4 units in 4 years and then converting them from LTR to STR to increase income. I am stopping at these 4. for the exact same reason you talk about in this video. I do still work a full-time job which is my other source of income. I am currently optimizing my rentals. Putting money into them so they will rent at a higher rater rather than going out and buying more. I would always fix up a home prior to renting it out. There is a strategy called Snowballing where you can quickly pay off the mortgages. I read it in and highly recommend this book called "Retire Early With Real Estate" by Chad Carlson. I read the entire book in December and that is my drive for 2025. He promotes having less, but mightier homes. Just a tid bit that I think with help!
Monthly Cashflow = Monthly revenue - Monthly expenses ( also include property taxes allowance, maintenance, monthly insurance expense allowance, allowance, and vacancy expense allowance - similar to an escrow account to pay those expenses when they come due).
Then, if you put money aside for maintenance and capital expenditure, you should be able to pay for roof replacement with out compromising your cash flow. Granted if you buy the property with due diligence…
You shouldn't give up this is not a get rich quick,stick it out get a regular job to support yourself and when these mortgages get paid off your a millionaire stick it out you look very young just amazing that your were able to do this this day and time.
Nothing but truth here. This covers a lot of the reason why I stopped investing in properties after my first 2 and just stuck to reinvesting in my business. The cashflow is so small in comparison to what my business can do.
One of the realist videos on rentals I’ve ever watched. She’s being real and raw and honest and that will take her a long way. She could have easily said “I’m rich” I own 22 rentals and now I’m a baller but nah she kept it real. I’ve flipped well over 18 properties in a span of 3-4 years and I am in the process of bankruptcy because I over leveraged. I should make a video just like this to really help people avoid believing real estate is a get rich quick scheme when it’s not. Slow and steady is the key. I plan on getting through this tough bankruptcy process and starting all over again but this time with a much different approach.
Sis, you have to have a plan. Buy them when the bubble pops (which it is getting ready to do), you get bargains like that. Fix ‘em rent them, and ride the bubble on the way back up. When it gets to the top, sell them, put your money in solid, tangible assets that retain its value during inflationary periods. Wait for bubble to pop, repeat cycle. I would NEVER put a second on my properties, because the borrower is subject to the lender. You just need a little guidance, and you will do well.
Based on what you said in the video it doesn't sound like your analyzing the deals correctly, Capital Expenditures(10%), Repairs(5%0, and Vacancy(7%) are all expenses that should be taken out of the rent on a monthly bases and set aside in a High Yield Savings Account, So that when an issue presents itself you already have the funds set aside to pay for the expense and the fact that your paying the utilizes rather than passing on that expense to the tenant is putting a dent in your cash flow. It isn't a bad idea to sell some of the properties and pay down the mortgage on some of the properties that you already own, butt you should also understand that the more equity you have the more liability you have. You can have access to the equity in your home through Home Equity Lines of Credit. So that you can use it and repay it as you please.
What about turning a few of the homes into specialized cooperative living? Veteran housing, Senior housing or high-end independent living. Rent by the room what you rent for the house.
Thanks for explaining both sides 😊 Social media makes it sound so easy but it seems oftentimes it's not! "Equity rich but cash poor"... well said and explained 😊
I totally agree with everything in this video!!! And this is what I tell all people who ask me about my investments. Also when tenants move out and trash the place that’s a whole different ball game !! One more property and I’m done!
i just sold a 3 plex in L.A purchased 1- duplex & 2- single family homes with legal rentals in the back …. so 5 checks coming in. i do use a management company i do all repairs and i still have my daily business live in one !
Awesome video - too few people here are talking about these downsides of the real estate business. Because in the end you have to feel comfortable with whatever business you are running.
1. But why don’t you do a cash out refi on 2-3 properties , so you can have more cash in hand. The tenants would pay the rent with the higher mortgage. 2. Sell 4-5 of those properties, drop a few $10- 15k on the “principal payment “ a few of those more expensive properties , that will drastically reduce your monthly payments.
"Make sure you are fully fixing your properties up from the jump." This is such a big key in my humble opinion. Make double sure all your mechanicals are in good working order and everything works as intended. Check your roof, HVAC, service panel, windows, and plumbing system. If your house is sitting on galvanized supply lines and cast iron drain now would be the time to replace it with Pex and PVC. These are things you have to look and budget for when you are considering buying property. Especially old thunder dumpers. You do that and provide a clean place that is legit above the league average in the neighborhood you've done your job. Now screen well.. Thanks Stefanie!
I agree with your point of clearing out the debt. Once you own all the properties then you can cashflow much higher, and stack cash. Your at a good stopping point for growth. Now its grind time and knocking out mortgages as quickly as possible. Wish you the best!
Making touch with financial advisors like Elizabeth Regina Nelson who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
I recommend the book “What Every Real Estate Investor Needs to Know About Cash Flow”. Learn from the veterans. The point of real estate is to have an ROI, positive monthly cash flow as you’ve mentioned, while having tax advantages. Having a fully paid property you’re not getting an ROI until the tenants have fully paid you back…the purpose is for the tenants to pay down your loan and you keep the excess. It’s tough out there, I wish you well on your next investments 😊
The absolute worst thing about rental properties is dealing with people paying late, that messes up big time of one single tenant stop paying rent, guess who has to cover the mortgage payments if the tenant with he help of the courts gets to saty living rent free for up to six months... I been a landlord before and will never do that type of business again. Literally every single property you own is a part time job you have to take cared of on top of your regular job... Im just super glad I own my one family house and dont have to deal with tenant or neighbors living too close to me.
I’m so glad you’re being honest about the financials if owning rental properties. I’ve seen too many influencers just tell the good side so they can sell a course or bootcamp without actually breaking down the whole play
I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire $680k liquidity value to my stock portfolio?
"Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal." All the best, buying on sale is actually one of the best ways to invest in stocks, and advisors are ideally suited for such task
Until the Fed clamps down even further I think we're going to see hysteria due to rampant inflation. If you are in cross roads or need sincere advise on the best moves to take now with financial markets will be best you seek a fin-professional with fiduciary responsibilities who knows about mortgage-backed securities for proper guidance.
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
Also have to take into account most investors haven't experienced the full real estate market cycle yet. If you don't have enough spread, cash flow, and cash reserves, it could all go down really fast. Protect your capital at all cost
Your mistake is you should have cashed in MORE on the refinance and took bigger loans! So your property would cash flow 250 a month and your accounts would have substantially more funds!
You need to buy properties that has low vacancy rate and the property have a minimum 20% cash flow after expend For me middle and low class area are better than high end neighborhoods because you can get the multi families at price that the rent have massive cash flow for your pocket
Congrats on 22 units! I would leverage up to 20% equity on everything with a small 500-600 /mo cashflow cushion on each mortgage. Use the cash pulled out to keep a strong reserve for repairs, upgrades, and turnover. Invest the rest in S&P 500 to diversify and outperform your mortgage rate using the money. Allow properties to appreciate over time and paydown principle then refi again and pull more cashout up 20%. Wash, rinse, repeat lol
Leveraging like that is pretty risky since you're probably devaluing the property on taxes too. If you do this you're not only wiping out your equity but you're speculating that the property significantly increases in value before you sell. You might find yourself significantly underwater by doing this.
@@nitroneonicman I don't follow the "you're probably devaluing the property on taxes too"... I not suggesting you ever sell. Keeping too much equity is riskier because its hard to get to it in crisis. I'm suggesting pull all the equity out up to a point your can comfortably keep a $400-600 cashflow and 20-25% equity so you do not have PMI. This allows for a strong reserve from the equity pulled out which will be used for repairs, upgrades, and turnover. Any excess is diversified in S&P 500 or other investments. Over time rent inevitably increase along with property values while paying down principle from mortgage payments.
@@emmanuel825 This all assumes you don't over leverage yourself. If you don't plan on selling then depreciation recapture doesn't matter, but if you are underwater and can't afford payments you're going to be in a bad place.
She’s right! Been there, done that! Basically, the older the property - the higher the maintenance…. And she didn’t mention tenants that also go thru life changes (divorce, job loss, etc, etc 🤦♂️)… I switched from Real Estate to Equity Investments (Stocks) - and have zero regrets…
Could you make a vid on hownyou started buying realestate in the forat place? For the average it feels impossible. Like did you have a high income job before, large savings, good credit, good partners who had resources? What strategies younused? Im really curious
Appreciate the honesty, I tell all my friends these things before getting into real estate. Wife and I both 28yr and own 4 units and if we weren’t working our normal jobs the little cash flow would not be enough to fix issues that arises
I hit $96k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject.
It's essential for you to have a mentor to keep you accountable. Myself, I'm guided by Evelyn Vera. for years and highly recommend her I focus on her. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Oh I love that woman so much I started pretty low, though, $4000 thereabouts. The return came massive. Elijah is in school doing well, telling me of new friends he's meeting in school. Thank you Evelyn Vera, you're a miracle.
Wow... I know her too she is a licensed broker and a FINRA agent she is popular in US and Canada she is really amazing woman with good skills and experience.
I own rental properties. I agree with you. It’s called bleed off insurance taxes, maintenance. It does have pay down a good tax consequence. You may consider investing in bitcoin instead. With no bleed off.
I sold my properties I. 2021 at the top of the market Never looked back...All your finances are dependent on everyone else. If they don't pay, you pay.. Now I just pay my life insurance policy, my kids will have more money than me when I pass away. That's the real way to pass in wealth..
Very cool video especially when you explained it better near the end. At first it seemed like you were saying real estate is a no go but you were saying the way you did it was not sustainable or ideal. In my case, I'm buying cash, fixing up myself, plan to manage myself, and IF I get a second unit it will be from cash earned on first unit that is totally paid for. And ALL of this is with a separate source of income and massive cash reserves the whole time and zero mortgage ever at any point. All cash. Never debt or stress at all at any point. So I'm polar opposite approach more Dave Ramsey style. And I'm NOT rich. I am buying in the ghetto only severely distressed horribly burned up or rotted properties that were given up and abandoned years ago. Then its in budget.
You may want rentals later, but right now, it sounds like you want cash. Acquire properties over time and allow the tenants to pay your mortgage. Later, you will receive sufficient cash flow and offset your taxes.
My advice to everyone is this : if you want to grow big this year especially in your finances. Be willing to take risks. Saving is great but taking risks puts you on a pedestal where you wouldnt have to worry about savings as you do now. Thanks to Tessa Brugh Dueker, my portolio is doing really great and im proud of the decisions i made last year.
I think she trades for everyone I meet. I met her twice at a meeting in Germany and after her lectures from Ella I had to personally ask her to be my financial advisor. she is definitely good
I feel this is quite an easy one. You already have her name which makes it easy for you. Just look up her name online. I’m sure you will come across her. That’s how I found her too.
Flip a few sis, get back liquid and don't give up. Just reset and keep a big bag for protection... Much respect to this very bright and brave young lady..
THANK YOU for being so honest!!!! Unfortunately the REAL side of real estate is never talked about. Mainly because 9 ot out 10 people making Real Estate Videos are trying to sell you something.
Sound like she didnt have a main income to live off of. I.E. everyday job. How was she able to get 22 units anyway? Her partner must had the funds. Sorry to say, sound like she didnt.
real estate can make you a lot of money but you have to think long term the money you make is not for right now if done right you should be making at least 20,000 a month within 5 years and most people dont save they just live off the money
You are spot on. I have been in the business for :27 years. Additionally, this business is something you must desire to do. The low margins associated with this business just isn’t enough.
This is poor portfolio management and bad advice. You cash out the max you can on all your refinances after rehab. This will limit your monthly cashflow and increase your cash reserves. If you want to free a property from mortgage you can invest your cash reserves in strategically paying off select properties in the portfolio. Example, you cash out $40,000 extra in each refinance will give you almost 1 million in your bank account. If you want to free 1 or 2 properties from mortgage you would pay those off and continue scaling. You would have same cashflow after doing this, and much more money in your account. Further you could scale faster by cross collateralizing your paid off properties. It’s better to take a bigger loans in refinance, stock up cash and pay off select properties than to take small loans, be low on cash, and cash flow 600 on each property. The paid off properties with the 250 on leveraged properties would be the same an your accounts would still have more cash…
That's a great strategy. I max my cash out refi on my best properties (b class) to pay off my c class properties while I flip to actually make income while growing my portfolio.
Youre assuming shes not maxing out her refi - mind you we have 0 idea what her max LTV here is. The most important part that Im wondering is that it seems they got hit with some big ticket bills, what are they actually repairing during the renovation process?
I’m not assuming, it’s obvious. A 22 unit owner, has decent credit and history. DSCR ratio allows leveraging that would leave as little as $150-200 a month left over. She stated her average is $600 per unit. As such she has as least $30,000 or more she can take on each unit in leveraging. Some folks who borrowed back when rates were super low don’t want to refinance, however nothing wrong with maxing out on newer properties or refinancing them to max out to increase cash reserves. An owner of an occupier 22 unit portfolio can and should refinance selectively to boost cash reserves and continue scaling. Since she had a partner she needs a job, but if they scale to 30 doors and manage portfolios leveraging properly she won’t need to work and she should not be low on cash….
@ Again, you are assuming their lender did not cap them out. Im not sure what youtube taught you but most DCSR lenders will not go above a certain LTV.. the ratio itself is not the only determining factor, if these properties are not held in a personal name that LTV is most likely even lower. Not to include any fees they were charged for closing on the property twice and if they rolled them into the mortgage. It’s a strong assumption to assume they are not maxing out considering they are paying off a presumably high interest construction + acquisition loan. I agree she needs a day job, 22 units does not warrant a fully time property manager. Really they dont need a fully time property manager until they reach the 70-100ish mark simply due to their class of property. Instead they need better systems. I’d recommend she at least find a part time / day job as a property manager so she can “steal” their systems or better understand how it works at scale.
Great video. It makes being a property owner real. Its like any other business there can be set backs. I have two rental properties that are paid off. I did it to help with our retirement. In one property I had a great renter for 5 years that became a nightmare at year 6. That ordeal blew through my 6k emergency fund plus an other 12k that went on a line of credit. That was 2019 and we got through it but it was hard. I'm so glad it didn't happen in 2020. The other property right now is an OK renter. I say that because he always pays his rent but the neighbors and HOA hate him. You also made a good point of listening to you business and were it will lead you. Often people start a business thinking one thing and after they get started, it leads them down another path. Its so good that you are flexible.
I have avoided real estate like the plague. I live in Southern California. Apartments cost $500K plus per unit. So many problems, so much stress. During the pandemic, millions stopped paying rent for years. All of the money is in the stock market. It generates completely passive income.
Thank you-thank you-thank you!!! for sharing your Journey and the seldom talked-about negative realities of Real Estate Investing. I hope that you find success, and I know you eventually will.
Sell half of them, and use the money to pay off the remaining ones... then you'll have more peace and more cash flow. 😉 You will probably make the same or more in cash flow with 11 paid off property and definitely less stress. 7:03
As a real estate broker and short-term rental host...your story is dead on! My clients share how desperate they are to purchase multiple units, without the proper training of property management. No one understands the nightmares dealing with solely relying on tenants to service your lifestyle. Thanks for being transparent.
Too many real estate investors can do arithmetic and think they are genius. Real estate is all about assumptions and modeling. There was a rule of thumb is that purchase price is 100x monthly rent. Nowadays "investors" have totally forgotten this. Experts make up excuses why this metric does not matter. I disagree. Most real estate investors know nothing about depreciation recapture too--that should be deducted from equity.
@@testymann5045
Most wanna be William Nickersons, have no understanding of accounting. They look at "cash flow" as one can see in so many of these comments as well as the original presentation.
Also, few have a solid understanding of tenant protection laws. In the end, one bad tenant can wipe out years of any cash "profits" and capital appreciation.
I love that you mentioned the recapture. In my tax prep days, back when ACRS was allowed, I had to pick up a few clients off the floor when after years of ownership of multiple rental properties and, writing off all that depreciation as a loss against other earned income they had, I had to explain to them why their tax bill for the year of sale of those properties (often for some emergency purpose or end of life estate planning) was comparatively astronomical.
lol How about SCREEN YOUR TENANTS!!! ALL real estate investors rely on the tenants to service their "lifestyle". What are you talking about? Many make millions per year. Will you have problems here and there, of course, thats a part of doing business. And $200 a month cash flow Where? Maybe in the ghetto on a unit that cost 25K a door. Maybe learn how ot buy properties. And you dont buy when you are paying 6%+ interest.
Yes, sir. You are 100 % right on , 😵💫😵💫😵💫 I have a friend who purchased two properties in less than 2 years, the man was literally going crazy ! The people he rented to were calling 📞 him all hours day and night 🌙 7 days week!!!!! , in less than 3 months, he was taking pills 💊 😳 , he told me never been sick 😫 🤒 😷 🤧 until he purchased the 2 properties .............
It would be better to build a duplex with 2 car garage each. Its so much better due to being new and when there is a garage people store junk. They never leave at that point
She was trying to live off the income out the gate and quite her job, if she had one. You cant expect to live off the cash flow soon as you get properties. Doesn't happen like that.
@@BJ-we3ik 100% the case here.
I bet she's a "favorable" entity to lenders.
Facts keep your 9 to 5 until you master the real estate industry. Give yourself some time to build a decent rental investment portfolio.
That’s facts u have to properly vet the properties and possible upcoming repairs…you have to let that cash build up …and a huge issue is splitting profits that never works …22 units is more than enough on your own and when the deal is properly scoped out
She could on 20 houses, but it sounds to me like she can't do the repairs herself, she didn't realize it's a job in itself, and because she went into debt for all of it is losing a lot of capital to interest payments. I live off my properties just fine but I started slow and I do 90% of the work on them myself, I can do HVAC, roofing, plumbing, and electrical and do it right. My rentals are my job.
I also put back 20% of my rental income in a repair fund....once it hits 30k then I use it for whatever I want.
That’s why you set aside 15-20% of gross rent for capex and maintainance. 5-10% for vacancy before you calculate your “cashflow”.
Thats how Dave Lindahl taught us at his Apt House Riches Bootcamp 10yrs ago🙏 #wisdom
Yeah I think 300 is a little low
@@StarVee-iw3zm Is he still around?
You can't overcome no liquid wealth. This is the reason why we need reparations. See all of the investors made their money free and clear. Their cash made them cash and left her holding the bag. The bag of debt. Now she may not have the equity to sell her properties and make a profit because the distressed homes she purchased are not appreciating in the neighborhoods where she bought them.
And you know how I know. Because she can't compete with the major companies like zillow who are spending real money in the good neighborhoods.
Thats what wealth gets you. The good sht!!!
This is why we as black people need to band together and fight for reparations so that we can have something collectively.
She bought distressed homes in poor neighborhoods amongst tenants with no wealth with debt. How did yall think this was a great business model? I don't get it
, you probably need 300 a month just for taxes. Why nobody ever talk about taxes?
This world isn't built for black people from slavery who's cash was thwarted and stolen for hundreds of years.
$150,000 is not a lot of money to spread across 22 properties. Which means that she forced appreciation in a market where the neighborhood is not appreciating.
This is our problem. We want to do everything but march together and make the government pay us the reparations they owe us.
Because if you think that purchasing a bunch of debt is the way to financial freedom you are smoking thr crack of aspirationalism on steroids.
Finally, someone who is telling the truth about real estate. I'm a follower and a subscriber now!
Appreciate that!
It's over....what's there to follow
Most people lie, Most people in comments lie but her message resonates. It's realistic.
It is the truth about real estate when scaling without reserves and not factoring vacancies, repairs, and capex into your numbers. But It's not the truth about real estate.
She’s not managing her properties correctly and she is not crunching her numbers the way she’s suppose to. She brought all these units so fast and doesn’t even know how to manage them. The reason why she regrets it is solely because of her poor management. That is why so many businesses fail. If you don’t set aside for maintenance, repairs, business expenses, etc this will become a nightmare real quick. She should not be flowing $200/m/unit. I can tell she didn’t take into account the interest rate, the taxes, she didn’t look at the yearly tax increases (if any), she didn’t take into consideration the ages of the home and its interior and exterior. I can tell she just brought homes to buy it and thought SHT was sweet. Please young lady take a class on property management so you can learn some things you are missing. This is not a dig but just a warning the economy is just getting worst every given day and from the looks of it you are 1 inflation rate increase from going bankrupt. You and your friend need to sit down crunch all of the numbers for all the homes, inspect every single home (note everything about the home from exterior to interior and what may need future repairs) if it is of concern sell the home now. Do not wait till it gets worst. On thing about this business is that you cannot get attached to these homes you have to be willing to leave it behind to generate a positive cash flow everytime.
4 properties and i have 2 paid off. My next goal is to pay off a 3rd property and scale slowly. I get anxiety having to much debt under my name.
That’s my plan to , expanding aggressively is to risky
That’s the correct way to scale one at the time …
Sounds like a solid plan. 👍🏽
I've invested into small number of rental properties. Bmore area at that was always the strategy, but a near low condition property, add some cost to it, fix it up, get a renter, call in the bank to cash out equity in year 2. Take that equity buy another property, fix it up, sale it, take profits, pay off the equity loan, wash, rinse, repeat.
Where did i go wrong?
Excellent strategy
We only have one rental, but we love it. We bought it while still working full time jobs. Now my husband is the only one employed. We had plenty of money in reserves just incase we needed it for the loan. We also got a separate bank account for all the incoming and outgoing expenses so we’re not commingling our personal money with the rental money. We also fixed everything that needed fixing which included a new AC and Heating unit, new tile & laminate flooring, new electrical box to bring it up to code and much more, but this was already included in the numbers before we bought it. The cashflow is only reused for any minor repairs & we use it to reinvest in other entrepreneurial endeavors we have, but never for personal use. My husband’s income is what we use for personal use. This works for us. We plan on renting out our primary residence one day & buy another little house later. And we’ll do the same with that rental as we did for the first one.
Rent by the rooms
@@clydthbell4787 I'm planning to try that. we'll see how it goes crossing fingers!
SMART 💯
Smart Idea !👍🙏
I own one condo in LA near the beach that I live in and when I rented it out in the past for about five months out the year, occasionally on Airbnb, I was making 7000 a month with a $5000 cash flow profit. So in essence it’s not how many properties you get. It’s the location location location, which is what they teach in real estate if you have a real estate license. So the moral of the story is if you can buy one expensive piece of real estate with equity or build equity in it, you will be better off using that as your income property and getting a large cash flow as opposed to having numerous rental properties with numerous tenants and numerous headaches and numerous repairs😂❤😊
everyone's strategy is different.
@@hp7639well the strategy that she’s talking about, the strategy that your defending and everyone seems to agree upon doesn’t seem to be working. Like I said in my other comment. Northeast is definitely different. Location location location. Don’t partner up 🤷🏾♂️
Great video!!! I use to be a landlord and its everything you said. Also money lost when tenants don't pay, evictions, court cost, attorneys, damage apartments. Never rent to family and friends. I would rather invest in the stock market instead. Less headache.
Thank you!
Same here got burnt out and sold my 11 units. Tenants calling all times of day and night or property managers scamming overcharging for repairs. Brand new toilet clogged by toys and cooking oil. If I could do it again would only buy in middle class areas.
@@cathylake9072😂bro this things are stressful I’m glad I realized this before I bought my first
Residential rental properties overall are headaches especially in Jamaica and some parts of Europe for example in Germany .They is the main reason I intend to shift to commercial units .
The stock market can give you similar or better returns, without the hassles.
I feel you on this. I used to own 2 single family units. From the beginning, things were great, I had to move to San Francisco to take a job in silicon valley 4 years into it then things started to go south and I hired a property manager that was a crooked. I decided to sell both units and took my profits which wasn’t that bad. Now as a stock market investor, I’m making money on a daily basis with peace of mind. Don’t have to worry about property manager called about A/C, water heater, or fence broke.
Do you mentor ppl on stock market investing?
What do you think those houses are worth now?
Happened to me as well. My property manager was crooked. Tenant did $40,000 worth of damage. Deciding to sell now. I'm in NY.
@@QueenZee2024 asking that on YT comments? You're definitely gonna get scammed
@@tarawalton6778
"Tenant did $40,000 worth of damage."
With no hope of restitution.
And all too common story amongst folks I've known to try and make bank on a rental property.
I want to know where you got a roof for 5k lol
My thoughts exactly. I’ve been in the real estate industry for 28 years and to my knowledge a tiny roof repair might start at the $5k. But definitely not a roof replacement. 😂
I just spent 16k on my roof. House is only 1500 square feet
😂I was looking for this comment, I thought that same thing
In houston, county area. Getting rid replacements at a little over 200 a square.
I’m paying about $5,000 for a roof on a row house.
It’s refreshing to see someone sharing the reality of the real estate business. The older I get the more I value free and clear properties.
What’s free and clear properties?
I value the sentiment, especially as you get older, but that "free and clear stuff" puts a big target on your back and I would argue is more risky than having your properties properly leveraged.
@@QueenZee2024 property with no loans on it.
@@ronbibb8162 I’ve heard that before too. Im sure there are benefits to that as well. But I have a large umbrella policy and a very strong legal team. I’m not concerned at all about that.
@@ronbibb8162it definitely is best to keep a loan to defend against title theft.
As an investor in Alabama. I agree with your points about scaling too fast. I made sure to flip for several years, building up a war chest of cash while also cherry picking fixer upper properties i set aside over the last 3 years. Now I'm using my flipping experience and crew to fix those dozen or so properties up and rent out while continuing to flip.
Exactly that’s an excellent strategy
I plan to get into real estate investing this year and this was the strategy that I came up with. So I’m glad to hear someone thats experienced verify that this is a good approach.
Smart🎉
Unfortunately not everyone has access to a team of repair professionals to flip/renovate homes. Some folks have other commitments too, like jobs and family...and not everyone is handy. Points to remember....
Being in the South, you're in a great market. We do Mississippi and Louisiana. Low property taxes and the homes are cheaper. Tenants also pay their own utilities.
You are courageous and successful because you have taken action instead of dreaming. You have learned a lot and going forward your lessons learned will reward you! Thanks for sharing your journey!💯
Thank you!
You took the words right out of my mouth. I made the jump earned money but not without some bumps and bruises. Meanwhile a friend of mine will talk your ear off but had yet to jump into real estate.
Determine how many properties you need to sell in order to pay everything off. And enjoy what you have done. If you bought well you should be able to keep about half of them
I was thinking along the same lines. So no need to write a similar comment.
2025 is going to be life-changing. Books like The Secret Doctrine of Wealth showed me how to take control of my future-it’s a must-read.
thnak you bro
Appreciate your recommendations ❤
@@1GQ_gent :3
You know whats another excellent financial book… Proverbs
If you don't mind can i ask who is the author of that book ?I'll definitely like to get my hands on that book!👍🎯💯
I’ve been studying real estate in general for years and this is honestly EXACTLY why I never got started in the first place. $300/mo as a landlord didn’t make sense to me if the house is not payed off because if something went wrong we all know it’s gonna cost at least thousands. Plus, if I miss my mortgage payment, heck, I could lose the house entirely and that’s a bad look on the portfolio. To me owning the house out right and then renting it out just made more sense to me, even if I have to wait until I can afford to do that. Rather save the headache lol thanks for this validation 🙏🏾
Everybody that's saying that they don't want to do real estate because of this I promise you you are short-sighted. Real estate is one of the very business practices a lot men and women have become rich. You just have to know how to do it.
Hey Ms S. I used to own properties too… too much headaches so I cashed out and starting an online store…I make $10k per month from home 🏡 no tenants no late calls etc. I can show how to do this too! ❤
You make 10k a month with an online store. I want to start an online store. Is it time consuming? How did you get started?
I just moved from a large apartment complex with several buildings. The reason I had to move was every time we got a half inch of rain, my apartment would flood. I told management about it and took pictures right away. A year later the problem still wasn't fixed. The roof caved in flooding at least three apartment units, each with gobs and gobs of black mold on the walls and ceiling. Other buildings also had major problems. If a roof didn't cave in, there was a problem with the sewer backing up into the apartment. Not everyone was a model tenant like me. Some of them were a nightmare. The owners of the complex needed to refinance, and that was when interest rates had gone up, and rents were coming down a little because people had trouble affording the current rents, which were beyond what the market would bear.
So when you buy an apartment building, these are things you must be prepared for.
I am giving you major Props for being so Honest and you are actually either clever and tactical or extremely sincere!!! I am going with the later so far! Thanks!
Thank you for being one of the few transparent content creators out here. I recently decided to mine my equity and put it to use by selling some properties to build more residual income-based businesses. I made the mistake in 2004 that you made by scaling too fast. It cost me 99% of my portfolio in 2008 and I learned a valuable lesson.
Yup! This is what I have said that the *Gurus* don't tell the truth. I had only two and this happened for me, because tenants call bse something is broken and several dollars out. I had to learn to do some of the work myself, thankfully the HomeDepot in the area I lived they were very helpful and literally the Reps in the Aisles were former or current Contractors or trades people that would walk you how to some of this.
But getting a contractor to do all these repairs for you, will drive you bankrupt faster than even the repairs themselves. It is alot. Then you have others that say - Just get a Property Manager or Management Company - this will get you poorer faster than even what?? I don't know but not a good idea.
All the story isn't given when they are pushing people to get invest in R/E...So glad you are telling the Truth!
There are other Businesses that give more cash flow than R/E...Never again!
All great points, many of which I have experienced myself. I just will caution about the other businesses that give more cashflow. 97% of small businesses gross under $1M, and 90% go out of business within 10 years. If you are a small business, especially one that grosses less that $1M, you will likely be working in the business day-to-day and will have just as many headaches, if not more, than a REI but you won't have access to capital in the same was an REI would; which is why so many traditional businesses go under. I've owned three small businesses and I am a REI. The businesses are gone now, but I've grown the RE to 46 units worth $8.9M and $4M in equity. All done using 60K that I borrowed 17 years ago to get started. I would challenge the thinking that you get more cashflow from a traditional business than RE provided you stick out the REI for the long haul. I will admit that It is very difficult and it will probably suck for the first 10 years. But if you can make it the payoff is amazing, although still not without headaches. At historical averages my portfolio will appreciate by over $400K this year, not counting principle paydown and cashflow. My cashflow is not taxed because of depreciation, and when I want to tap equity I do a cash out refinance to access capital with no tax because its a loan. These loans are given without even submitting tax returns or bank statements, and paid back by tenants. Truly amazing if you can make it through the tough times.
Yep we have 2 properties in MA and they cashflow nicely but our FEDEX contractor business does much better!!!!!
Keep grinding. Everything in life is either a lesson or a blessing. The fact that you are getting this hands-on experience will help you pivot & adjust to how you move next. The real-estate game aint for everybody, but if you stay patient, resilient, & and hungry, you'll see that bag 💰grow
Much success, prosperity & abundance to you. 🙏🏾
🙌🙌🙏
Great advice! Success isn't easy. Is so everyone would have it.
So true and thank you!!
LOVE your optimistic outlook. ❤️
@@blackson4546Agree 💯
I bought three rental properties in 2019 and have all the three of them now in market for sale. It's the worst money decisions and headache of my life to own those properties. If I had left the money in the stock market, I would have made a lot of money. As soon as I sell them, I'm putting the money in the stock market.
The stock market blowup has already started. This year will be brutal. 🔥
@@justlikeyouful I've been investing in stock market for years. Over the years, the value of stock investment appreciates better than the appreciating value of properties. Yes, we are going to have a bear market this year, and that's exactly the reason to put some money in the market to reap the benefits of falling prices of stocks. I'm going to leave the money in the stock market for over 10 years. So, I'm not concerned about the ups and downs over the years.
@@justlikeyouful Or not. Put not all the money in the same basket
@TheAdeJohn Given how long R/E sales take to close your timing might be right. I follow a lot of successful macro guys on RUclips. "Buy the dip and never trip!"
I regret NOT buying 22 rental properties... If I'd kept just the 6 I had I'd have well over $1,000,000 while being completely debt free. Timing and management matter. It beat my now job in every regard except cash flow...but I exchanged working 2 hours most months to 240 hours per month.
Okay, after actually listening, I agree. I was doing exactly what you wished you'd done. Taking it slow to keep debt down and consistently upgrading what I had. I HATED debt!, plus I took opportunity for granted. You could simply sell off your lesser and/or more stressful properties to simplify. I would, but sticking it out means some day you could own 22 of those 30 properties outright with what you already control. That's probably 4-5mil for the future and 30k+ a month! Why ruin that future when the present already offers it!? Just stop adding stressful properties now! If you want something to do...wholesale or rehab to resell additional properties. Roll that money directly into your current holdings.
I feel you on that. I have 46 and there are definitely headaches, but it beats working for someone else. My portfolio is worth $8.9M. Just by holding on to them I will gain $400K in appreciation this year at the historical average rate of appreciation. I have a good bit of tenant issues at the moment, but right now I'm in my drawls typing this response, later I'll go have lunch with my mom, take a nap, and then pick up the kids from school and take them to their activities. The tenant issues will work themselves out, and more will come up, but I control my life.
Sage advice. 💯
Seems obvious but it needed to be said. If buying more properties is an expense that's puting you in the red, and you own 22 units, then simply stop buying more properties.
@@ronbibb8162 I wanna get started, do you have IG? Need some advice on getting started.
After selling two homes in 2023, I'm anticipating a housing crisis in order to buy inexpensively. As a backup plan, I've been thinking about purchasing stocks. What recommendations do you have for the best time to buy? On the one hand, I keep reading and seeing trader earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
Most investors can't handle a crash since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
The fact that the US stock market had been on its longest bull run ever makes the widespread worry and enthusiasm understandable given that we are not used to such unstable markets. As you pointed out, it wasn't tough for me to earn over $750k in the last 13 months, so there are chances if you know where to go. I hired a portfolio advisor since I was aware that I needed a solid and trusted plan to survive these trying times.
I tried researching strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your asset manager is by name.
Her name is Amy Lea Kohlert. Hope that helps
Just copied and pasted Amy Lea Kohlert on my browser and her page popped up immediately, thank you for saving me hours of researching.
This is why you must be a great business person, not just an individual who buys properties. I suggest this strategy for high income individuals looking for tax shelters.
I’m a real estate investor since 2007. My life consist of golfing, playing Madden at night and finish the night watching u tube real estate channels to further my knowledge. and many many vacations through out the year. That the light side. Now it’s time for the dark moments. Everyone should give big thanks to this young lady for sharing her experience. Oh my god everything she shared I experienced. The nightmare started a month before the pandemic I semi retire early because I had 24 houses at that time. Than the pandemic hit. Crushed my world. Thank god to this day I had a great job in middle management my 401K and pension saved me. Next nightmare came end of 2023 November and December I purchased 9 house’s bad decision that cost me she mentioned credit card debt I’m not going to mention the amount because everyone will throw up. 🤮. In closing the net profit numbers she presented was dead on. Now I have 48 and I managed them from 8 hours away. I already know what you’re thinking answer is I have good people helping with the work. Thank god for having a great job with benefits helped my journey. Once again to the young lady you’re awesome for sharing and good luck 🍀
I agree with scaling up a little fast. I was in a similar situation years ago. I would recommend that you get handy and you'll save yourself a lot of money. The big things that Stefanie mention roof, hvac, windows are expensive and hard to do yourself but are replaced rarely. When I started I had a full time job and picking up a hammer on some weekends while cash flowing little for my efforts. That got me by but now I'm in a much better place. 14 years later I have cash reserves, free and clear properties, and I pick and choose what handy work I want to do. This doesn't happen fast or by accident it was the long game that got me to where I am now.
I have a close relative who believed he’d strike it rich by owning 18 rental properties. However, things quickly took a turn when the maintenance costs of these homes began to nickel and dime him. Over time, he became increasingly unscrupulous and started coming off as a slumlord. It was a classic case of "robbing Peter to pay Paul," so to speak. He lost his handyman because he either wouldn’t pay him or couldn’t afford to, and now he either does the repairs himself or ropes his wife into helping-mostly with patchwork fixes. Watching his struggles and the compromises he’s had to make, I’ve realized the stress is just not worth it for me.
You can't take spend all the money an asset is generating and call it good. There has to be a maintenance budget. It's basic business.
25 years baby sitting people! I’m done with it!
The only way to do it with little management is to own 2 properties. The one you live in and a rental unit. Only 1 rental will be easy to manage while bringing in profit since you have no mortgage to pay. But people will say not to do that, and to use the money as leverage for more. Don't do that, that's just greed. The end goal shouldn't be more money, but financial independence.
Less is often more. We owned three rental properties while keeping our jobs. We also assumed occupancy for each unit at 9 months per year and kept a maintenance contingency. After 10 years we sold three, bought a single investment property and shifted our investments to mutual funds and other vehicles. Lots of headaches with three never mind 22.
I am 53 and Last year I was working full time, budgeting groceries, unable to afford date nights, and missing time with my kids. Now I learned how to make money online. Now am a SAHM, homeschooling, and making profits every week.
Wow that's awesome everyone needs more than their salary to be financial stable. The best thing to do with your money is to invest it rightly, because money left for saving always end up used with no returns.
You are absolutely right 💯
Am looking for something to venture into on a short term basis, I really need to create an alternate source of income, what do you think I should do?
Cryptocurrency/STOCK investment, but you will need a professional guide on that.
Facebook 👇
Great video. I always warn people about scaling too fast and keeping proper reserves. Good luck to you and your business partner.
Thank you!!
In every industry I hear about "scaling"....sounds like a double edged sword to me and or a trap 😂 in audio engineering school they taught us about finding the "sweet spot". Don't max out the gain just cuz you can. Don't hit the inputs hard just cuz you can. "Gain stage" and find the "sweet spot"....that's what I'm trying to do, while maintaining optimal performance
I'm a property manager, just bought 6 units. I think one advantage i have is i really understand the budgeting and financials of a property, so I woudo never scale like this. Thanks for the content.
Exactly. 💯 Rookie mistakes.
How would you go about it ?
Honey you are in a great position!!! Choosing to sell so you can get that equity is ohkay.
We are not house hoarders we are real estate investors.
When properties can make you $100k sell them and celebrate... than buy some more.
Congrats on all of your success
Really good transparent video. I’ve been a Realtor for over a decade and see this happening constantly! In this market not only are you paying sky high prices but when you take into account your monthly expenses - the rent you can get, you’re barely breaking even, loosing money or slightly making a profit. All for the hope of future appreciation. For those “lucky ones who manage to cash flow a few hundred per month, all that is washed away with maintenance expenses, realtor commissions and the cost of paint/repair the property once the tenant leaves. In today’s world, if you have enough money to buy investment properties, buy Bitcoin instead, less headaches, no random expenses and a more guaranteed appreciation for the future!
Now if the real estate market happens to crash, which it probably won’t, and prices go back to pre-pandemic levels, and interest rates drop below 4%, the formula changes and investments properties make sense again. However, Bitcoin will still reign King!
horrible advise its a pyramid scheme
I sold my rental property and bought Bitcoin. I sleep peacefully at night. I had bad luck with tenants and them not paying rent(I managed my properties myself and I'm not a confrontational person). Then there were the municipal fees as we call them in country which were high, the maintenance and tax end of each year.
I couldn't anymore. Like I said, I now sleep very well lol.
@@entervalhalla8484 bitcoin is a pyramid scheme what a stupid investment
I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quiet mediocre neighbourhoods. Then you’ve got Better, average sized homes in nicer neighbourhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Personally, I can connect to that. When I began working with a fiduciary financial counsellor, my advantages were certain. I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2021 this time with guidance, Long story short, its been 2years now and I’ve gained over a million dollars following guidance from my investment adviser.
This is huge! think you can point me towards the direction of your advisor? been looking at advisory management myself.. seeking ways to invest and make more money with the uncertainty in the economy.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy’’’ for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Insightful... I curiously looked up her name on the internet and I found her site, which I reviewed and went through to learn more about her credentials, academic background, and employment. She has a fiduciary duty to protect my best interests. I sent her an email outlining my objectives and also booked a session with her; thanks for sharing.
Stefanie, great HONEST video! Too many times we just buy, buy, buy. After buying 4 units in 4 years and then converting them from LTR to STR to increase income. I am stopping at these 4. for the exact same reason you talk about in this video. I do still work a full-time job which is my other source of income. I am currently optimizing my rentals. Putting money into them so they will rent at a higher rater rather than going out and buying more. I would always fix up a home prior to renting it out. There is a strategy called Snowballing where you can quickly pay off the mortgages. I read it in and highly recommend this book called "Retire Early With Real Estate" by Chad Carlson. I read the entire book in December and that is my drive for 2025. He promotes having less, but mightier homes. Just a tid bit that I think with help!
Monthly Cashflow = Monthly revenue - Monthly expenses ( also include property taxes allowance, maintenance, monthly insurance expense allowance, allowance, and vacancy expense allowance - similar to an escrow account to pay those expenses when they come due).
Then, if you put money aside for maintenance and capital expenditure, you should be able to pay for roof replacement with out compromising your cash flow. Granted if you buy the property with due diligence…
You shouldn't give up this is not a get rich quick,stick it out get a regular job to support yourself and when these mortgages get paid off your a millionaire stick it out you look very young just amazing that your were able to do this this day and time.
Nothing but truth here. This covers a lot of the reason why I stopped investing in properties after my first 2 and just stuck to reinvesting in my business. The cashflow is so small in comparison to what my business can do.
One of the realist videos on rentals I’ve ever watched. She’s being real and raw and honest and that will take her a long way. She could have easily said “I’m rich” I own 22 rentals and now I’m a baller but nah she kept it real. I’ve flipped well over 18 properties in a span of 3-4 years and I am in the process of bankruptcy because I over leveraged. I should make a video just like this to really help people avoid believing real estate is a get rich quick scheme when it’s not. Slow and steady is the key. I plan on getting through this tough bankruptcy process and starting all over again but this time with a much different approach.
FACTS 😂😂😂😂😂😂 THAT'S WHY I BUY LAND AND RENT CAMP SITE ❤❤❤ NO HEADACHES ‼️
Sis, you have to have a plan. Buy them when the bubble pops (which it is getting ready to do), you get bargains like that. Fix ‘em rent them, and ride the bubble on the way back up. When it gets to the top, sell them, put your money in solid, tangible assets that retain its value during inflationary periods. Wait for bubble to pop, repeat cycle. I would NEVER put a second on my properties, because the borrower is subject to the lender. You just need a little guidance, and you will do well.
Based on what you said in the video it doesn't sound like your analyzing the deals correctly, Capital Expenditures(10%), Repairs(5%0, and Vacancy(7%) are all expenses that should be taken out of the rent on a monthly bases and set aside in a High Yield Savings Account, So that when an issue presents itself you already have the funds set aside to pay for the expense and the fact that your paying the utilizes rather than passing on that expense to the tenant is putting a dent in your cash flow. It isn't a bad idea to sell some of the properties and pay down the mortgage on some of the properties that you already own, butt you should also understand that the more equity you have the more liability you have. You can have access to the equity in your home through Home Equity Lines of Credit. So that you can use it and repay it as you please.
Thanks for sharing all this Stephanie. You've achieved so much already. That's next generation wealth.
What about turning a few of the homes into specialized cooperative living? Veteran housing, Senior housing or high-end independent living. Rent by the room what you rent for the house.
Right
Thanks for explaining both sides 😊 Social media makes it sound so easy but it seems oftentimes it's not! "Equity rich but cash poor"... well said and explained 😊
I totally agree with everything in this video!!! And this is what I tell all people who ask me about my investments. Also when tenants move out and trash the place that’s a whole different ball game !! One more property and I’m done!
I kmew people and saw people do this...i seen tenants offer to sleep with landlords...a lot.... I just stayed away
i just sold a 3 plex in L.A purchased 1- duplex & 2- single family homes with legal rentals in the back …. so 5 checks coming in. i do use a management company i do all repairs and i still have my daily business
live in one !
You are also over leveraged if you get a couple tenants not paying you are going to lose most of your properties
Awesome video - too few people here are talking about these downsides of the real estate business. Because in the end you have to feel comfortable with whatever business you are running.
1. But why don’t you do a cash out refi on 2-3 properties , so you can have more cash in hand. The tenants would pay the rent with the higher mortgage.
2. Sell 4-5 of those properties, drop a few $10- 15k on the “principal payment “ a few of those more expensive properties , that will drastically reduce your monthly payments.
"Make sure you are fully fixing your properties up from the jump." This is such a big key in my humble opinion. Make double sure all your mechanicals are in good working order and everything works as intended. Check your roof, HVAC, service panel, windows, and plumbing system. If your house is sitting on galvanized supply lines and cast iron drain now would be the time to replace it with Pex and PVC. These are things you have to look and budget for when you are considering buying property. Especially old thunder dumpers. You do that and provide a clean place that is legit above the league average in the neighborhood you've done your job. Now screen well.. Thanks Stefanie!
I agree with your point of clearing out the debt. Once you own all the properties then you can cashflow much higher, and stack cash. Your at a good stopping point for growth. Now its grind time and knocking out mortgages as quickly as possible. Wish you the best!
Appreciate that🙏
Your video is 1000% accurate. The key to Real Estate rentals success is: grow slowly, manage them yourself, and get them paid off ASAP.
I'm glad you made this video it reminds me of my transformation from a nobody to good home, $34k monthly and a good daughter full of love
My advice to everyone is that saving is great but investment is the key to be successful imagine investing $15,000 and received $472,700.
wow this awesome I'm 47 and have been looking for ways to be successful, please how??
Making touch with financial advisors like Elizabeth Regina Nelson who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times
Thanks to Mrs. Elizabeth Regina Nelsen's time in my life, which had a profound impact on me.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
I recommend the book “What Every Real Estate Investor Needs to Know About Cash Flow”. Learn from the veterans. The point of real estate is to have an ROI, positive monthly cash flow as you’ve mentioned, while having tax advantages. Having a fully paid property you’re not getting an ROI until the tenants have fully paid you back…the purpose is for the tenants to pay down your loan and you keep the excess. It’s tough out there, I wish you well on your next investments 😊
I feel you sis. Its damn hard, very hard. I just hope that it pays off within the next 5 yrs.
Looks like you over leveraged too fast. Definitely appreciate the ambition. You actually DID something! Respect.
I had two rentals and boy was it a headache.
same here. I have 2 rentals also and always have issues. Either maintenance or tenants.
The absolute worst thing about rental properties is dealing with people paying late, that messes up big time of one single tenant stop paying rent, guess who has to cover the mortgage payments if the tenant with he help of the courts gets to saty living rent free for up to six months... I been a landlord before and will never do that type of business again. Literally every single property you own is a part time job you have to take cared of on top of your regular job... Im just super glad I own my one family house and dont have to deal with tenant or neighbors living too close to me.
You are the most truthful content creator in real estate
Good video!! Proper scaling requires proper funding. Strategically plan and research properly. Best wishes everyone peace!!
So true and thank you!
Thank you for keeping it real Stefanie because many of us real estate investors don't want to look good to the superficial eye but want to be good.
Less is more, the key is to pay off the mortages.
Exactly
I’m so glad you’re being honest about the financials if owning rental properties. I’ve seen too many influencers just tell the good side so they can sell a course or bootcamp without actually breaking down the whole play
I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire $680k liquidity value to my stock portfolio?
"Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal." All the best, buying on sale is actually one of the best ways to invest in stocks, and advisors are ideally suited for such task
Until the Fed clamps down even further I think we're going to see hysteria due to rampant inflation. If you are in cross roads or need sincere advise on the best moves to take now with financial markets will be best you seek a fin-professional with fiduciary responsibilities who knows about mortgage-backed securities for proper guidance.
this sounds considerable! think you know any advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; thank you for sharing.
Also have to take into account most investors haven't experienced the full real estate market cycle yet. If you don't have enough spread, cash flow, and cash reserves, it could all go down really fast. Protect your capital at all cost
Your mistake is you should have cashed in MORE on the refinance and took bigger loans! So your property would cash flow 250 a month and your accounts would have substantially more funds!
You need to buy properties that has low vacancy rate and the property have a minimum 20% cash flow after expend
For me middle and low class area are better than high end neighborhoods because you can get the multi families at price that the rent have massive cash flow for your pocket
Congrats on 22 units! I would leverage up to 20% equity on everything with a small 500-600 /mo cashflow cushion on each mortgage. Use the cash pulled out to keep a strong reserve for repairs, upgrades, and turnover. Invest the rest in S&P 500 to diversify and outperform your mortgage rate using the money. Allow properties to appreciate over time and paydown principle then refi again and pull more cashout up 20%. Wash, rinse, repeat lol
Leveraging like that is pretty risky since you're probably devaluing the property on taxes too. If you do this you're not only wiping out your equity but you're speculating that the property significantly increases in value before you sell. You might find yourself significantly underwater by doing this.
@@nitroneonicman I don't follow the "you're probably devaluing the property on taxes too"... I not suggesting you ever sell. Keeping too much equity is riskier because its hard to get to it in crisis. I'm suggesting pull all the equity out up to a point your can comfortably keep a $400-600 cashflow and 20-25% equity so you do not have PMI. This allows for a strong reserve from the equity pulled out which will be used for repairs, upgrades, and turnover. Any excess is diversified in S&P 500 or other investments. Over time rent inevitably increase along with property values while paying down principle from mortgage payments.
Yeah but you’ll be really rich once those mortgages are done.
@@emmanuel825 This all assumes you don't over leverage yourself. If you don't plan on selling then depreciation recapture doesn't matter, but if you are underwater and can't afford payments you're going to be in a bad place.
She’s right! Been there, done that! Basically, the older the property - the higher the maintenance…. And she didn’t mention tenants that also go thru life changes (divorce, job loss, etc, etc 🤦♂️)… I switched from Real Estate to Equity Investments (Stocks) - and have zero regrets…
Real estate is a long term game. Slowly pay down the buildings. 5 years from now after 2-3 are paid off it will make a huge difference.
Finally someone who tells me what I'm going through
Heavy leverage makes it hard to sleep at night...
To be honest I got use to managing higher levels of stress, so it wasn't bad. I just got tired of it
@@StefanieKebedethat was literally a contradiction lmao
Could you make a vid on hownyou started buying realestate in the forat place? For the average it feels impossible.
Like did you have a high income job before, large savings, good credit, good partners who had resources? What strategies younused? Im really curious
Appreciate the honesty, I tell all my friends these things before getting into real estate. Wife and I both 28yr and own 4 units and if we weren’t working our normal jobs the little cash flow would not be enough to fix issues that arises
yeah I could go back to selling and get that exta cash... life short not trying to do more work for little more
Thank You for your honesty and sharing your experience.
I hit $96k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject.
It's essential for you to have a mentor to keep you accountable. Myself, I'm guided by Evelyn Vera. for years and highly recommend her I focus on her. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Damn that's huge, how do you make that much monthly?.. I have been looking for ways to be successful, please how??
It's Ms. Evelyn Vera doing, she's changed my life.
Oh I love that woman so much I started pretty low, though, $4000 thereabouts.
The return came massive. Elijah is in school doing well, telling me of new friends he's meeting in school. Thank you Evelyn Vera, you're a miracle.
Wow... I know her too she is a licensed broker and a FINRA agent she is popular in US and Canada she is really amazing woman with good skills and experience.
I own rental properties. I agree with you. It’s called bleed off insurance taxes, maintenance. It does have pay down a good tax consequence. You may consider investing in bitcoin instead. With no bleed off.
I sold my properties I. 2021 at the top of the market
Never looked back...All your finances are dependent on everyone else. If they don't pay, you pay.. Now I just pay my life insurance policy, my kids will have more money than me when I pass away. That's the real way to pass in wealth..
Would like to know more about which insurance you bought ? Is it Termlife or IUL ?
Very cool video especially when you explained it better near the end. At first it seemed like you were saying real estate is a no go but you were saying the way you did it was not sustainable or ideal. In my case, I'm buying cash, fixing up myself, plan to manage myself, and IF I get a second unit it will be from cash earned on first unit that is totally paid for. And ALL of this is with a separate source of income and massive cash reserves the whole time and zero mortgage ever at any point. All cash. Never debt or stress at all at any point. So I'm polar opposite approach more Dave Ramsey style. And I'm NOT rich. I am buying in the ghetto only severely distressed horribly burned up or rotted properties that were given up and abandoned years ago. Then its in budget.
Did you hear the part about she has other investors? Makes the pot even smaller. Being overleveraged can be the devil sometimes.
Yeah, so it's just me and my business partner that owns these which is 50/50 split, but you're right over leveraging is a pain
You may want rentals later, but right now, it sounds like you want cash. Acquire properties over time and allow the tenants to pay your mortgage. Later, you will receive sufficient cash flow and offset your taxes.
My advice to everyone is this : if you want to grow big this year especially in your finances. Be willing to take risks. Saving is great but taking risks puts you on a pedestal where you wouldnt have to worry about savings as you do now. Thanks to Tessa Brugh Dueker, my portolio is doing really great and im proud of the decisions i made last year.
I think she trades for everyone I meet. I met her twice at a meeting in Germany and after her lectures from Ella I had to personally ask her to be my financial advisor. she is definitely good
I trade with her every week and make huge profits from her. her consistency is crazy.
I just looked up her name online. she is licensed with credible certificates and has an amazing track record. Thank you for the message.
Can I knw mre?
I feel this is quite an easy one. You already have her name which makes it easy for you. Just look up her name online. I’m sure you will come across her. That’s how I found her too.
Flip a few sis, get back liquid and don't give up. Just reset and keep a big bag for protection... Much respect to this very bright and brave young lady..
I have 4 single family properties and 3 apartment complexes ( 18 units). $47, 600 monthly cash flow but of course I charge a lot more for rent.
what do you cash flow on each after mortgage, maintenance, etc? Trying to learn.
THANK YOU for being so honest!!!! Unfortunately the REAL side of real estate is never talked about. Mainly because 9 ot out 10 people making Real Estate Videos are trying to sell you something.
Sound like she didnt have a main income to live off of. I.E. everyday job. How was she able to get 22 units anyway? Her partner must had the funds. Sorry to say, sound like she didnt.
We used a private money lender
@@StefanieKebedeWhat lender?
@@StefanieKebede Bro who gave you this financial advice , this is terrible
Because apparently I. Certain parts of the country you can buy a home for a song.
yeah, every time I did the math on real estate, it never papered out.
happyI just stuck to just sharpening my pencil on my 401k.
real estate can make you a lot of money but you have to think long term the money you make is not for right now if done right you should be making at least 20,000 a month within 5 years and most people dont save they just live off the money
She is smart, articulate and has a solid business sense.
until you listen to her
You are spot on. I have been in the business for :27 years. Additionally, this business is something you must desire to do. The low margins associated with this business just isn’t enough.
This is poor portfolio management and bad advice. You cash out the max you can on all your refinances after rehab. This will limit your monthly cashflow and increase your cash reserves. If you want to free a property from mortgage you can invest your cash reserves in strategically paying off select properties in the portfolio. Example, you cash out $40,000 extra in each refinance will give you almost 1 million in your bank account. If you want to free 1 or 2 properties from mortgage you would pay those off and continue scaling. You would have same cashflow after doing this, and much more money in your account. Further you could scale faster by cross collateralizing your paid off properties. It’s better to take a bigger loans in refinance, stock up cash and pay off select properties than to take small loans, be low on cash, and cash flow 600 on each property. The paid off properties with the 250 on leveraged properties would be the same an your accounts would still have more cash…
That's a great strategy. I max my cash out refi on my best properties (b class) to pay off my c class properties while I flip to actually make income while growing my portfolio.
Youre assuming shes not maxing out her refi - mind you we have 0 idea what her max LTV here is.
The most important part that Im wondering is that it seems they got hit with some big ticket bills, what are they actually repairing during the renovation process?
I’m not assuming, it’s obvious. A 22 unit owner, has decent credit and history. DSCR ratio allows leveraging that would leave as little as $150-200 a month left over. She stated her average is $600 per unit. As such she has as least $30,000 or more she can take on each unit in leveraging. Some folks who borrowed back when rates were super low don’t want to refinance, however nothing wrong with maxing out on newer properties or refinancing them to max out to increase cash reserves. An owner of an occupier 22 unit portfolio can and should refinance selectively to boost cash reserves and continue scaling. Since she had a partner she needs a job, but if they scale to 30 doors and manage portfolios leveraging properly she won’t need to work and she should not be low on cash….
@@googlewebsite5953Sounds to me that it’s money management. Something isn’t adding up. I would love to see a breakdown of her expenses for the units.
@ Again, you are assuming their lender did not cap them out. Im not sure what youtube taught you but most DCSR lenders will not go above a certain LTV.. the ratio itself is not the only determining factor, if these properties are not held in a personal name that LTV is most likely even lower. Not to include any fees they were charged for closing on the property twice and if they rolled them into the mortgage. It’s a strong assumption to assume they are not maxing out considering they are paying off a presumably high interest construction + acquisition loan.
I agree she needs a day job, 22 units does not warrant a fully time property manager. Really they dont need a fully time property manager until they reach the 70-100ish mark simply due to their class of property. Instead they need better systems. I’d recommend she at least find a part time / day job as a property manager so she can “steal” their systems or better understand how it works at scale.
Great video. It makes being a property owner real. Its like any other business there can be set backs. I have two rental properties that are paid off. I did it to help with our retirement. In one property I had a great renter for 5 years that became a nightmare at year 6. That ordeal blew through my 6k emergency fund plus an other 12k that went on a line of credit. That was 2019 and we got through it but it was hard. I'm so glad it didn't happen in 2020. The other property right now is an OK renter. I say that because he always pays his rent but the neighbors and HOA hate him. You also made a good point of listening to you business and were it will lead you. Often people start a business thinking one thing and after they get started, it leads them down another path. Its so good that you are flexible.
Thanks for coming on to share your honest opinions. I believe that you’re gonna have to sell off some those units to ease the burden.
I have avoided real estate like the plague. I live in Southern California. Apartments cost $500K plus per unit. So many problems, so much stress. During the pandemic, millions stopped paying rent for years. All of the money is in the stock market. It generates completely passive income.
Thank you-thank you-thank you!!! for sharing your Journey and the seldom talked-about negative realities of Real Estate Investing. I hope that you find success, and I know you eventually will.
Sell half of them, and use the money to pay off the remaining ones... then you'll have more peace and more cash flow. 😉
You will probably make the same or more in cash flow with 11 paid off property and definitely less stress. 7:03
I like the fact you keep it real so many people making it seem like it’s so easy and there’s no problems but we all know that’s not true