Made my first 100k per month at 23 years old, now what?

[Antifragile]

First of all - congratulations.

If you are serious about hearing advice that you won't like but need to hear, then set ego aside and buckle up.

Half of all the USD in circulation today has been printed in the past 1.5 years. Real estate is generally inflation proof. It is to be expected the results you are posting. Meaning anyone in our business should be making big money even if you aren't good.

This too shall pass. (Search for @SteveO posts, his examples are a lesson best learned on a forum, not your own skin).

My advice is in the order of priorities:

1. Prepare to be wrong - how are you defending yourself against a change in the market? There is an old saying "don't confuse bull market for brains". I am in RE and have both seen (lived through) and studied market cycles. An example question: assume your interest rates go up by 1% to 2% in the next 3 years. Then assume properties you bought at the top come off 20% in value. The bank wants to "negotiate" with you by asking you make a bigger downpayment to reduce your total debt or repay the loans. How prepared are you?
2. Continue the hustle. You must be in the game to see the signs of opportunity and the signs of things changing. I find that when money is easy to find (both capital for equity and debt!) prices tend to skyrocket and overshoot. This means you have to stay sharp and on your feet. Build up a small piggy bank and try to for a full war chest - one day you may need it. It's offence + defence all in one.
3. Study. Yes, I said it - what can you find in history that you (as a very young and smart person) have not yet seen but will happen to you. Will there be maintenance issues with your properties that will cost too much? A roof or a seismic upgrade can wipe out all of your gains. Has there been regulation that impacted ability to use short term rental or increase rents during the "bad economic times"? Governments have a way to hit landlords in the nuts.
4. Focus on your current projects more than on new business. That's because if you bite too much you may fail to see something and gain the valuable experience and lose confidence (trust) of your investors. You have the net 30 years to have fun here, make sure your reputation is solid.
5. Consider hiring staff and/or just getting a partner. Partners cost nothing and can really up your game. Who's most dissimilar from you? Who could frustrate you with questions but is also smart, very smart? You don't want another you, you already have you. You want someone who'll contribute in another way.

Most people in your position will ignore what I am sharing. I hope I didn't waste my time typing this up. My advice is to play offence with defence with 50/50 split on effort. But it's hard not to feel like a king when your success screams "I just can't miss".

I am glad you are being frugal, it bodes well for your future success. Most people who come into big money find ways to spend even more than their highest earnings.

Congratulations again and all the best.

 

[ChrisGav]

HELP. This is nuts guys. I am making more money than I know what to do with and I need some big time help from you experienced guys. I don't even say any of this to brag. I say all of this because everything is moving so quickly, and I have never experienced anything like it. This is LITERALLY a Fastlane.

I'm a real estate investor, I jumped into this full time 6 months ago.
But these past 4 months have been absolutely insane. Here's what I've done since October 1st:
-Syndicated a $1.2m 16 unit apartment complex that I own 20% of with $0 of my own money.
-Bought a duplex to buy and hold
-Bought my first ever single family home that will be an AIRBNB (I now officially have 32 rentals and never owned a single family home before)
-Done over $90k in wholesale assignments alone
-Flipped 3 houses
-This month I have made over 100k alone. My first ever 6-figure month
-My rental property portfolio has gone from 13 doors to 32 in 4 months.
-just got my first creative finance deal locked up under contract

I have no overhead. I have no marketing budget. It's literally just been me and a phone cold-calling like a telephone terrorist to land me all of this in 4 months.
I say none of this to brag or boast, I say all of this to say I'm excited, terrified, anxious, and deal with imposter syndrome probably on a daily basis. Now here's where I need help. For you big players in this, how in the world do you deal with this? This has all happened so fast. I have so many freaking deals coming through right now I literally do not know what to do. How do I balance finishing the projects I currently have on my plate, whilst simultaneously making sure my pipeline doesn't dry up and continue marketing??

It's a good problem to have no doubt. I am definitely beyond grateful for everything that has happened. I just don't know how to handle it. Every single dime I make I save, or I go buy another rental with it. I live in a duplex in the ghetto for crying outloud. (I'm house hacking it) I'm not blowing my money at all, but I need help from you experienced guys.
How do I continue to scale without biting off more than I can chew, but at the same time continuing to push myself to new heights? If I stop marketing and just finish my current projects then I will wake up to an empty pipeline in 3 months, however, my current pipeline is literally overflowing. knock on wood....
What do I do?!?!?

 

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[WestCoast]

I usually don't give advice... I just share my experiences. But, I'm going to give advice:

If you are truly doing this yourself - get help. Now.
Build a team.
Lawyer. CPA. Banker

Maybe you have these, but, what about a manager?
COO. Someone to watch your back

You've launched a operation. Cool. You've hustled to build a great start.
Awesome.

What's the plan to sustain? To build a business that isn't just you grinding?
You're 23 and having success - AWESOME.

Stay humble. Keep your head down.
Expect kicks to the shins.
Expect a downturn.
Expect a crushing correction.

Be ready. Maybe it's time to pause, collect yourself.
Save cash for rainy day.
Build a team, consolidate.

Defend your castle - barbarians will come.
Build a killer team to keep growing with you. Find people you trust, build relationships.

That's what I would do.

 

[Johnny boy]

137k in 6 months from wholesaling

Holy F*ck

Where can I buy your course Jesus Christ

 

[biophase]

It would increase $2,300/mo if I didn’t have those 2 mortgages. I owe a total of about 280k between the 2 of them. However, 1 of those I have $0 of my own money in it.

That deal broke down as such:
Purchased it for 90k owner financed with 23k down there was 16k worth of rehab it needed, the owner financed that as well. Borrowed 23k for down payment

All in: 106k
After rehab it’s now worth about 150k-160k
Both 23k down payment and owner financed note are on 20 year terms with no balloon

I could refinance that deal and pull out a free 14k and pay back other loans.
150k valuation
80%LTV get a 120k note
Pay back 106k,
keep 14k

You didn’t mention what the interest rate is on those. But it probably doesn’t matter too much.

You started this post by saying you’ve made 100K in the past month and didn’t know what to do with it. Making $100,000 in a month is great but having only $4000 a month of passive income with a bunch of leverage it’s not really that great.

If you are really good at what you do and can generate five figures a month wholesaling properties I would use that money to pay down these loans.

Once you own these duplexes free and clear you are going to cash flow about $5000 a month for the rest of your life. Almost nothing could take that away from you, even if you have periods of no renters.

Using this $5000 a month as passive income you can qualify for regular bank financing on a home. This is where you can start leveraging at very low interest rates. Using this method you could build wealth by purchasing a home at under 4% interest every year for the next 5 to 8 years or even longer.

It really depends on what your goal is here. You can keep flipping houses and doing what you’re doing and building up a large amount of capital, or leveraged real estate. But at some point you are going to want to own some cash flowing Properties free and clear. That is almost always the endgame of most people because it provides never ending cash flow with very little risk.

 

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[biophase]

Interesting, but if I pay off 280k to get 28k more a year annually that’s only a 10% return on my 280k. I definitely understand how that’s safer, but do you think I could make a better return placing that money somewhere else? or do you think it’s worth doing that to build more of a permanent foundation so to speak?

This really all depends on what you want. If you want to keep putting all your current income into rentals and flipping homes at some point You will have a couple million dollars worth of real estate and probably $500,000 in equity and no cash.

The danger is that if you screw up once or twice while leveraged this much you could end up with nothing at all.

So it’s up to you to decide when you want to move your cash from its optimal return on investment to a safer but lower return.

A 10% return on investment that can last forever is what many of us would strive for.

Here’s what I’m thinking. You seem to be saying that you can make large sums of cash by flipping and wholesaling real estate monthly. It seems like you don’t need this cash that you made. Why would you need $100,000, if you can make that again in the next few months. That is why I am suggesting that you put that money into something safer that will give you long-term cash flow.

What happens if real estate takes a downturn and you can’t make any more cash flipping houses? Then you will only have $4000 a month of cash flow coming in. What happens if a few of your rentals go empty or you need some repairs? Can you see how a few events could bring down your whole empire?

All I’m saying is to get a couple safer avenues of cash flow just in case hard times come.

You don’t want to come back on this forum in five years and tell us that you are starting from zero.

I understand that 4k/month isn’t that impressive, but for where I’m at in life I think it is pretty substantial. I make a livable wage of 48k/year In relatively passive income. That allows me to take a bit more risk knowing my necessities of life are taken care of.

I’m young of course, and not trying to retire any time soon necessarily. Do you think it’s better to start paying stuff off, or should I play riskier while I don’t have kids/other financial responsibilities and have pretty cheap living expenses?

I understand that you are young and that you can play at risky. But it would be much easier to take risks if you had a safe income coming in. Again that is my opinion. For me I know that because I had fairly safe income from rentals I could take risks with my other capital when starting my businesses.

 

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[BizyDad]

continue to run a very lean business?

This.

I don't have any experience in real estate, but I've seen the guts of a lot of real estate businesses, so this is just my 2 cents.

Keep wearing as many hats as you can until you really feel like you understand the different hats.

You need to build processes, not let others build them for you.

If you hire people too soon and just "trust" them to do their jobs, they often don't have your hustle but can easily BS you into thinking they are valuable.

Getting one assistant to help you sounds like a logical next step.

Lastly, different people build different real estate empires different ways through different systems.

You can ask everybody's advice, and you can learn from lots of people. But at the end of the day, you are building your business. Their advice might not apply. You will someday discern what is helpful advice and what isn't. Your market is different than other people's markets. You're going to build your processes. Keep going, keep learning, keep growing.

And congrats on hitting a mile stone.

 

[ChrisGav]

How did you initially get introduced to what you're doing? And where did your initial capital come from to start what you're doing?

I started a small pressure washing operation 2 years ago. I washed a few houses for a realtor and he started talking to me about how I should get into real estate. He was ultimately trying to recruit me to be a realtor with him, but I ended up going a different route. He certainly is the reason I started learning about it.

I used cash from my pressure washing to fund my first few down payments. From there I started connecting with people who had cash. I bring the deal, they put up capital or we both put up capital.

In terms of flipping, I borrow money from these partners and other lenders. My wholesaling operation is extremely lean. I maybe have $600/month in overhead to run that.

 

[Jobless]

Do you know, understand and track your assets and liabilities? Your cashflow? Tax situation? It helps me stay sane.

If I were you (I'm not so don't take me that seriously) I'd hire someone just to keep track of the numbers. Also someone that can make your life easier. If you make up to 100K per month your time is too valuable to be spent on daily chores etc.

 

[biophase]

Sounds like you have a good cash flow problem. My question is, how much of that $100k is from wholesale and flip deals vs rental income.

If you truly have too much cash, I would start paying down the mortgage on the rentals. Look at getting a few properties free and clear and spewing out consistent monthly income. This way those properties can’t be taken from you during a downturn.

 

[Kak]

It's literally just been me and a phone cold-calling like a telephone terrorist to land me all of this in 4 months.

Hell yes. This shows the power of bad a$$ action. Well done!

Let this be a lesson to everyone… Does your life suck? Get the phone out and insert yourself into peoples lives.

Now, what was the question?

 

[Antifragile]

@biophase is spot on with his advice here. There is “financial wealth” and “real wealth”. We make first financial wealth to later transfer it to real wealth. If you can pay off debt, you’ll own real wealth - properties. That’s as good a “defence” pay as you can get. While still staying in the game to keep adding!

 

[ChrisGav]

I do not get impressed when people brag about buying rentals and the # of doors etc - who gives a shit, anyone can go out and buy x number of doors tomorrow if they outbid the next guy.

But profitable wholesales & flips mean you can in fact source good deals. Keep it up. Doing it with no marketing spend is quite a feat.

I appreciate that, thank you. I usually say it not as a brag, but more of a way to say "hey, I'm out here actually doing deals guys". There's a lot of people that stand on the sidelines hoping to get into real estate, but not so many that are really playing the game. I like to connect with people I know are actually playing the game, as I'm sure everyone does. I say it as another way of saying "I'm doing deals, I'm really in the trenches everyday lets connect"

 

[Guest-5ty5s4]

Correct me if I’m wrong, but wouldn’t that hurt tax benefits a little bit in the process of paying them off?

Do you want to save money on taxes or do you want to be rich? Sometimes you have to bite the bullet and pay more in taxes because it’s better for your wealth building.

Flipping isn’t tax efficient but the money you make accumulates faster than holding for a year.

That’s just something I’ve been thinking about a lot and wanted to throw out there. That’s why businesses can grow faster than job + investments, the turnover is higher. Good job on your success!

 

[GIlman]

Study, learn, and understand how taxes work in relation to real estate and business in general. You should be an expert in how to protect yourself from the most viscous barbarian of all. From my experience you usually have to manage your accountant, because you know your business inside and out, and if you know taxes (you can meaningfully consult with your accountant), you can find and implement things in a way that can save you lots of money.

If you make a big difference in money one year to next make sure to save a sizable chuck saved for taxes. You can generate some huge tax bills, much larger than you might think, and you could be put in a situation to have to liquidate assets or try and get an asset backed loan or some other credit line in a rush to pay them.

Expect a big kick in the nuts next year at tax time where you will have to pay your income tax, personal employment tax, and prepaid quarterly for Q1 of 2023 all at the same time. You can offset this by creating some big depreciation event such as @biophase stated. You can look into schedule 179 and bonus depreciation as ways to create big offsets too.

I would have to agree with others on trying to payoff your other two properties. If it's not paid off, you don't own it, the bank does. I've seen numerous people implode because their debt was high and they hit some snag that dug much much deeper than they ever expected. If you pay them off, pay one off entirely, don't spread your money between two with residual loans on both...again the bank owns it until you pay them off, no matter how much you owe.

Also, paying them off is parking cash and eliminating interest payments - you can always take out loans against these properties in the future if you saw an unbelievable opportunity. If you don't have a better use for the cash, why not park it into the property, reducing your risk, increasing your cashflow, and eliminating interest. A paid off property is like a piggy bank, it should be pretty easy to get a loan at anytime.

With current monetary policy, there are many factors afoot that no one alive today has lived through, or at least no one that is not extremely elderly. We have simultaneous bubble like conditions in almost every asset market at the moment. There is a significant chance that some event could trigger a huge asset write down in multiple different categories all at once...and if history is any guide, when inflation spikes the governments institute rent and price controls.

At this time, I have been working to increase my control of everything and putting cash into fixed assets. But, that's largely because given the rate of money printing I have zero faith in the long term ability of USD to hold it's value...there is certainly a lot of uncertainty in all asset markets and only time will tell what planning pays off and what does not. I have also been paying off all my assets with debt on them, this is because I see uncertainty in future cashflows, and if they are paid off I own them and am not at risk of having them taken if I hit hard times.

 

[WillHurtDontCare]

Make friends with older dudes (30s / 40s) who are well established and can offer you specific advice. Definitely make sure they have no need for your money.

Clearly you're a winner if you're doing that well at 23, but you're still young and pretty clueless as to what makes the world go round. It will 100x your life to be friends with older winners who can share their insights with you.

Do this through hobbies (guns, MMA, books, whatever stuff you like outside of business) and chatting with people on online communities. Don't divulge just how well you're doing until you figure these people out.

And don't specifically go looking for a "mentor". Just make organic friendships with people who you actually have stuff in common with (like those hobbies that I mentioned, or whatever interests you have).

 

[Raoul Duke]

Models & Bottles

 

[Rabby]

Defend your castle - barbarians will come.

This is so true. Been there done that. Don't stop what you're doing or spend all your money, but make sure you're talking to people who know about taxes, law, insurance, and regulations. Someone will come try to mess with you, eventually.

What I'm not great at, or what I don't really know, is the actual steps of growing a business. I'm sure there's no one right answer. But, how do you gauge things such as: how much cash do I keep on hand in reserves, and how much do I play offense with?

Your instinct is correct; there is no one right answer. Everyone brings their own set of skills to this. Personally, I would start taking manual processes like collecting or depositing rent checks, marketing for properties, etc., and find ways to duplicate them at scale through automation, documentation, and passing them to assistants who can follow your processes and checklists. I would also look at risk and stability for the assets I have... things like insurance, maintenance planning, contingencies, etc. You have a base right now. Keep up the aggression, but like others have said, don't neglect defense.

100k in a month is a great result. 4k per month in mostly-passive income is also super good... it's better than 12k per month in labor income (in my opinion) because your time is still available. But as the markets adjust, you'll find that different conditions require different strategies, and you'll need some funds in reserve to test your ideas and cover gaps, maintenance, vacancies, and unforeseen problems. 'How much' is highly dependent on your risk tolerance and level of aggression as an investor.

I have some friends who are doing similar things... a couple flipped 12 houses in the last year and bought 5 rentals, after spending years as regular employees. I found out because they started paying back a loan I had written off ("friend loan"). There's been movement in the property market, and the people figuring it out are doing well right now. We live in interesting times.

See if you can get a few people in the forum and/or your local real estate (or business) community who've built something of value, to talk with you. It doesn't have to be a real estate empire... just anyone who has done enough to figure things out. Talk to people, learn things. They'll probably learn things too, so reciprocity is built in. Bonus points if you stumble across a new investor from time to time. These conversations (often real-time ones in my experience) trigger ideas that we need to grow and get better. And then you can come back and add things from those conversations to the forum, which makes the whole world a better place.

Anyway, talk to people who have handled growth, business change, and other problems. And figure out how to translate what they tell you to your own situation. That's one thing that has helped me many times, and I think it helps almost anyone... it's like gaining experience just by talking for 15 or 20 minutes with someone on the phone, or over lunch. Experience that would otherwise take years and expensive experiments to acquire. Not that you'll be able to avoid all the years and expensive experiments... but you can make them more effective

Good luck skill, and keep doing what you're doing!

 

[ChrisGav]

Who are you cold calling to get $137k wholesaling? In what market?

I could see it in the Bay Area, but not in podunk Midwest.

That’s a lot of scratch. I’d get back into wholesaling if I had your recipe.

I'm in Greenville South Carolina. No secret recipe besides forcing myself to do what I don't feel like doing every day, COLD CALLING.

 

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[ChrisGav]

First of all - congratulations.

If you are serious about hearing advice that you won't like but need to hear, then set ego aside and buckle up.

Half of all the USD in circulation today has been printed in the past 1.5 years. Real estate is generally inflation proof. It is to be expected the results you are posting. Meaning anyone in our business should be making big money even if you aren't good.

This too shall pass. (Search for @SteveO posts, his examples are a lesson best learned on a forum, not your own skin).

My advice is in the order of priorities:

1. Prepare to be wrong - how are you defending yourself against a change in the market? There is an old saying "don't confuse bull market for brains". I am in RE and have both seen (lived through) and studied market cycles. An example question: assume your interest rates go up by 1% to 2% in the next 3 years. Then assume properties you bought at the top come off 20% in value. The bank wants to "negotiate" with you by asking you make a bigger downpayment to reduce your total debt or repay the loans. How prepared are you?
2. Continue the hustle. You must be in the game to see the signs of opportunity and the signs of things changing. I find that when money is easy to find (both capital for equity and debt!) prices tend to skyrocket and overshoot. This means you have to stay sharp and on your feet. Build up a small piggy bank and try to for a full war chest - one day you may need it. It's offence + defence all in one.
3. Study. Yes, I said it - what can you find in history that you (as a very young and smart person) have not yet seen but will happen to you. Will there be maintenance issues with your properties that will cost too much? A roof or a seismic upgrade can wipe out all of your gains. Has there been regulation that impacted ability to use short term rental or increase rents during the "bad economic times"? Governments have a way to hit landlords in the nuts.
4. Focus on your current projects more than on new business. That's because if you bite too much you may fail to see something and gain the valuable experience and lose confidence (trust) of your investors. You have the net 30 years to have fun here, make sure your reputation is solid.
5. Consider hiring staff and/or just getting a partner. Partners cost nothing and can really up your game. Who's most dissimilar from you? Who could frustrate you with questions but is also smart, very smart? You don't want another you, you already have you. You want someone who'll contribute in another way.

Most people in your position will ignore what I am sharing. I hope I didn't waste my time typing this up. My advice is to play offence with defence with 50/50 split on effort. But it's hard not to feel like a king when your success screams "I just can't miss".

I am glad you are being frugal, it bodes well for your future success. Most people who come into big money find ways to spend even more than their highest earnings.

Congratulations again and all the best.

Dude this is awesome thank you for taking the time. Here's what I've been thinking I should do moving forward, but please correct me if you think otherwise. Continue to wholesale and assign contracts while this market is buying every deal that is available. There could come a time where wholesaling is not as easy as it is now, so take advantage of it while I can.
Continue to get cheap debt for as long as I can but be careful to keep enough liquid in case of surprises or issues that inevitably pop up.

Things I don't know though:
1. How do you balance playing defence and offence? How much cash do you keep liquid, versus how much do you throw into new deals and take advantage of the cheap money?
2. When the market starts to shift, how does this impact wholesaling/rentals? What sort of challenges should I prepare for, but not be overly concerned with fear about?
3. How do you juggle finishing your projects, but keeping an eye out to make sure you don't miss other smoking deals?

I know there are not set in stone answers to these questions, or definitive rules. But I'm definitely curious to hear what you think. Thanks man

 

[biophase]

All of the 100k is from wholesales and flips. I haven’t even included my rental income in that figure.
Here’s essentially what’s been going through my head:
I’m making pretty decent money and it happened really quickly. I know that it may not always be this way, and I also know that I don’t know how to run a business that brings in that kind of money because I’ve never done it before.


When you’re making 100k/year you can afford to not understand tax strategies and you can do everything by yourself if needed because the numbers are smaller. But if I finish this year making 500k or something, I know I don’t have the knowledge, systems, or infrastructure to know how to manage that.

I think I have been so focused on just putting one foot in front of the other and taking action every day that I haven’t stopped to look at what I’ve already done. And so I paused for the first time the other day, and realized what was actually happening and had a minor panic attack to be honest.

I also don’t have a mentor or coach helping me unravel all of this. I’m not a part of any masterminds and I don’t really know where else to turn other than on here to ask. I did what the YouTube videos said and it got me here now what. Lol

If you think you are going to make 500 K this year you could look at purchasing a $1 million property and then using cost segregation to depreciate a big chunk to offset your taxes. You could end up paying nothing in taxes this year. I’m pretty sure you would qualify as a real estate professional.

 

[biophase]

Correct me if I’m wrong, but wouldn’t that hurt tax benefits a little bit in the process of paying them off?

The only thing that you would lose would be the write off on the interest.

 

[ChrisGav]

What youtube videos and or books did you look at to learn about this?

I wish I could tell you one channel or book that made it click, I think it was just picking up small nuggets from a bunch of sources that helped me put it all together.

for youtube channels:
Brent Daniels
Pace Morby
Todd Tobach
Steve Trang

Books:
All of the biggerpocket books about real estate
Majority of the other books I read are regarding mindset as I believe that is the foundation to everything. A lot of Tony Robbins stuff, Rich Dad Poor Dad (of course), TMF , unscripted , etc.

 

[ljean]

I do not get impressed when people brag about buying rentals and the # of doors etc - who gives a shit, anyone can go out and buy x number of doors tomorrow if they outbid the next guy.

But profitable wholesales & flips mean you can in fact source good deals. Keep it up. Doing it with no marketing spend is quite a feat.

 

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[Johnny boy]

You having 32 rentals in 6 months starting from 15k in savings smells fishy. Did you start off by wholesaling or what?

 

[ChrisGav]

You having 32 rentals in 6 months starting from 15k in savings smells fishy. Did you start off by wholesaling or what?

I went from 13 to 32 doors, I already had 13 to begin with when I was doing this part time. I bought my first ever rental a year and a half ago. 32 - 13 = I got 19 doors. 16 of those being the apartment complex, 2 of which being the duplex, one of which being the single family airbnb totaling to 32 doors.

I started buying rentals before I got into wholesaling. It was 6 months ago when I started wholesaling. I've grossed a total of $137,000 in 6 months strictlly from wholesaling. Through wholesaling I've met a bunch of private money lenders, and people that have partnered with me to do the apartment complex. Those lenders have also lent me money to flip the 3 houses that I've done. Majority of this has all been done with none of my own money.

 

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[Antifragile]

Things I don't know though:
1. How do you balance playing defence and offence? How much cash do you keep liquid, versus how much do you throw into new deals and take advantage of the cheap money?

Defence can be viewed from two angles:
a) cash you personally hold and
b) access to cash

If you set up your deals in such way that you have no personal guarantees tied to loans, you are already safer. Next is to take care of yourself. If times get tough, how will you live? How will you pay for your own food, clothes, shelter etc? If you have enough savings to last you a year or two, you are playing good defence (even if your business fails, you'll be fine).

Access to cash can mean having your investors commit and contribute more. Raising cash in this environment is easy. How prepared are you for a change when raising even $1,000 becomes hard?

2. When the market starts to shift, how does this impact wholesaling/rentals? What sort of challenges should I prepare for, but not be overly concerned with fear about?

What do you fear most about change in the economy for wholesaling RE?

Rentals can be studies as there are many examples of how rentals behaved in the worst of economic times. Governments tend to protect their voters and it usually means restrictions on the rental rates or evictions etc. Banks can call the loans, the property values can tank and wealth can be "wiped out" to let the new owners come in a buy at a discount. What is there to fear today?
- Repairs and maintenance costs
- Did you overpay per door to get the properties you hold? What cap rate are you buying them at?
- What loan terms do you have? Fixed, variable? How long? What's the spread to the cap rates? Yield on cost?

3. How do you juggle finishing your projects, but keeping an eye out to make sure you don't miss other smoking deals?

I don't juggle. I focus. It pays better. Even your choice of words "juggle" implies you understand the risk. You are asking this because you already intuitively know the answer, don't you?

What happens when your projects start to look like stinkers? What happens when your investors start talking in public about how you are going from one shiny new rock to another failing to execute on what you promised?

 

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[ChrisGav]

Sounds like you have a good cash flow problem. My question is, how much of that $100k is from wholesale and flip deals vs rental income.

If you truly have too much cash, I would start paying down the mortgage on the rentals. Look at getting a few properties free and clear and spewing out consistent monthly income. This way those properties can’t be taken from you during a downturn.

All of the 100k is from wholesales and flips. I haven’t even included my rental income in that figure.
Here’s essentially what’s been going through my head:
I’m making pretty decent money and it happened really quickly. I know that it may not always be this way, and I also know that I don’t know how to run a business that brings in that kind of money because I’ve never done it before.


When you’re making 100k/year you can afford to not understand tax strategies and you can do everything by yourself if needed because the numbers are smaller. But if I finish this year making 500k or something, I know I don’t have the knowledge, systems, or infrastructure to know how to manage that.

I think I have been so focused on just putting one foot in front of the other and taking action every day that I haven’t stopped to look at what I’ve already done. And so I paused for the first time the other day, and realized what was actually happening and had a minor panic attack to be honest.

I also don’t have a mentor or coach helping me unravel all of this. I’m not a part of any masterminds and I don’t really know where else to turn other than on here to ask. I did what the YouTube videos said and it got me here now what. Lol

 

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[ChrisGav]

How many rentals do you have yourself with no partners?

Who is managing the day to day operations on your rentals?

I have 4 doors with no partners (2 duplexes)
The rest of my portfolio consists of:
9 unit mobile home park 1 partner 50/50
16 unit apartment complex: 1 partner 20% owner ship but I get 30% of revenue as cashflow every month too
2 doors (1 duplex): 50/50 partners
The Airbnb: 50/50 partners

My partner that I’m 50/50 on manages the rentals and they also manage the 2 I own by myself for free.

 

[ChrisGav]

Woah @ChrisGav, this is damn impressive! I'm in RE too but clearly haven't taken the sort of action you have. Congrats on your success so far. Based on the awesome responses you got in the thread what's your plan moving forward? Are you still feeling lost with how fast things are progressing for you?

Definitely feeling lost still. I have a lot of deals currently in the works, so going to continue down this path. Mainly just feel very outside of my comfort zone, but I'm making it a point to continue to do marketing and push forward even through a little discomfort. I'll probably plan to focus on paying off some of the debt, however, I'm not absolutely leveraged to the gills. I take on partners in some of the deals to insulate myself some more and have added protection. For example, on my apartment complex deal, I have a partner that owns majority. (I own 20%, he owns 80%) therefore, the debt on that deal I feel pretty safe with. If we fell on hard times, it would be the 2 of us trying to figure out a solution versus just me by myself.

Moving forward, probably plan to continue to buy up properties when it makes sense, while wholesaling the ones I don't feel comfortable taking on.