Seeking advice in making a decision

[JAZI]

I am relatively new to this forum, some information about myself here. I am not sure if this is the right thread for this post but here I am seeking the advice of more experienced in making a decision. After reading the book and doing some brainstorming and based on my past experience I have narrowed down to two fastlane roads.

1. Starting and operating a printing and packaging business. Traditional B&M and online
2. Starting a Real Estate investment business.

I my recent past I have failed and gained a lot of experience in doing both. Ideally I would like to spend my day in operating the printing business and passively running the RE business. I have used the Weighted Average Decision Matrix (WADM) described in the book but the results seems not to be conclusive. So basically what I am saying I would like to get into both but the real questions is which one should I go for first?

ANY advice is appreciated. Thanks

 

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[jon.a]

It might depend on what type of REI business. There are many.

 

[JAZI]

Renting out Apartment buildings

 

[jon.a]

Renting out Apartment buildings

Okay then...
Hey @SteveO

 

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[jon.a]

Okay then...
Hey @SteveO

While we wait, it will help if you can be more specific.

With your...
ideas for a plan.
resources.
experience.
goals.

You haven't given us much to work with to help you.

 

[SteveO]

Most anybody can rent out apartment buildings. The trick is acquiring enough of them to make it worthwhile. The real money is in purchasing properties at a low cost and selling them at a higher cost. Repeat this until you are ready to settle in with the cashflow.

My recommended method for acquiring your first property is to do whatever you can to build capital. You can get a high paying job, beg, borrow, steal, get investors, take it from your retirement accounts, etc....

Once you have the capital to start, then you need to figure out how to force value (buy low, sell high).

 

[JAZI]

@jon.a : Here is some more about me: I am in my mid 30's with an engineering degree. I am working a job right now and have started a printing and packaging company. I plan to operate it as a traditional brick and mortar business in the future and also sell online customized commercial printing products like business cards, brochures, banners and so on targeting new businesses in particular. I don't have a huge budget to start but plan to invest some of my own money that I saved from my job. I want to buy a running under-valued printing business and replace my current job with that business to keep the lights on and pay the bills. I have ran a retail shop in the past which was doing OK but not great so I started the job which pays a little better.
Along with this I had owned single family houses and rented them out. I started with buying tax foreclosures and fixing them up and renting them out. I wanted them to be passive so I hired a property manager which initially resulted in less profitability and then loss for various reasons, so I had to let go a few of them. I still have two SFR which are rented and doing OK.




@SteveO : Thank you for the great advice, I appreciate it. I have a quick question, by building capital how much are you talking? I mean how much starting capital do you think would be enough to begin?


So in your opinion guys, which option should I go for first? should I concentrate on the printing business and once established then buy some rental properties or should I buy a rental property first and then build my business from the cash flow? or work on both side by side?

 

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[SteveO]

@SteveO : Thank you for the great advice, I appreciate it. I have a quick question, by building capital how much are you talking? I mean how much starting capital do you think would be enough to begin?

That depends on what you want to do. If all you want is rentals to supplement your other business, then I am the wrong person to ask. I like the aggressive approach to investing in real estate.

Pencil it out. See how much money you can project for each business.

 

[jon.a]

@jon.a : Here is some more about me: I am in my mid 30's with an engineering degree. I am working a job right now and have started a printing and packaging company. I plan to operate it as a traditional brick and mortar business in the future and also sell online customized commercial printing products like business cards, brochures, banners and so on targeting new businesses in particular. I don't have a huge budget to start but plan to invest some of my own money that I saved from my job. I want to buy a running under-valued printing business and replace my current job with that business to keep the lights on and pay the bills. I have ran a retail shop in the past which was doing OK but not great so I started the job which pays a little better.
Along with this I had owned single family houses and rented them out. I started with buying tax foreclosures and fixing them up and renting them out. I wanted them to be passive so I hired a property manager which initially resulted in less profitability and then loss for various reasons, so I had to let go a few of them. I still have two SFR which are rented and doing OK.




@SteveO : Thank you for the great advice, I appreciate it. I have a quick question, by building capital how much are you talking? I mean how much starting capital do you think would be enough to begin?


So in your opinion guys, which option should I go for first? should I concentrate on the printing business and once established then buy some rental properties or should I buy a rental property first and then build my business from the cash flow? or work on both side by side?

Have you been to https://www.biggerpockets.com/forums?

 

[JAZI]

Thanks @SteveO and @jon.a for the advice.

After some consideration and discussion I am inclined to go full time with an aggressive approach in RE investing in apartment buildings. And then we'll see if there is a need for the other business or not. And yes I have been to biggerpockets before, I was an active member there 2 years back, now I am just a passive member there. It is really a great resource.

Thanks again

 

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[SteveO]

There are many ways to buy low and sell high with apartment buildings and commercial in general. I like to use as many as possible at a time.

Buy in the right place at the right time. Such simple words... There is an entire book written on this topic called "How to buy and sell apartment buildings" by Eugene Vollucci. It is an old book but the ideas are still relevant. The idea here is to use data to watch the cycles in different metro areas to see which ones are ripe for buying. If you plan on buying in your own location only, then you can evaluate where it is at in the cycle.

The "Value Play" is the one that I use most often. It is based on the ability to purchase a property that is not performing the way it should be and making it run well. The mere change in income will raise the value. This number can be significant. Let's say that you buy a 4plex for 160K. It has a lot of issues. You fix it up, get good tenants in place at a market rent, operate it for a while, then sell it at an increased price. Let's say $300K. Those are the numbers from the first deal that I did. I put about 25K into the improvements. Most will require more though.

The components of a "Value Play" lie primarily with below market rents and/or the ability to fix a property up. In the business, this is referred to as repositioning. It is always best to buy a property that needs cosmetic updates in a great location. That is where I find the biggest bang for the buck.

Find out more about the Value Play from the book "The complete guide to buying and selling apartment buildings" by Steve Berges.

If you start with a 4 plex, you can usually get a lower down payment. Anything 5 units and greater is considered commercial. Downpayments will be 20 to 30%. Keep working up in size.

There are other ways to get a faster start. Investors are a great way to go. The problem is that you usually need a track record to show the potential investors. To get a track record, you need to have done some deals successfully.

I'm sure that there are a lot of other good books on the topic. I have not read any new ones in many years.

 

[JAZI]

Thanks Steve, the first book that you refered is on its way from amazon. I read great reviews about it

 

[SteveO]

Thanks Steve, the first book that you refered is on its way from amazon. I read great reviews about it

Both are equally important!

btw... I know the author, Gene Vollucci. He used to refer to me as his star pupil...

 

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