2016 Round up and 2017 Goals

Did you write your goals for 2017? I would hope so if your serious about investing in Real Estate. I have several goals related to different aspects of my life. One of those goals includes purchasing 3 rental units that turn out $250 cash flow monthly per unit in 2017. That was a solid goal in in 2016 based on my 2015 year end numbers. So I thought I would put my 2016 numbers together to see how close I came to that goal in 2016.

One thing that I am very diligent about during the year is paying bills every Monday and recording those expenses into a spreadsheet to track income and expenses. This really makes your life easy during tax time. I am able to make a PDF copy and send to my accountant to complete my taxes. Clarity is Power, and having your numbers available to track your progress can make the waters less muddy or if I dare say crystal clear. Having a source of good information to make decision will make life and business easier.  

Analysis of the numbers in my 2016 spreadsheet shows that factoring out the acquisition costs for two of the homes I purchased and rehabbed in the second half of the year I cleared $215.95 cash flow per unit per month. I had a problem at one of the homes during the turnover that created a $2100 chimney pipe bill that if I could have avoided that hit I would have cleared $260 a door. My goal for 2017 is $250 for all units. I feel very confident I will hit this goal with increased rents and decreased mortgage payments.

My first goal is to refinance out the private money at three of my rentals that are being held at higher interest rates. This will allow me to reduce the mortgage payments and make that money available again for more acquisitions, all the while increasing cash flow. If I have the equity I planned when I purchased these home I will have to hit the LTV numbers needed to put as little cash in as possible. The general market is appreciating. I hope this help me achieve my goals.

What are your goals? What kind of processes do you use to measure success?

Investment Real Estate gives you multiple ways to make money unlike most other investment types.
Here are Five things to strongly consider when choosing an investment class.

1. CASH FLOW – When you purchase Investment real estate
correctly the property should cash flow. Over time these cash flows
can passively make your wealthy.

2. MARKET APPRECIATION- If you buy right, over time
historically values appreciate. This will allow you to cash out of your
investment at a higher price then you paid.

3. EQUITY CAPTURE- If you know your market and work
with professional guidance you can purchase property at discounts
and capture equity at the time you buy in.
The advantage to this is can be used in many ways.. Most
importantly you make your money when you buy. If you
refinance the property after repairs are made this will reduce
the amount of cash needed out of pocket, if any.

4. PRINCIPAL PAY DOWN – Your tenants pay down your
mortgage with every rent payment they make. This is why you only
purchase investment property that cash flows. These payments
increase your equity over time.

5. TAX ADVANTAGES – You receive tax advantages related
to mortgage interest, depreciation, any expenses related to your
property as well as 1031 tax exchange advantages.

When I started in the wild west of real estate investing I had little information or direction. I read Rich Dad Poor Dad and went out and bought a rental home. I bought it from a local investor who owns many properties. I’m sure he thought fresh meat coming.. here you go, here is one for you. Having No idea of the extra expenses or the management side of the business. The monthly payment / taxes / Insurance minus rent made sense. Not so fast my friend! I’ve learned many valuable lessons from that home but one of the best lessons I learned and am still learning is how and where find property that makes sense to purchase as a buy and hold. After that one I struggled for several years until I took a real estate investing course which did only one thing.. Pushed me to network. Thank god for that! From that point on it has been a different trajectory. Here are a few of the easiest and more basic ways to find “deals” that I have found make sense.

1. 1)  Networking - This is the best way to find deals! You may have heard that “Your Network will equal your Net worth”. This is the best way to find where the people are that have properties. Talk to everyone about your goals. Let your family and friends know what your are doing. They will help you. As they say in traditional real estate.. if you are a secret agent you will be a hungry agent.
2. 2)  Wholesalers - There are a few wholesalers in every community, some more active than others. If you are a serious Cash Buyer they will make sure you know what they have available. Easiest Way to find them is to call the “We buy houses” signs you see on the side of the road. I call them and I have had them call me off the signs we have put out over the years. Websites like mine are out there you just have to dig deeper than first page google searches.
3. 3)  Real Estate agents - Look at the listing agents for the multi family and rehab properties and give them a call. They sometimes have off market deals they have knowledge about or have relationships with investors who are looking for buyers and sellers. The one thing to remember if they give you a great lead try to pay if back to cement that relationship. Agents and brokers get paid off closing deals just like investors.
4. 4)  Bandit signs - These are a cheap and easy way to get calls from sellers. If you set up a solid capture and follow up system it can be less intrusive. This will create some leg work with dead ends but you may be able to refer some of these homes to a realtor or partner with and wholesaler who maybe has more time and or resources (money or knowledge). If you have a deal you have a opportunity to make money either short term or long term.
5. 5)  Real Estate websites, Real Estate investors associations (REIA’s), Investor meet ups are all great places to connect with like minded individuals and build your network. I met one of the most important people in my real estate business from a large real estate online community. It has lead to a successful partnership.