Ask Me Almost Anything – 2020 Edition

This was… THE… most important real estate investor class for… YOU.

How did I know? Because it covers the topic you're most interested in.

How did I know? Because you get to choose the topics.

That's right… this class was “Ask Me (Almost) Anything” or as I like to call it… Brian teaches every one of the 200+ different real estate investor classes we have all in one relatively short, 2-hour-and-8-minute class.

  • Want to learn about deal analysis? No problem.
  • Asset protection? Yup.
  • How to find money to invest? OK.
  • How to come up with down payments? Sure, why not!
  • How to find and screen tenants? Totally.
  • House hacking, Nomad™, something else? Got it.
  • Acquiring a gazillion dollars of properties starting with nothing? Heck yeah!
  • FIRE with real estate? Light ‘er up!
  • Real estate investing with good credit, bad credit or ugly credit? Debit away!

Whatever your desired poison is regarding real estate investing… Brian took “your calls” live, without a net.

In fact, with the ridiculous library of 257 (yeah… I just counted) real estate investor classes we've already taught, you know Brian can handle just about any questions you have.

So, watch this “AMAA” class and buckle up for an incredible ride.

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This class was taught on October 14, 2020.

Questions/topics covered during this class include:

  • Submitted email question: “On double ending transactions and getting a discount (which I think you mentioned last week). I've bought 2 properties from agents who were double-ending (not in CO), and I believe “I've” received a discount both times as a result. My method when buying on a double ended transaction is to stop negotiating with a 1% distance between the seller offer and the buyer offer. The agent then says he will negotiate an agent discount with the seller for double-ending and then magically our offer (which previously wasn't high enough) gets accepted. Do you think this is a legit tactic or is this ruining the relationship with my agent, or worse?”
  • Submitted email question: “On getting your lender to provide a letter that matches your offer exactly, instead of the max loan amount (which you mentioned last week). One strategy we're aware of when the seller is way out on their asking price (for some reason we tend to buy properties that have stagnated, but at a big discount) and the buyer knows there will be multiple rounds of negotiation (if we are to be successful) is as follows (hypothetical example): Suppose a property is listed at $200k, we are willing to spend $150k which we think is the likely final selling prive, have approval to spend $bignum (say $300k), and want to offer $100k and ending at $130k would be a big victory for the buyers. Then we: Offter $100k but with a lender letter stating we can buy up to $128,500k. Don't show more proof of funds than we would need for a $130k home. Then we gradually negotiate up to $128,500k … and maybe a little higher (with updated proof of funds). Much as the seller shouldn't infer at the start that $128,500 is the buyers' limit, they will… or at least the seller broker will.
    What do you think of this strategy? It isn't lying any more than getting a lender letter for the offer amount. Yet it is hoping that the seller will be misled into believing that the buyer can't pay more than the $130k (which isn't the case with a lender letter of the offer amount). So is it a legitimate strategy you would be willing to employ?”
  • Submitted email question: “Brian, on analysis of your costs etcetera from a month or so ago. It has been a few weeks since I listened to that one but as I recall you broke up your analysis: * between very old properties and fairly old properties (with the hypothesis that old properties need more maintenance) * between multi-family and single family (under the hypothesis that this makes a difference) [and of course in your portfolio these concepts are highly correlated] However I'm wondering if there is a different concept that is related to both of these (correlated to both in your portfolio) that may explain the data better… What if maintenance is considered as a fixed cost + some percentage of the rent (instead of just some percentage of the rent). e.g. is there a linear regression of rental price versus maintenance cost that doesn't pass through (0,0) that explains the data better. To me this would make sense if we consider some maintenance examples: * A water heater, furnace or AC replacement is close to a fixed cost. It is not related to land cost (except through cost of living affecting plumbers' rates) and increases only slightly on a larger home (more individuals living there, so larger unit, or more frequent replacement). * A roof replacement is roughly proportional to roof size. Not related to land cost (location) unless the location expects a more expensive roof. Even for a larger home the labor cost is not quite linear.”
  • Submitted email question: “For my quick mental model of whether an investment should cash flow (i.e. instead of the 1% or 2% rules) in this current low interest rate market is $400 + 0.4% (for monthly rent, compared to home price) or for multifamily $100 + $300(per door) + 0.4%. This reflects that most costs have both a fixed and a proportional component. Obviously still not perfect at it equates a small cheap house in an expensive location to a large home in a cheap location. However I do feel it is a quick fix that I can keep in my head for anytime we run in to cap/ex and maintenance killing the 1% rule for homes under $100k.”
  • Submitted email question: “How long do you have to rent out a property after doing a 1031 exchange before you can move in as a primary resident? I've heard of “seasoning” the property before you move in to prove your intent to the IRS. Could you do this every time you buy a new house forever and ever until you die, effectively evading taxes on capital gains?”
  • Submitted email question: “Are you able to back out of a deal if you do a final walk through and see “significant” changes from when you first signed the contract? Generally, the final walk through isn't meant to be an out for the buyer, but are there any exceptions?”
  • Submitted question live via chat: “James: what games are you playing these days?”
  • Submitted question live via chat: “thoughts on LLC's? from tax perspective? from risk reduction perspective? from loan perspective? from other perspectives?”
  • Submitted question live via chat: “Thank you for tonight! I love the “crap” you are teaching. 😉 I hear contradictory opinions about the RE market crashing in 2021. I live in Philadelphia, and if there IS a down turn here in Phila. Where do you recommend that I look for indications for my local RE for”
  • Submitted question live via chat: “Is it worth it buying non conforming basement bedrooms, and egressing the window/ bringing it up to code?”
  • Submitted question live via chat: “Will the occupancy and prices of small multi-units be affected, too during a RE market downturns?”
  • Submitted question live via chat: “What advantage brings using credit union as a lender as opposed to a “regular” lender?”
  • Submitted question live via chat: “In your experience, do purchased cash buyers list yield results for wholesalers?”
  • Submitted question live via chat: “Analyzing deals: should a multifamily home have better Cash on Cash, Cash flow or other indicator than an equivalent Single Family Home (maybe because 4 units are more difficult to maintain than a SFH or because of other reasons)? Or should be a SFH and a multifamily home with the same ROI/Cashflow considered as equally good/bad deal?”
  • Submitted question live via chat: “And a related question: if you have SFH and a Condo/Townhome (with significant HOA fees) which has the same indicators (ROI…), would you prefer SFH or Condo/Townhome.”
  • Submitted question live via chat: “Does Brian's spreadsheet support FHA loans? Specifically, does it support MIP does not go away never/after 11 years (based on specific FHA rules)?”
  • Submitted question live via chat: “has anyone ever had a neighbor to a rental property that continually run tenants out? (Even when a property management company is running it)”
  • Submitted question live via chat: “Analyzing deals: is there a rule of thumb how to model increasing HOA fees over time? Should we use 3% annual increase ratio? Or e.g. are older properties likely to have HOA fees increasing faster?”
  • Submitted question live via chat: “If I start Nomading with SFH and a conventional loan, is there still a possibility to get FHA and multifamily as my 2nd or 3rd property?”
  • Submitted question live via chat: “I am a newbie, and just applied for a HELOC to use to buy my 1st property. So, I am just concerned that if I buy when the market is going to drop, won’t it be easier to get cash flow if I wait to buy?”
  • Submitted question live via chat: “Would it make sense to specialize yourself only to SFH or only to Condos/Townhomes – become an expert on that domain and disregard the other domain? (SFH nomad only or Condo nomad only)?”
  • Submitted question live via chat: “What are your thoughts on investing into apartment complexes?”
  • Submitted question live via chat: “Question to Brian and James as experienced real estate investors: Did COVID-19 outbreak changed which properties are you choosing to your portolio? If so, how did your criteria change? E.g. not taking into account proximity of public transport, preferring detached houses over multifamily…”
  • Submitted question live via chat: “For properties in NOCO what would you model appriation and rent growth at over the next 5 years?”
  • Submitted question live via chat: “If I start Nomading with SFH and a conventional loan, is there still a possibility to get FHA and multifamily as my 2nd or 3rd property?”
  • Submitted question live via chat: “what are a few of your favorite real estate books?”
  • Submitted question live via chat: “how do you deal with an insane hike in a shared utility (for example water/sewer bill) for a small multi?”
  • Submitted question live via chat: “How we can get the books from James, because they are not in Amazon?”
  • Submitted question live via chat: “what do you think of ever-repeated housing “shortage” within the next decade given the demographics issues we have now?”
  • Submitted question live via chat: “would it make any sense to meter utilities by person/room (not sure how that would work) so that you can charge people for what they actually use? does anybody ever do that?”
  • Submitted question live via chat: “If you start doing NOMAD, I will be easier to finance the second home? Or the interest will be higher for the risk, etc ? What should I plan to get an easy finance for the second home?”
  • Submitted question live via chat: “is it typical to bill back utilities to a non-family household in fort Collins? I was thinking like in year 2 with nomad, could you assign one person to cover utilities and have them work it out among themselves, billing it back to that person”
  • Submitted question live via chat: “If you were to start afresh, what would you do differently?”
  • Submitted question live via chat: “but If you are 55 and only have one house. How will change your strategy?”
  • Submitted question live via chat: “Are you going to add reserves into the spreadsheet? By 1am tonight? “
  • Submitted question live via chat: “This is probably entirely situational, but how much leverage is too much? Go until you can’t qualify for a loan?”

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