# If you were me....



## Blossom Leigh (Mar 27, 2014)

My H and I are in the middle of financial moves that present two paths that we are really trying to decide which way we want to go. We are in our 40's and have our seven year old son. We both work full time and I recently took on a side job in real estate for fun and education. We are real estate investors and are building a portfolio of houses. Our end goal is 10 to 20 depending on which path we take. 

On one path, we will end up with around ten houses, put a home on our 24 acres about an hour from where we are now, but it is on land far away from town, my H would have to drive that to finish the plan. I would take on being a SAHM and my horses would be at home. Slushie money for future investments would be around $20,000 a year.

On the other path, we end up with around 20 houses, we stay in town, I hire all the help I need so that when I get home it's ALL family time and when I head to the barn I don't have to worry about things undone at home, but I remain working for the next four years and at the end of that we BOTH can choose to retire OR keep working and slushie at the end of the year is $75,000, which can pay easily for college, a home in town with my horses at home, etc.

Both have merit... for instance... we went out this weekend and REALLY enjoyed our son's birthday. We didn't have to worry about money. We did whatever we wanted. Painted the town and had a blast. That would be amplified in scenario #2.

On the other side of things I would be home when our son got home from school and do all those sweet things, etc. 

Both appeal to me on deep levels. I would love to show my son the world and it tends to take a healthy amount of money to do that. Yet, I would love to be home with him. It's just two different experiences. One of the issues is I now have health issues that could end up dictating which path to take. One path would give us money and helping hands so that I can focus on my health between all else I'm doing. The other path would allow more time for that but less helping hands. 

We are going to try the city living over the next year with hired help first and if it's just not doing it for us... then we will shift to the farm though there is some concern about the distance to doctors out there. Yet if we go there... I can retire in 18 months. We are stock piling money this year and will make a decision by Feb of next year, so I have time, just kind of at a loss on direction... I know I miss my horses being home, but my health issues are beginning to require extra help... 

Would just love to hear where you guys fall on things... money to do things and have big experiences with your kids or less money but those daily possibly "smaller" scale experiences. This is NOT to say either is less or more important. Just different. :nerd:


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## Marduk (Jul 16, 2010)

Path 2 but I worry that you're over leveraged in real estate.

Oops sorry just realized this is the ladies forum. 
_Posted via Mobile Device_


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## Lostme (Nov 14, 2014)

IMO I would work for the 4 years, if it would make my finances more stable for early retirement. If you are going to try city life for 1 year you would only be 3 away from the 4 years to retire. I'm not a financial advisor just an accountant, but in the 4 year time frame you can build more security and have a better cushion for any problems that come up.


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## Blossom Leigh (Mar 27, 2014)

marduk said:


> Path 2 but I worry that you're over leveraged in real estate.
> 
> Oops sorry just realized this is the ladies forum.
> _Posted via Mobile Device_


We would have to have them managed very well and have the right cushion for sure.


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## Marduk (Jul 16, 2010)

Blossom Leigh said:


> We would have to have them managed very well and have the right cushion for sure.


What if the real estate market tanks? Or taxation changes? Or any number of things?

Diversify.


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## Blossom Leigh (Mar 27, 2014)

marduk said:


> What if the real estate market tanks? Or taxation changes? Or any number of things?
> 
> Diversify.


Long term buy and holds. So, market is minimized. Cushions for everything else. But will be consulting real estate accountants/attorneys before we get too far in.


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## thefam (Sep 9, 2014)

Hi Blossom! Haven't seen you in a while. But then I haven't been around much either.

Are you going to be buying the houses outright or mortgaging them? Have you thought about throwing a few flips in the mix? My H and I have been doing that as a side business for the last two years and have been so successful it's scary. We only had one bad flip where we profited only $6k but other than that it has proven quite lucrative. Best part about it is you could be a SAHM and take this time now to do stuff with your son. It will only be a few more years before he will rather do things with his friends anyway, if he doesn't have any other siblings.

You don't have give up your rental inventory, just flip 2 or 3 a year. I guess the only leg work you HAVE to do is find a good contractor that you trust. My H can do a lot of the work but his uncle is a contractor and since my H travels a lot, he does most of it. I have also saved us a lot of bucks by putting sweat equity in. I also got a realtor's license to cut out the middle man in sales. But you could always do sales by owner. We're on break from it now since we have a new little one, but plan to get back in it in time for buyers looking to move before school in September. 

Just a thought.


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## Blossom Leigh (Mar 27, 2014)

@thefam  we are absolutely thinking about doing that and I'm on the front end of finding the leads on houses at rock bottom prices  We are already hooked in tight with a guy who already has a team assembled and spoke about doing one later this year. I just sold him a house to flip wholesale last week 

Yea, buying them outright... No mortgages.


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## Blossom Leigh (Mar 27, 2014)

thefam said:


> Hi Blossom! Haven't seen you in a while. But then I haven't been around much either.
> 
> Are you going to be buying the houses outright or mortgaging them? Have you thought about throwing a few flips in the mix? My H and I have been doing that as a side business for the last two years and have been so successful it's scary. We only had one bad flip where we profited only $6k but other than that it has proven quite lucrative. Best part about it is you could be a SAHM and take this time now to do stuff with your son. It will only be a few more years before he will rather do things with his friends anyway, if he doesn't have any other siblings.
> 
> ...


You really got me thinking and we may very well flip 2 to 3 a year so that we can just be at the farm.

What are you netting on your houses on average if you don't mind me asking. 

Right now we are getting rid of debt. We just retired $23,000 and we will retire another $20,000 by the end of the year. We will only be left with one small mortgage on one of our rentals of $25k. Everything else is paid for. So we are excited at the progress and I'm warming up to that idea of flipping 2 - 3. I've got the contacts to get it done easily.


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## MarriedDude (Jun 21, 2014)

marduk said:


> What if the real estate market tanks? Or taxation changes? Or any number of things?
> 
> Diversify.


Diversify for sure. Several family members went all in on residential RE. I don't think they will ever get back to where they were before the dying time. 

Hire out whatever you need to make sure your time at home is really for your family. My wife and I have done this for years....it makes ALL the difference.


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## Blossom Leigh (Mar 27, 2014)

MarriedDude said:


> Diversify for sure. Several family members went all in on residential RE. I don't think they will ever get back to where they were before the dying time.
> 
> Hire out whatever you need to make sure your time at home is really for your family. My wife and I have done this for years....it makes ALL the difference.


What RE sectors were they in?


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## EVG39 (Jun 4, 2015)

Would agree about hedging your bets. The RE business can eat amateurs alive. In a down market your credit line can dry up in a hurry. And as anybody in the RE game for a while will tell you you can never have a big enough credit line. Not trying to I rain on your parade at all but a word of caution before you go all in. Good luck to you.


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## MJJEAN (Jun 26, 2015)

If you're both buying to rent out and buying to flip, that hour commute will become a problem if you or your H are needed on site due to some kind of emergency.

My Aunt and Uncle sold out at a profit and bought a house 1.5 hours away in the country on 10 acres with their 4 sons and dogs. It was their dream. Turned out, the only creatures happy with the move were the dogs. The boys didn't have anyone close by to pal around with due to the rural nature of their location. My Uncle was miserable with the commute. My Aunt was upset Uncle was always driving, working, or tired. The rural area also came with other annoyances like spotty internet, one cable company, no city water, and very minimal snow removal on the roads.

If it were me, I'd stay close to the city until you're both ready to retire.


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## tech-novelist (May 15, 2014)

How much of this real estate investing have you already done? I know a few people who have done this on a somewhat smaller scale, and none of them have made out very well.

If you really want to invest in real estate, how about REITs? They don't get stopped-up plumbing in the middle of the night, they don't burn down, they don't need the furnace replaced, they don't trash the place and leave without a forwarding address, etc.

For any investing idea, ask yourself, "If it's that profitable, why aren't big companies doing it?"


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## Blossom Leigh (Mar 27, 2014)

Big companies are doing it. The big REITs just bought up a ton of houses here in Birmingham. 

You have to know what you are doing without question. We own three rentals now. Two I've had since 2003, the third we got in 2008. When these are paid off in 24 months or less, I'm turning them over to a trusted real estate management service, then adding more.

I''m studying this all the time. I'm doing homework everystep of the way, so very much appreciate the feedback.

Yea, one of my conerns about the farm is the weight of the distance. One of my concerns about getting a farm in the city is the weight of a half million dollar mortgage.


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## MarriedDude (Jun 21, 2014)

Blossom Leigh said:


> What RE sectors were they in?


The ones that got hit the hardest were all in single family homes..about 50% flipping and 50% building ground up spec. 

the lucky few that are in multi-family are surviving -but most likely because the area is still desperately short of rental properties. The high density stuff...8-plex's...etc are doing the best -lowest maint cost overall & steady occupancy. From my observations -the low income housing that has the gov't subsidies do the best...steady money. 

They all...to a person..called my wife and i crazy for not getting into it. We had a couple rentals (single family) after college...enormous pain to manage...too expensive for PM companies...so we sold them off. We have the best results keeping our money on the street funding contracts or in the bank. It's what we know and are comfortable with

Your best bet is stick with a level of risk that you can handle with little to no stress.


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## MarriedDude (Jun 21, 2014)

Blossom Leigh said:


> Big companies are doing it. The big REITs just bought up a ton of houses here in Birmingham.
> 
> You have to know what you are doing without question. We own three rentals now. Two I've had since 2003, the third we got in 2008. When these are paid off in 24 months or less, I'm turning them over to a trusted real estate management service, then adding more.
> 
> ...


My grandfather was buying 50+ acre tracks just outside of town for decades. old farms / tree farms/ranches/etc. he was playing the long game though -spent YEARS getting them re-zoned -re-parcelled into small tracts -then sold them off slowly for the Mcmansions. Thats the only real success story I have ever witnessed in RE


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## Blossom Leigh (Mar 27, 2014)

Yea, I love stories like that. I discovered a secret myself. Instead of buying in crime ridden areas, buying 3/2 mobile homes in high demand school areas can be rented for almost $1000 a month, but cheap expenses and can be bought cheap. Great cash flow. Thats what I've done on these first three. I will probably diversify the type of property after these three if the numbers and location are right.

I had a sweet deal on the 1st two. 10 year blanket mortgage, zero down, zero interest. pays off this year. 

A lot of people in RE cut their margins WAY too close. We have a personal goal on our own personal residence to not ever exceed 10% of our gross income. Right now, its 7%. Helps tremendously.


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## thefam (Sep 9, 2014)

Blossom Leigh said:


> You really got me thinking and we may very well flip 2 to 3 a year so that we can just be at the farm.
> 
> What are you netting on your houses on average if you don't mind me asking.
> 
> Right now we are getting rid of debt. We just retired $23,000 and we will retire another $20,000 by the end of the year. We will only be left with one small mortgage on one of our rentals of $25k. Everything else is paid for. So we are excited at the progress and I'm warming up to that idea of flipping 2 - 3. I've got the contacts to get it done easily.


Hi Blossom. Sorry I'm just seeing your question since the little ones are keeping me quite busy! But H is finally back home so I get a TAM overdose day!

The average net for our 5 flips starting late 2013 through summer of 2015 was $63k. Now when I say net I'm deducting ALL expenses down to getting a sitter so I could do open house. Throw out the high and low outlier of 150k and 6k probably gives a clearer picture. $150k net was in a very high market and we sunk almost all our available cash into the purchase. H was scared to death until the closing was actually over. He doesn't have much of a stomach for high risk because he's tight on a dollar.

Low of 6k was what we thought was a no brainer, cosmetic fixer only which turned out to have hidden foundation damage. Very blessed we got out of that one without a loss.

Hope this helps!


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## Blossom Leigh (Mar 27, 2014)

thefam said:


> Hi Blossom. Sorry I'm just seeing your question since the little ones are keeping me quite busy! But H is finally back home so I get a TAM overdose day!
> 
> The average net for our 5 flips starting late 2013 through summer of 2015 was $63k. Now when I say net I'm deducting ALL expenses down to getting a sitter so I could do open house. Throw out the high and low outlier of 150k and 6k probably gives a clearer picture. $150k net was in a very high market and we sunk almost all our available cash into the purchase. H was scared to death until the closing was actually over. He doesn't have much of a stomach for high risk because he's tight on a dollar.
> 
> ...


Yea I like looking at numbers. :grin2: I'm crunching a lot of them right now. Looking to absolutely maximize the hell out of this effort. So, studying as much as possible before we make our next move so that ROI's and cap rates are through the roof. LOT of strategies out there. :nerd:


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## Blossom Leigh (Mar 27, 2014)

thefam said:


> Hi Blossom. Sorry I'm just seeing your question since the little ones are keeping me quite busy! But H is finally back home so I get a TAM overdose day!
> 
> The average net for our 5 flips starting late 2013 through summer of 2015 was $63k. Now when I say net I'm deducting ALL expenses down to getting a sitter so I could do open house. Throw out the high and low outlier of 150k and 6k probably gives a clearer picture. $150k net was in a very high market and we sunk almost all our available cash into the purchase. H was scared to death until the closing was actually over. He doesn't have much of a stomach for high risk because he's tight on a dollar.
> 
> ...


What price range are y'all buying in?


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## BioFury (Jul 9, 2015)

You are probably very familiar with how real-estate works on a corporate level, but this video spells it out. Real estate isn't exactly a very stable market these days. We narrowly avoided economic failure in 2008, and nothing has changed since then. All the problems that existed then, are still present, and in a lot of cases are even worse. The government just keeps delaying the inevitable.

https://www.youtube.com/watch?v=bx_LWm6_6tA


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## Blossom Leigh (Mar 27, 2014)

I'm fortunate to live in a town that doesn't have hard cycles. Stays pretty level.


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## BioFury (Jul 9, 2015)

Blossom Leigh said:


> I'm fortunate to live in a town that doesn't have hard cycles. Stays pretty level.


I'm not warning you against a bad cycle, but a complete faceplant of the market. A Great Depression type of thing, just 2-3 times worse, considering our money isn't backed by precious metals, as it was then. Not to mention several other factors.
*
Edited to add:* What is someone going to pay you with if the US dollar is next to worthless? And more importantly, how are you going to buy anything you need when your money is worthless? And, how is anyone else (like the grocery store) going to buy anything in order to resell it to you? And even if they could, why would they trade valuable goods they need, for the toilet paper we call money?

Not saying it will, or won't, be that bad, just giving you food for thought.


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## Blossom Leigh (Mar 27, 2014)

Yea, I get what you are saying and worth consideration. My issue with it is I've kept an eye on doomsdayers now for a decade and its never gotten as bad as they said it would. But, even if it did. All of my houses sit on acreage and they could grow food and pay me that way. We already barter from time to time already in other ways, so it actually could be a benefit. I would have renters with built in impetus to barter with solely me, whether its food, labor or other items. Gives me leg up on th competition. I already have a reputation as an excellent landlord. That would be a opportunity to take it to the next level and network in a bartering system.


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## jdawg2015 (Feb 12, 2015)

How much equity in the properties? If you have not rented/owned property I can tell you there's a lot of hidden issues you'll have to learn to deal with.

Going with minimum money into the investment properties means you'll be making slim margins after property taxes, bad tenants, repairs, and on and on.

You're better served with less properties and less leverage.

I bought my first investment condo on 30% down to get the loan as that's all the cash I had on hand and after all the work of getting tenants and issues, taxes, condo fees, etc it felt like I was making squat for the amount of effort. I recently refinanced and have nearly 50% equity and only NOW does it feel like it makes money.

Property can definitely be a money make but if you have to mortgage yourself to the end of the earth be very careful. You say you're investors but if you need TAM advice on what you want, take a step back and revaluate what you're doing.


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## jdawg2015 (Feb 12, 2015)

Blossom Leigh said:


> I already have a reputation as an excellent landlord. That would be a opportunity to take it to the next level and network in a bartering system.


You need your tenants to prove their worth, not you to prove to them.

Screening tenants is probably the #1 factor in the success (or not) of property investment.

1. Verified income
2. True verification of references -> don't just use the numbers/names they give you as you can be calling their sister/brother
3. Credit check -> bankruptcy, judgements, prior eviction don't listen to ANY sob story

My rental condo is in a upper middle income area and it still requires due diligence for tenants. Don't trust, always verify.


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## Blossom Leigh (Mar 27, 2014)

jdawg2015 said:


> How much equity in the properties? If you have not rented/owned property I can tell you there's a lot of hidden issues you'll have to learn to deal with.
> 
> Going with minimum money into the investment properties means you'll be making slim margins after property taxes, bad tenants, repairs, and on and on.
> 
> ...


The advice was asking about staying in town or moving to the farm  and the difference in cashflow each scenario presents since we are parents of our seven year old boy. I actually thought I would get more lifestyle comments versus investment talk. I dont mind investment talk, I love talking numbers, it was lifestyle thoughts I was after more than anything else.


I have two houses paid for and one with a small mortgage that goes away in five years. The rest we will be paying cash for because you are correct, no mortgages is the way to go and the way I prefer. I've had rental houses for the past 13 years, so already versed in "issues"


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## jdawg2015 (Feb 12, 2015)

I'm a country boy from the US who lives in super urban Asian cities so I am biased.

I'll take the commute so I can relax at night and on weekends away from the hub bub. Nothing like looking up and seeing stars and no noise:grin2:



Blossom Leigh said:


> The advice was asking about staying in town or moving to the farm  and the difference in cashflow each scenario presents since we are parents of our seven year old boy. I actually thought I would get more lifestyle comments versus investment talk. I dont mind investment talk, I love talking numbers, it was lifestyle thoughts I was after more than anything else.
> 
> 
> I have two houses paid for and one with a small mortgage that goes away in five years. The rest we will be paying cash for because you are correct, no mortgages is the way to go and the way I prefer. I've had rental houses for the past 13 years, so already versed in "issues"


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## Blossom Leigh (Mar 27, 2014)

jdawg2015 said:


> I'm a country boy from the US who lives in super urban Asian cities so I am biased.
> 
> I'll take the commute so I can relax at night and on weekends away from the hub bub. Nothing like looking up and seeing stars and no noise:grin2:


Exactly, staying in town brings us way more cash, but moving to the farm feeds the soul. But there's age and friends to consider, so was just tapping hearts here.


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## Kivlor (Oct 27, 2015)

jdawg2015 said:


> You need your tenants to prove their worth, not you to prove to them.
> 
> Screening tenants is probably the #1 factor in the success (or not) of property investment.
> 
> ...


I found that sticking to Commercial RE, with corporate tenants on long leases has been much better than doing the Residential end. I mean, Residential had better margins (it was easier to hit 25% ROI) but the headaches...


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## Blossom Leigh (Mar 27, 2014)

Kivlor said:


> I found that sticking to Commercial RE, with corporate tenants on long leases has been much better than doing the Residential end. I mean, Residential had better margins (it was easier to hit 25% ROI) but the headaches...


Are all of your long leases triple net?


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## Kivlor (Oct 27, 2015)

Blossom Leigh said:


> Are all of your long leases triple net?


Yup, mostly. The occasional Double-Net. One Absolute to a bank.


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## Blossom Leigh (Mar 27, 2014)

Kivlor said:


> Yup, mostly. The occasional Double-Net. One Absolute to a bank.


That's some sweetness right there. Very cool.


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## Kivlor (Oct 27, 2015)

Blossom Leigh said:


> That's some sweetness right there. Very cool.


There's some better margins to be had in Residential, I think. But man, that is some hard-earned money. We've still got a mobile-home park, but it's the last hold-out. Not selling it either.

You can accelerate your income in Residential even further by focusing on Management. Build up a great Property Management Business (to manage your own) and then manage other people's properties for a fee. 

At max, we ran 400+ Single Family Units. It was a nightmare to manage though. Always had a real problem with theft from the people collecting rent.


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## jdawg2015 (Feb 12, 2015)

Exactly why you don't over leverage.

The guys with deep pockets are the one's who made out in 2008/2009 when the market imploded. 

As long as your rental covers your costs you're fine.



BioFury said:


> You are probably very familiar with how real-estate works on a corporate level, but this video spells it out. Real estate isn't exactly a very stable market these days. We narrowly avoided economic failure in 2008, and nothing has changed since then. All the problems that existed then, are still present, and in a lot of cases are even worse. The government just keeps delaying the inevitable.
> 
> https://www.youtube.com/watch?v=bx_LWm6_6tA


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## Blossom Leigh (Mar 27, 2014)

Kivlor said:


> There's some better margins to be had in Residential, I think. But man, that is some hard-earned money. We've still got a mobile-home park, but it's the last hold-out. Not selling it either.
> 
> You can accelerate your income in Residential even further by focusing on Management. Build up a great Property Management Business (to manage your own) and then manage other people's properties for a fee.
> 
> At max, we ran 400+ Single Family Units. It was a nightmare to manage though. Always had a real problem with theft from the people collecting rent.


Yea, one of the local guys who owns a property management company approached me about working for him and it totally sounded nightmarish. I ended up with a different management company on the wholesale side which is very interesting and another cash cow revenue stream when set up right. That's interesting about your mobile home park. I've always heard they are a cash cow. Have you been in commercial from the beginning? How long did it take for you to reach that level of not?


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## Kivlor (Oct 27, 2015)

Blossom Leigh said:


> Yea, one of the local guys who owns a property management company approached me about working for him and it totally sounded nightmarish. I ended up with a different management company on the wholesale side which is very interesting and another cash cow revenue stream when set up right. That's interesting about your mobile home park. I've always heard they are a cash cow. Have you been in commercial from the beginning? How long did it take for you to reach that level of not?


They can be pretty rough. I started in Commercial, and tried to avoid property management; it took me 5 years to get going. My dad was more into the Management business than I am. He spent a lot longer getting to where I am (15 years?), but he didn't have all the experience to draw upon that I did--the benefits of a groomed family business. 

Mobile Home Parks can be a great revenue stream. Ours doesn't make much, but it's ROI can't be beat. Paid almost nothing for it, and we require all tenants to be a senior and to own their own mobile; so their is very little trouble or management.

I'm not familiar with management on the wholesale side, what's that like?


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## Blossom Leigh (Mar 27, 2014)

Kivlor said:


> They can be pretty rough. I started in Commercial, and tried to avoid property management; it took me 5 years to get going. My dad was more into the Management business than I am. He spent a lot longer getting to where I am (15 years?), but he didn't have all the experience to draw upon that I did--the benefits of a groomed family business.
> 
> Mobile Home Parks can be a great revenue stream. Ours doesn't make much, but it's ROI can't be beat. Paid almost nothing for it, and we require all tenants to be a senior and to own their own mobile; so their is very little trouble or management.
> 
> I'm not familiar with management on the wholesale side, what's that like?


Its a company that has two arms of business. One side is property management and the other side is wholesaling. Leads come in and we do fast wholesale flips. Bird dog them if you will to our pool of buyers.


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## Kivlor (Oct 27, 2015)

Blossom Leigh said:


> Its a company that has two arms of business. One side is property management and the other side is wholesaling. Leads come in and we do fast wholesale flips. Bird dog them if you will to our pool of buyers.


I've done some similar stuff in CRE, but it requires a lot of travel. Put land under an option, and then assign the option to a developer or corporate client. I'm thinking my market is too small for that kind of business to make much money. But... I bet it's very profitable in bigger cities.

So, do you do much on the property management end in your business, or does someone else handle that? I take it the properties are usually unoccupied?


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## Blossom Leigh (Mar 27, 2014)

Kivlor said:


> I've done some similar stuff in CRE, but it requires a lot of travel. Put land under an option, and then assign the option to a developer or corporate client. I'm thinking my market is too small for that kind of business to make much money. But... I bet it's very profitable in bigger cities.
> 
> So, do you do much on the property management end in your business, or does someone else handle that? I take it the properties are usually unoccupied?


I bet it would be profitable in larger cities too, but I bet it would still require travel. Commercial flipping I bet would have to be done on a national/international scale to move it fast enough. 

Yes, there are a lot of these houses that are unoccupied and yet surprisingly a lot of them either have tentants or are personal residences. I am not on the property management side. Someone else is handling all of that. Now, I do handle my personal portfolio and when it gets large enough I may have this group manage them OR like you say... start my own company. Depends on how my health is holding out when that time comes.


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