10 yr rental plan please comment

[motivatedceo]

That is only true to a degree.

If you find a deal you like on Loopnet, you don't have to pay the asking price. A sophisticated seller almost expects you to haggle the price down. So...you can do your own due diligence on a commercial property for sale on Loopnet, and if you want a 10% CAP rate and the seller is asking for a sales price that gives you a 5% CAP rate, at that point it's all a matter of math. You figure out what price you want to pay, give him/her an offer at say a 12% or 15% CAP rate (you ask for a lower price), and work your way up to where your target 10% CAP rate via the negotiating process.

Also, there ARE some real deals on Loopnet, just like the MLS. However on average they are not listed long because the best deals go to the most sophisticated investors...they tend to find and buy the best bargains first.

And last, but not least, the best of the best deals go to the people (investors) who create their own opportunity. They don't tend to sit around and wait for a property to be listed. They do that by making their own deals...via their own networking or advertising. That's not a new secret, though it's not always practiced by investors ... just look at all the "We Buy Ugly Houses" signs across the nation ... those guys have been doing it for years.

So, "saying that all the good deals have already been found prior to Loopnet"  --- is not an entirely accurate statement.
 

Thought that I heard someone else say that all the good deals have already been found prior to loopnet, and if you are finding a property on there, it's probably not such a "good deal".

Did I misunderstand this?

[sbgradinnb]

That is only true to a degree.

If you find a deal you like on Loopnet, you don't have to pay the asking price. A sophisticated seller almost expects you to haggle the price down. So...you can do your own due diligence on a commercial property for sale on Loopnet, and if you want a 10% CAP rate and the seller is asking for a sales price that gives you a 5% CAP rate, at that point it's all a matter of math. You figure out what price you want to pay, give him/her an offer at say a 12% or 15% CAP rate (you ask for a lower price), and work your way up to where your target 10% CAP rate via the negotiating process.

Also, there ARE some real deals on Loopnet, just like the MLS. However on average they are not listed long because the best deals go to the most sophisticated investors...they tend to find and buy the best bargains first.

And last, but not least, the best of the best deals go to the people (investors) who create their own opportunity. They don't tend to sit around and wait for a property to be listed. They do that by making their own deals...via their own networking or advertising. That's not a new secret, though it's not always practiced by investors ... just look at all the "We Buy Ugly Houses" signs across the nation ... those guys have been doing it for years.

So, "saying that all the good deals have already been found prior to Loopnet"  --- is not an entirely accurate statement.
 

Thought that I heard someone else say that all the good deals have already been found prior to loopnet, and if you are finding a property on there, it's probably not such a "good deal".

Did I misunderstand this?

Gotcha.  Makes sense.  Thx

[Estrogen Hostage]

You and I are similar in age and household income levels, but we have totally different "day jobs". You're a doctor, and I own a couple small businesses.

One thing starkly different between you and I, based on what you described, is that I have a lot more money to put back into my investments than you. I have spent $36k in a month on investments - granted I did save for a couple months. LOL. But spending about 9% of your gross income per year is way to LITTLE in my opinion. I probably reinvest at minimum 50% of my gross income into new assets...albeit spent on my small business to increase income or on a rental property. I purchased a nice collection of short term assets, and long term assets, this calendar year.

One reason I can do that is the fact I own my own businesses...the tax advantages such as the same-year 100% writeoff of certain short term income producing assets (section 179 accelerated depreciation) or the ability to writeoff (defer income technically) $45-$50k in contributions to my self-directed IRA which in turn NOW gets invested into real estate...makes a big difference. I could live in a millon dollar home and drive a Ferrari, and also be in debt up to my ears, but I actually choose not to live that way...for now anyway. I do live in a very nice house, and do have 3 late model cars (one being a luxury car)...but I spend most of my extra money investing in passive and semi-passive income producing assets that are making me wealthy. By the time I am 40 I should have over 100 properties, all debt free, and by the time I am 60 or 70...<insert a friendly expletive of your choice>...with compound interest I will probably be worth $30mm to $50mm.

ANYWAY...my point is...I would focus on putting yourself in a position so that you have more capital to invest on a monthly or annualized basis. You can do that by investing wisely so that you get a higher yield on your money, and you can just reinvest it. Or you can find (legal) ways to reduce your tax burden and also your cost of living by cutting back on the luxuries and extras...and that should free up your capital too.

I call it my "bathtub theory of economics". You can either find ways to get more income coming in through your faucet, or plug up your drain slightly more so less income goes down the tube. Either way, you have more money in your pocket and therefore more money to invest.

THEN after that look at your current plan, or a similar plan. That plan is not a bad one but it does not generate you a large enough yield to really get you where you want to go comfortably in 10 or 15 years.

Good luck

This is great advice. I personally did Dave Ramsey's program and got rid of all consumer debt. My wife and I bring in half what you guys do, but we are still able to invest one whole salary. IMHO, you can spend a few years cutting your lifestyle and cutting your debt and fixed costs and then come back in 2-3 years wanting to invest 30k/month instead of 3k/month. At that rate you're spending your time buying, which is where you make your real money anyway. You find a property manager to manage them (maybe keep a few nice ones near you to get your hands dirty from tie to time), and you have the ability to pretty much buy 1-2 per month and be adding to your income by tens of thousands per year every year for the rest of your life.

We have a long list of extravagant "wants" too, and slowly we have been adding them back in as our cash flow increases. But we make our lifestyle fit our budget, not the other way around.