Author Topic: Bigger Pockets - does their advice sound risky to anyone else?  (Read 5629 times)

rentalnewbie

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Bigger Pockets has been a great resource to learn about investing and different kinds of investing, they even occasionally have an article where they jump on the frugality bandwagon. However, I am constantly surprised by how risky their advice is (or I perceive it to be). Am I too conservative/slow/over-analyzing or do others feel the same?

As examples:
- Newbie to 5 units in 7 months! was in an email today as a "success story" spotlight. This speed acquisition seems very fast to me (and scary), even if you have the money to pay cash for them all, you don't know what you are doing. A user could post this on their site, but they selected it as the item to promote in the newsletter as the "right approach." This seems to be a typical story angle for them also.
- Lots of articles on how to invest with no money down. While I have no qualms against investing using hard money lenders, I think it's dangerous to say you can invest with "no money." While it might not be in the deal, if you don't have any savings to fall back on, you are vulnerable to any problem that may come up.

Am I a fuddy duddy or do others feel the same?

YttriumNitrate

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #1 on: August 15, 2018, 08:56:37 AM »
Yes, the stories of people leveraging to the hilt and going from 0 to 20 doors in 12 months make for interesting articles on bigger pockets, so they tend to get more of the coverage. I suspect things will change a bit when the next housing decline happens. As Warren Buffet likes to say "only when the tide goes out do you discover who has been swimming naked."

Jon Bon

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #2 on: August 15, 2018, 11:32:25 AM »
Totally agree, its gotten way too "Get Rich Quick".

On some level IMO it goes against the FIRE life. I dont care if you have a kick-ass property management company. 50 units is going to be a full time job!

MMM Goal: Wealth Building
BP Goal: Empire Building

You be you, but it's not for me!




rentalnewbie

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #3 on: August 15, 2018, 02:12:47 PM »
Totally agree, its gotten way too "Get Rich Quick".

On some level IMO it goes against the FIRE life. I dont care if you have a kick-ass property management company. 50 units is going to be a full time job!

MMM Goal: Wealth Building
BP Goal: Empire Building

You be you, but it's not for me!

I totally agree. I'll stop when I have "enough" beyond that, it's another job. Even now, I have 1 rental (plus my regular job) and it can be a lot.

sammybiker

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #4 on: August 15, 2018, 02:56:28 PM »
IMO there has been a shift in the culture of the forum.  Many of the members of 5+ years ago have made their wealth with this recent bull run and are much less involved in the forums compounded with the influx of newbies (also brought in with the recent bull run) that are looking to grow as well.

Newbies are good, fresh blood, ideas, drive are needed and are healthy.  But I'll say a number of the newbies are of a different class...I don't know how to explain it but it's just different.  Reading through forum posts today occasionally reminds me of reading through the comments on a Yahoo.com news story. 

Hopefully BP works to correct this culture.

Lmoot

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #5 on: August 15, 2018, 04:54:22 PM »
 Yeah, I realized I donít want to own commercial properties, or even multi family units. Investment properties for me are a personal endeavor, as much as financial. I really like my little area of the city, and it needs help, and I like the idea of purchasing some of the run down properties, fixing them up and renting them out. One of the main reasons I donít want to work my 9 to 5 for my entire life, is I want something that means more to me than just earning money. And for me snatching up properties just to get the maximum return, but not really caring about the property itself, or who lives in around it, is not my cup of tea. I want to be a part of growing a community.

jmecklenborg

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #6 on: August 15, 2018, 05:07:40 PM »
Quite a number of the podcast guests seem like they just got lucky.  For example, a lot of them got seed money because they were Californians who bought in San Diego or the Bay Area in 2010 were willing to cash out in 2015 and then buy in the Midwest. 

The girl from Denver (I think) who bought the houses in St. Louis to rent as airbnb's seemed like she didn't know the difference between gross revenues and profit, and might not have known that she has to pay tax. 

monarda

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #7 on: August 15, 2018, 10:22:08 PM »
Totally agree, its gotten way too "Get Rich Quick".

On some level IMO it goes against the FIRE life. I dont care if you have a kick-ass property management company. 50 units is going to be a full time job!

MMM Goal: Wealth Building
BP Goal: Empire Building

You be you, but it's not for me!

I totally agree. I'll stop when I have "enough" beyond that, it's another job. Even now, I have 1 rental (plus my regular job) and it can be a lot.

+1.   We have 6 units and pretty much are living off of that. Practicing for FIRE.
These guys who want  tens of thousands a month cash flow are just switching their lives over to being RE managers.  I think "enough" for us here on this forum is on average going to be way less than "the freedom number" as they call it over there.

MaikoTsumi

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #8 on: August 17, 2018, 10:03:33 AM »
Real estate as a profession is all about marketing, selling, and hype.  Biggerpockets is just an extension of this.  They'll have anyone on who'll fill an hour podcast.  I think it's funny that they always say they are against seminar type gimmicks, but have people on who preach the same models.  That being said, there are some really good discussions there as well. Real systems being discussed, real potential and good ways to invest.  You just have to filter out the chaff.

Edit: Their articles are worse than some of the podcasts.  I get their emails, and they have 2-3 emails every week with new articles. Packed full of outright lies and bad advice. 
« Last Edit: August 17, 2018, 10:07:01 AM by MaikoTsumi »

tralfamadorian

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #9 on: August 17, 2018, 02:56:17 PM »
+1 Everyone's thoughts.

I just finished listening to the most recent podcast this morning and was really disappointed in the quality. The guest was some guy who has been flipping houses since 2015 in the bad parts of Vegas and is on track to flip >100 houses this year. The hosts were all, "wow, that's great!...this is so inspiring!"

Zero discussion or questions on purchase price, rehab costs, selling price, average time for rehab or average time to sell except for one property that the guest admitted was unusual for him. Zero discussion or questions on the guest's current number of held properties and what his plan is for the next part of the cycle in one of the most volatile markets in the county. Worst part is that this guy bragged about his private investors who pony up 100% of the purchase price plus rehab so when the shit hits the fan, he only has moral obligation keeping him from walking away from all these houses in bad neighborhoods.

Concurrently, I've been becoming a bigger fan of the Real Estate Guys podcast. They are more politically conservative that I, they are bullish on gold, bearish on the US economy and more of their guests than not are pushing sketchy investments. However, they do take the time to discuss in detail how to evaluate a city and how to estimate the position in the cycle of a particular market.

You know, real information instead of just the latest in a line of amazing inspiring guests who hustled their way onto biggerpockets podcast.

jmecklenborg

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #10 on: August 20, 2018, 01:22:45 AM »
Real estate as a profession is all about marketing, selling, and hype.  Biggerpockets is just an extension of this. 

Edit: Their articles are worse than some of the podcasts.  I get their emails, and they have 2-3 emails every wek with new articles. Packed full of outright lies and bad advice. 

They keep partying like it's still 2011.  It's not.  I live in one of the Midwestern markets that was super-cheap through 2016.  It's not anymore thanks to coastal money.  Now people are on FOMO mode and overpaying for single-family and multi-family rentals in third-tier places like Richmond, IN and Lima, OH. 

It's 2018 and pretty hard to stumble into a real estate deal anywhere in the United States.  Like I posted above, many of the Bigger Pockets gurus got their start in 2009-2013, mostly due to luck, and now are in grave danger of over-leveraging because they think they're good at it. 




 

makinbutter

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #11 on: August 20, 2018, 05:32:25 AM »
I agree that a lot of the material on the site is... irksome.  See the following podcast.

https://www.biggerpockets.com/renewsblog/biggerpockets-podcast-238-real-estate-millionaire-teacheraes-salary-michael-swanny-swan/

The individual on the podcast talks a blue streak about how he was able to replicate and exceed his teacher's salary by purchasing blue-collar rentals in Ohio.  That's amazing, you say!  Wow!  How did he get the multiple hundred k required to buy multiple apartment complexes in Ohio, though...?  Oh, he sold a San Diego condo that had massive appreciation - so all you need to do to walk in his footsteps is hop in your time machine, fly back to the mid 2000s, and buy California property.

...sigh.

Basically, the advice on BP boils down to:

1) Buy a property at no more than the TOTAL of 70% of after-repair value (ARV) minus your renovation costs.
2) Renovate the property.
3) Refinance out your money, leaving you with little-to-no dough, but an essentially-free income stream.
4) Repeat.

Sooooo... if you can't buy property at a massive discount, the model doesn't work, period, full stop, do-not-pass-go-do-not-collect-$100.

Much less sexy are the stories where someone purchases one house a year, snowballs their rental income plus their w2 income into future purchases, and gradually scales up.  I think BP as a whole does a disservice to this relatively-MUCH-safer method by convincing people that the "BRRR" (buy, renovate, refinance, repeat) is the only way to go.

Now, all that said, BP was an amazing resource for me simply because it provided a proof-positive case study (or a series of case studies) showing that you could, indeed, buy houses in an area far afield.  ARebelSpy here did the same thing, and it was massively eye-opening / paradigm-shifting for me.  I've got multiple cash-flowing rentals now, and while I'm not "infinitely cashflowing" a la some of these BRRR zealots, I'm stacking away, slowly but surely.

Bottom line: if you can understand underwriting and have a decent inflow of capital from a w2 job (or can save up enough from a lower-w2 job), you're in business.  You'll need one of the following:
1) capital
2) access to capital
3) ability to convince people to part with their assets for less capital than they would get on the open market

Good luck! :)


ETA: When I say I own "cash-flowing rentals," for me the big advantage of a rental versus, say, a passive stock index is the ability to harness the bank's money and lever up.  If I have 100k in the stock market and return 8% or 9%, that's an 8k return.  If I have 100k in rentals and return 12% cash-on-cash returns (before accounting for principal paydown, tax benefits, potential appreciation of the underlying asset [!]), now I'm in business.  I'm around 12% CoC returns for the year even with a massive capital expense (think: roof), so for ME, real estate trumps simple stock market investing because I'm willing to put up with a lack of liquidity for a better return.
« Last Edit: August 20, 2018, 05:38:24 AM by makinbutter »

monarda

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #12 on: August 20, 2018, 08:22:58 AM »
I agree that a lot of the material on the site is... irksome.  See the following podcast.

https://www.biggerpockets.com/renewsblog/biggerpockets-podcast-238-real-estate-millionaire-teacheraes-salary-michael-swanny-swan/

The individual on the podcast talks a blue streak about how he was able to replicate and exceed his teacher's salary by purchasing blue-collar rentals in Ohio.  That's amazing, you say!  Wow!  How did he get the multiple hundred k required to buy multiple apartment complexes in Ohio, though...?  Oh, he sold a San Diego condo that had massive appreciation - so all you need to do to walk in his footsteps is hop in your time machine, fly back to the mid 2000s, and buy California property.

...sigh.

Basically, the advice on BP boils down to:

1) Buy a property at no more than the TOTAL of 70% of after-repair value (ARV) minus your renovation costs.
2) Renovate the property.
3) Refinance out your money, leaving you with little-to-no dough, but an essentially-free income stream.
4) Repeat.

Sooooo... if you can't buy property at a massive discount, the model doesn't work, period, full stop, do-not-pass-go-do-not-collect-$100.

Much less sexy are the stories where someone purchases one house a year, snowballs their rental income plus their w2 income into future purchases, and gradually scales up.  I think BP as a whole does a disservice to this relatively-MUCH-safer method by convincing people that the "BRRR" (buy, renovate, refinance, repeat) is the only way to go.

Now, all that said, BP was an amazing resource for me simply because it provided a proof-positive case study (or a series of case studies) showing that you could, indeed, buy houses in an area far afield.  ARebelSpy here did the same thing, and it was massively eye-opening / paradigm-shifting for me.  I've got multiple cash-flowing rentals now, and while I'm not "infinitely cashflowing" a la some of these BRRR zealots, I'm stacking away, slowly but surely.

Bottom line: if you can understand underwriting and have a decent inflow of capital from a w2 job (or can save up enough from a lower-w2 job), you're in business.  You'll need one of the following:
1) capital
2) access to capital
3) ability to convince people to part with their assets for less capital than they would get on the open market

Good luck! :)


ETA: When I say I own "cash-flowing rentals," for me the big advantage of a rental versus, say, a passive stock index is the ability to harness the bank's money and lever up.  If I have 100k in the stock market and return 8% or 9%, that's an 8k return.  If I have 100k in rentals and return 12% cash-on-cash returns (before accounting for principal paydown, tax benefits, potential appreciation of the underlying asset [!]), now I'm in business.  I'm around 12% CoC returns for the year even with a massive capital expense (think: roof), so for ME, real estate trumps simple stock market investing because I'm willing to put up with a lack of liquidity for a better return.

Funny you should mention that particular podcast.
After I watched a few minutes of that podcast a few months ago, I decided I wouldn't watch any more of their podcasts.  It was downright terrible. I couldn't stand it for more than a few minutes. I couldn't stand listening to him. He's so full of himself.

I've only listened to a couple. My take on the podcasts is they are way too long, lots of rambling, very unfocused, and I really don't learn much from them. I've done a lot of fast-forwarding through the few that I've tried to listen to.

There are a couple of posters on the BP forum that have good things to say, in my opinion. But there are many more who are just teeming with greed. More more more more more, I want more. Look how much I've got. That summarizes quite a few of the posts.

Through BP we've formed a local meetup group in our town. Helpful to share experiences with local contractors, etc.

Bobberth

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #13 on: August 23, 2018, 02:34:28 PM »
I have also seen the quality of the site go down. I wasn't sure if it was just me or if it was actually the site. I see posters that were the butt of jokes when they first joined BP are now being promoted in emails and featured articles. I'm not sure if they are paying for exposure or if their writing style and personality pull in clicks but it's definitely lowered my opinion of the site-not that you can't find good information. You now have to look for it and sift through a lot of the crap and most of what is promoted is generated just for clicks/advertising. I get that they want to make money with the site, but I think they're pushing a bit too much to make too much instead of letting the content speak for itself like other sites.

Again, this may be my opinion because it's been nearly 2 years since I purchased a property and don't really feel like buying anything else right now. My interest in the site has always correlated with my wanting to purchase more properties.

clarkfan1979

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #14 on: August 24, 2018, 01:05:33 PM »
Totally agree, its gotten way too "Get Rich Quick".

On some level IMO it goes against the FIRE life. I dont care if you have a kick-ass property management company. 50 units is going to be a full time job!

MMM Goal: Wealth Building
BP Goal: Empire Building

You be you, but it's not for me!

My step-dad owns 85% of a 45-unit apartment complex. He probably spends less than 20 hours/year on managing it. He has a great team. He spends 60 hours/week running a small engineering firm (25 employees). He likes his day job. 

I think the income from the apartment complex is around 1/3 of his income from his day job. If he had 3 apartment complexes he would work 60 hours/year. However, at his day job he works 60 hours/week.


ketchup

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #15 on: August 24, 2018, 02:07:17 PM »
I like their podcast and listen to most of the episodes, but their blog tends to be kind of gross with lots of overpromising and Go-fever type attitude.  They definitely tend to advocate more risk than I'm comfortable with (survivorship bias is strong there).  There's some good information in there, but it's often wrapped up in a lot of hype.

genesismachine

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #16 on: August 24, 2018, 05:40:46 PM »
I've listened to all their podcasts but didn't find much value in their site/articles and unsubscribed from their mailing list.

The thing with their podcasts was that they literally never disagreed with the guests, and would have just about anyone on. They would have insane guests or lucky guests come on proclaiming themselves to be experts recommending you do insane things and the hosts would just agree. This gave an air of authority to their insane advice for the newbie investors.

I would say much more than half their guests 'mistook leverage for genius' as they say. They were in the right place at the right time and levered themselves up like crazy. Grant Cardone sounded like a prime example of this. He levered up, then almost lost everything in 2008, learned nothing and levered up to the hilt again. He is now super rich. And those who didn't survive 2008? They aren't on the BP podcasts.

That being said, it is a great series of podcasts for ideas as they do have good guests on from time to time, and a lot of their guests also serve as lessons on 'what not to do' (even if not intentional). It is a treasure trove of information, but you do have to throw out 90% of it as garbage/dangerous advice. Unfortunately, for the newbie audience they cater to, I think it is more dangerous than helpful.

tralfamadorian

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #17 on: August 24, 2018, 05:58:22 PM »
I also dislike something I've been hearing them say since Josh quit the podcast- that the first property does not have to make sense. It doesn't have to cashflow- don't worry about that. You should just buy it because then the subsequent ones will come easily and be profitable.

I mean, what the fuck kind of magically thinking is that?

ketchup

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #18 on: August 25, 2018, 03:20:00 PM »
I also dislike something I've been hearing them say since Josh quit the podcast- that the first property does not have to make sense. It doesn't have to cashflow- don't worry about that. You should just buy it because then the subsequent ones will come easily and be profitable.

I mean, what the fuck kind of magically thinking is that?
Wait what?  Fuck, I'm behind on that one.  That's just ridiculous.

rentalnewbie

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #19 on: August 27, 2018, 08:25:08 PM »
I also dislike something I've been hearing them say since Josh quit the podcast- that the first property does not have to make sense. It doesn't have to cashflow- don't worry about that. You should just buy it because then the subsequent ones will come easily and be profitable.

I mean, what the fuck kind of magically thinking is that?
Wait what?  Fuck, I'm behind on that one.  That's just ridiculous.

Whoa I haven't seen that, that's insane. There are people who buy for appreciation but that's also risky imo.

I'm glad to see I'm not the only who thinks some of the stuff on BP is BS. I can be pretty risk averse but constantly promoting buying properties when you don't have any money... doing that scares the crap out of me personally.

jmecklenborg

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #20 on: August 30, 2018, 09:52:15 AM »
I also dislike something I've been hearing them say since Josh quit the podcast- that the first property does not have to make sense. It doesn't have to cashflow- don't worry about that. You should just buy it because then the subsequent ones will come easily and be profitable.

I mean, what the fuck kind of magically thinking is that?


Yeah these guys just haven't gotten burned yet.  One of my much-younger brothers knows one of the guys personally and is all about high-risk financial behavior because all he knows is the post 2008-world where everything has gone steadily upward.  Last night I told him I was going to pay off my primary residence early and he tried to convince me to do otherwise.  I'm sure people like me sound like people who lost everything in the Depression to people of his generation.     

tralfamadorian

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #21 on: August 30, 2018, 02:22:18 PM »
I also dislike something I've been hearing them say since Josh quit the podcast- that the first property does not have to make sense. It doesn't have to cashflow- don't worry about that. You should just buy it because then the subsequent ones will come easily and be profitable.

I mean, what the fuck kind of magically thinking is that?


Yeah these guys just haven't gotten burned yet.  One of my much-younger brothers knows one of the guys personally and is all about high-risk financial behavior because all he knows is the post 2008-world where everything has gone steadily upward.  Last night I told him I was going to pay off my primary residence early and he tried to convince me to do otherwise.  I'm sure people like me sound like people who lost everything in the Depression to people of his generation.     

Indeed. I sympathize that it can be difficult to have perspective when the entirety of your adult investing life has coincided with an amazing quadfecta of historically low interest rates, the longest stock market bull run in American history, an eight year almost nationwide housing run-up and the lowest unemployment rate in 20 years.

However, I think it is very risky and shortsighted for biggerpockets as a business not to realize or care that eventually all of these will change and the lemmings they are leading to the cliff will be the ones who suffer the most.

JoJoP

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #22 on: August 31, 2018, 01:00:36 PM »
I haven't watched any of the BP podcasts, but it does seem that flipping houses has become mainstream over the past couple of years.  The whole "something for nothing" attitude of the 100% leveraged crowd is like a drug.  I once attended a Fortune Builders weekend workshop (free).  The whole thing was such a hard sell... spend (up to)  $40,000 on our top training "mentoring" program and we'll show you how to be as rich as we are.  We'll even hook you up with hard money lenders (or you can be a hard money lender, weeeeehhh!).  Everybody was fired up and ready to get rich.  There were people lining up for all levels of the sign up tiers. The sales pitch was unbelievably good... I seriously had to refrain (bought the CD's used on Ebay, instead).   The people signing up were just your average Joes and Janes... spending what money they had to really master this getting rich idea.  It was sad.  The whole image has stuck with me for years. 

Then, on the flip side, you see these poorly rehabbed houses (cheap new carpet over the old stinky carpet pad), sitting around because they are overpriced, with the sellers hoping to get the rehab costs back.  PT Barnum had it right:  There's a sucker born every minute. 

Cubert

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #23 on: September 04, 2018, 05:08:47 AM »
I like Bigger Pockets. They have a wealth of helpful information and debate on real estate investing. Every site should have its own purpose. Buyer beware, grain of salt, yada yada. Remember all these blogs and resources aren't the Holy Bible. Take what you need and distill it down to what works for YOU.

afox

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #24 on: September 05, 2018, 11:00:21 AM »
Quote from: clarkfan1979
My step-dad owns 85% of a 45-unit apartment complex. He probably spends less than 20 hours/year on managing it. He has a great team. He spends 60 hours/week running a small engineering firm (25 employees). He likes his day job. 

I think the income from the apartment complex is around 1/3 of his income from his day job. If he had 3 apartment complexes he would work 60 hours/year. However, at his day job he works 60 hours/week.

Come on, really?  Those numbers are unbelievable.  Even if he doesn't do a lick of work himself I cant imagine it takes less than 20 hours a year to manage the people doing the work, taxes, etc?

Ive listed to a lot of the bigger pockets podcasts, in all of the interviews if you listen carefully, you'll hear that this business is hard work, all of the interviewees described periods of their life where they basically did nothing but work on their business.  Some people are okay with giving up a few years of their life to build a business and might actually enjoy the lifestyle.  For most people building a business is the only option for acquiring real wealth. 

The point of this post is that I hope someone is'nt reading this thread and thinking that they are going to buy a 45 unit apartment complex and work 20 hours a year.  Dont take my word for it, ask real life RE investors, THIS IS NOT REALITY.  I also hope people listen to the bigger pockets podcasts and recognize how much hard work and sacrifice went into building these real estate empires. 
« Last Edit: September 05, 2018, 01:29:00 PM by afox »

profnot

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #25 on: September 06, 2018, 01:52:24 PM »
I think BiggerPockets has a wealth of info on real estate investing.

And one must be very careful to analyze the information.

I don't listen to the podcasts.  Too much Red Bull, not enough content.

Most alarming are the people who want to leverage their personal residences to borrow money for investment real estate.  Leave your home alone - it is your insurance against housing inflation and, someday in the distant future, it will pay out at long term savings. 

The posts on "how do I get my wife on board with doing a cash out refi on our home to invest in real estate?" kill me.  Listen to your wife, knucklehead!

afox

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #26 on: September 06, 2018, 02:53:59 PM »
Most alarming are the people who want to leverage their personal residences to borrow money for investment real estate.  Leave your home alone - it is your insurance against housing inflation and, someday in the distant future, it will pay out at long term savings. 

bigger pockets is all about BUILDING wealth, not wealth preservation.  leveraging the primary residence may be the only option for building wealth for some people.  Obviously if they had the capital in a bank account or even in a 401k (available for RE via a loan) they would not be talking about borrowing against personal residence for RE investment.  I agree that there are other/better options for building wealth (for starters working at a good paying job and saving your earnings).  Some people, and I assume many starter RE investors do not have that option.  To me successful RE investment is mostly about grit and this is what makes it attractive to so many.  You don't have to have a degree in electrical engineering to make money with RE.  Im glad there are options like RE for motivated, determined, and hard working individuals.

genesismachine

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #27 on: September 07, 2018, 11:32:52 AM »
I think BiggerPockets has a wealth of info on real estate investing.

And one must be very careful to analyze the information.

I don't listen to the podcasts.  Too much Red Bull, not enough content.

Most alarming are the people who want to leverage their personal residences to borrow money for investment real estate.  Leave your home alone - it is your insurance against housing inflation and, someday in the distant future, it will pay out at long term savings. 

The posts on "how do I get my wife on board with doing a cash out refi on our home to invest in real estate?" kill me.  Listen to your wife, knucklehead!

Your home is a hedge against inflation whether or not you have a mortgage on it. A mortgage does not go up with inflation.

If you're borrowing money at 5% and getting 10% cash on cash return, or 15% cash on cash + principal paydown, how is that a bad thing? This is assuming 0% housing appreciation for the next 30 years.

Rent would have to fall by 30% on the property I just bought for me to break even with the mortgage payment. When have you known that to happen over a 30 year period?

rocketpj

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #28 on: September 11, 2018, 07:23:05 PM »
I read some of the articles and got some benefit, mostly about what calculations can help determine whether a property is worthwhile or not.

I find a lot of it a big pushy, but I find most real estate investment stuff pushy (and realtors, for that matter).

Of course, I leveraged my primary residence to buy a mixed use commercial/residential property that need(s) a ton of work.  So that makes me a bit of a maniac in the context of this post.  There is a chance it will fail, but with every day I work on it the chance shrinks, and it has moved my projected FIRE date up about 15 years to early next year.  (It was a hell of an opportunity).

brian.ellwood

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #29 on: September 13, 2018, 11:00:42 AM »
I think your intuition is correct. It's generally safer to start with one single family house at a time...

And yeah, even if you do a no money down deal, you should have a 3-5K cushion for every house you own, because the HVAC or roof could go out.

I'll turn this back around on you...

What type of entry into RE investing DOES feel safe and within your comfort zone?

What does it need to look like for YOU to be comfortable to move forward?

Find your own entry point.

Blindsquirrel

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #30 on: September 15, 2018, 08:54:20 AM »
Quote
I think your intuition is correct. It's generally safer to start with one single family house at a time...

And yeah, even if you do a no money down deal, you should have a 3-5K cushion for every house you own, because the HVAC or roof could go out.-
This depends greatly  on how much total cash flow(including day job) and units  you have, and your debt load and your overall financial shape. If you are grossing 25k a month with no debt, you do not need to keep anywhere near as much per unit in reserve.

I'll turn this back around on you...

What type of entry into RE investing DOES feel safe and within your comfort zone?- I suggest that folks start with SFR close to their house if possible, or remote markets if you wish to go that way or live in  HCOL- totally agree that the exceptions of folks becoming zillionaires with 1000 units  in the last 10 years are exceptions, not the rule. Some (lots!)of the leverage levels on BP would not let me sleep at night.

What does it need to look like for YOU to be comfortable to move forward?-Absolutely agree, if you want to invest in RE -play first not to get hurt, do not take on too much debt, know WTF you are doing. You can always invest in RE via a REIT with absolutely zero hassle.

Find your own entry point.

  I agree Bigger Pockets is quite different from MMM.
 MMM=if you do not reach for your wallet continuously, you do not need a very big pocket to hold it.
BP= I wanna be Rich (80s song)

tralfamadorian

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #31 on: September 16, 2018, 10:19:13 AM »
So I listened to another BP podcast today that might finally turn me off for good. Some nuggets:

1) Host was discussing how he spent 90 minutes putting together an ikea or similar chair. Co-Host evidently spent those 90 minutes in the same room mocking him because his time is work "like $1000 an hour" so he wasted $1,500 putting together a chair and by not helping him, he was teaching him a lesson. The economist portion of my brain exploded.

2) Host detailed on how he used to make fun of people who hired cleaning services for their own homes but now he understands how wrong he was. The MMM portion of my brain exploded.

3) Guest explained how he purchased a commercial building 20 years ago with $150k down that now nets him $10-15k/mo in addition to almost seven figures of equity that he has refi'd out for other projects. Instead of asking useful follow up questions regarding how he had adapted to the changes in commercial property tenant landscape, what the expenses are like on his commercial vs residential properties, how much of his time it requires and what management is like, Co-Host launches into an extended soliloquy about how the property is like a fruit bearing tree where the tenants are birds and branches are occasionally harvested for firewood. 

What a load of horse shit.
« Last Edit: September 17, 2018, 01:33:21 PM by tralfamadorian »

aasdfadsf

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #32 on: September 17, 2018, 11:40:01 AM »
1) Host was discussing how he spent 90 minutes putting together an ikea or similar chair. Co-Host evidently spent those 90 minutes in the same room mocking him because his time is work "like $1000 an hour" so he wasted $1,500 putting together a chair and by not helping him, he was teaching him a lesson.

So the co-host, by his own math, just spent $1500 so he could mock someone. Brilliant.

letsdoit

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #33 on: September 26, 2018, 09:12:57 AM »
Real estate as a profession is all about marketing, selling, and hype.  Biggerpockets is just an extension of this.  They'll have anyone on who'll fill an hour podcast.  I think it's funny that they always say they are against seminar type gimmicks, but have people on who preach the same models.  That being said, there are some really good discussions there as well. Real systems being discussed, real potential and good ways to invest.  You just have to filter out the chaff.

Edit: Their articles are worse than some of the podcasts.  I get their emails, and they have 2-3 emails every week with new articles. Packed full of outright lies and bad advice.

the boss sounds like he is like that , too.  like an undergrad business student, driven x10

Cwadda

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Re: Bigger Pockets - does their advice sound risky to anyone else?
« Reply #34 on: September 26, 2018, 09:33:02 AM »
I don't have a problem with the advice Bigger Pockets has per se, a lot of it just involves getting up and taking action, just doing it. This is good. A lot of new real estate investors get stuck without ever closing a deal.

I do have a big problem with how they glorify wholesaling and treat successful wholesalers like gods. Wholesaling preys on people who are in terrible situations or who are incompetent (i.e. elderly people with Alzheimer's). It is a shady and morally compromising business. Josh and Brandon don't see it that way.