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Old 11-09-2019, 03:51 PM   #1
mindflayer
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Mindflayers journey to 100k PMNI

You can tell I have been around for a while from my join date and number of posts. PMNI = Passive Montly Net Income.

I used to post on 2+2 and read here every day when I started (the poker threads) then i move to (business finance and investing) when I moved out of poker and into business and real estate. When my business plans started to work, i stopped coming here and reading/posting. I did visit frequently but i moved to (health and fitness), but that stopped as well when that started to work too!

My current goal is to make 100k per month in passive NET income. That may sound ridiculous, but my last goal was set too low and when I hit it I retired and it took me a long time to get my mind turned around.

I have been putting my notes onto paper and plans into action for about two years now and wanted a place to refine my plan and have anyone who follows poke as many holes into it as they can find; show me the weaknesses that I cannot see.

I am going try to post maybe 5 times per week at the start and go up or down from there depending on how busy i get.

Feel free to post, ask questions, even tell me I am full of it and it can't be done.
I look forward to having you follow me on my journey.
Cheers
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Old 11-10-2019, 11:45 AM   #2
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Re: Mindflayers journey to 100k PMNI

maybe post a quick background bio so we have some context for the challenge
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Old 11-11-2019, 02:39 AM   #3
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Re: Mindflayers journey to 100k PMNI

Day 0. It is not really day 0. but for the purposes of this log I will start on Canada's Remembrance Day for Day 1.

A quick background will probably miss a lot but will start with this...

Canadian, MAM mid-early 50 's , 2 "kids" in University.

Did a bachelors and Master's degree in Engineering, not because I was interested in being an Engineer, but because when I didn't know what to study my dad told me "If you study engineering anything after that will be easy AND if you fail in whatever business you do want to be in, you can always be an Engineer." (he was an Engineer running a business but not Engineering related)

Will skip the work career unless it becomes relevant. You can also ask..
All property is in Greater Vancouver Area unless specified.

1997 Purchased my first home lived in top floor, with a basement mortgage helper.
2002 Purchased my second home, kept the first and rented out top/bottom (2) units total.
2010 Purchased my first 6200sqfWarehouse/ 1300sqf office space(My own business became the primary tenant in the Warehouse portion and only rented out the office space to tenants)
October 2012 Purchased 6 single family homes in Detroit Michigan. US-Canada Exchange rate at that time was over parity. I learned a ton here.
Jan 2015 Entered a Joint Venture with 4 other partners purchased a 97 unit Appartment + townhomes Complex. General Partner was NOT me but one of the other investors who brought the group together.
2015 Sold my business, Sold first home, sold second home, purchased new "retirement home" and retire. (sub 50)
2016-2018 General Partner, makes multiple mistakes and other partners fight hard to keep the General Partner in line. Mistakes are amplified and corrections have no urgency, due to the General partner starting/getting a divorce.
2018 I take a course in Strata Management (Home owners Association's management / Community Management for USA readers) I come out of retirement and get a Job with a large company managing Strata/HOA's.
2019 I invest with 4 other (totally separate) investors in a JV to purchase 18 unit complex in Sarnia Ontario.
May 2019 Discover the General Partner sold Kansas city investment for $10! Yeah.. i'm sure you are going to ask about that too.
2019 I am currently taking a course in Rental Management (formal course to be licensed in BC Canada as a Rental Manager) I am still working as a Strata Manager because these two skills are part of the core competency required for my long term plan.

from 2007 until now, I have also managed commercial property for my extended family but that is not part of my personal plan.
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Old 11-11-2019, 09:10 PM   #4
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Re: Mindflayers journey to 100k PMNI

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Originally Posted by mindflayer View Post
My current goal is to make 100k per month in passive NET income. That may sound ridiculous, but my last goal was set too low and when I hit it I retired and it took me a long time to get my mind turned around.
Very interested. glgl.

100k per month sounds crazy high. Hope you do it.

What was your last goal that was too low? How did you get there, meaning sources of income?
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Old 11-11-2019, 10:19 PM   #5
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Re: Mindflayers journey to 100k PMNI

So lets get started on how the idea came about.
Please note that this plan goes fairly far into the future and I have not set a deadline as it will easily take 10 years + to accomplish. The plan to get there is not rigid and will likely get modified as things arise.
-------------------------
I also plan to have sections in my blog.
1st section will be about the plan
2nd will be about what I did today to further my plan.
-------------------------
1) The Plan
The seeds of this plan took hold right in that 2016-2018 range. Right after I though I had achieved my long term financial goal.

My goal early on in my business career was: that If I could net 5K and replace my irregular business income with a steady passive income, I would retire.

Before I invested in Kansas City, I had already hit that goal, retired and was ready to relax. I did not have anything planned at all except take a few classes and keep investing.

At first everything was great. I did stuff that I had never done before. I took Guitar Lessons, I learned how to Ice Skate, I took Yoga4StiffGuys, Mandarin Classes, diet and exercise, etc.

The quarterly reports for my Kansas City Development started out ok, but right around 6 months there was already trouble brewing. I questioned the General Partner's decision to take on all of the 97 units utility bills (sticking the partnership with $3000/month in expenses ) in the hopes of getting a government rebate for installing Solar Panels on the buildings. On the application forms, only the individual paying the bills could get the rebate. As soon as the General Partner signed the contract for installation, the problems of that project started popping up; No permits, delays, stolen panels, delays in installation, nonsensical planning (ie our plan is to install the solar panels in the parking lot etc.)

Things got worse over time and I was unable to do anything about it except point out to the General Partner that he had taken a project that was net +10k income per month and in one year had dropped it to 0.

I felt really frustrated with the GP's response time and resistance to take other partners suggestions to improve occupancy. It was around this time that I decided to take a course in property (Strata) management.
--------------
2) What I did today to further my plans.
-completed assignement #9 of Rental Management Course.
-sent messages to 5 linkedin associates asking for them to vote for me in an PAMA awards luncheon (Professional Association of Managing Agents)
-sent linkedin requests to two new contacts I met at a recent luncheon.
-worked today (holiday) to catch up on the 118 unread emails in my work inbox. (All property/strata management related) got it down to under 60.
- most interesting email in my inbox was about a gas leak that required immediate action.
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Old 11-11-2019, 10:28 PM   #6
mindflayer
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Re: Mindflayers journey to 100k PMNI

Thanks Pokerdox

The original goal was my requirement to retire. I consisted mainly of rental income from six single family homes in Detroit Michigan and a Warehouse and office in the Greater Vancouver. I also had a decent cash buffer to either invest in new projects (as i did in KC) or short term deposits. This cash came from the sale of my first home, second home and my business. (minus the cost of my third home) When I sold my business, I kept the real estate and freed up the 6200 SQF warehouse. The gross rent on the warehouse alone was+5K . I will update you on the warehouse as it may change in the next 2-3 months.
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Old 11-11-2019, 11:14 PM   #7
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Re: Mindflayers journey to 100k PMNI

Subbed
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Old 11-12-2019, 11:06 PM   #8
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Re: Mindflayers journey to 100k PMNI

So you're all about real estate now, cool.

What market do you plan on scaling in?
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Old 11-12-2019, 11:56 PM   #9
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Re: Mindflayers journey to 100k PMNI

Thanks kekeeke for the question.

There is no specific market that I plan to scale in. Each area will have its pluses and minuses.

things like
+ i already own property there + for tax filing, + for having boots already on the ground + good provincial/state tax structure + company I work for has an office in that city.. +growing population, + free infrastructure planned (I am a HUGE believer in free infrastructure), + property is proposed by associate that I have dealt with before.. etc

(converse of any of the + items above)
-- does not make positive cash flow (like my area which is all capital gains)
- state/province has rent restrictions (like my area which is limited to the inflation rate! used to be inflation +2% but was changed in January 2019)
- property is in a trouble area - history of insurance claims - no depreciation report - problem tenants - history of police reports linked to the property - property is outside of my "financial comfort zone"
--------------------
1) The Plan continued...
I do plan to look at 512 properties before I make my next investment.
The property will probably look like 1M and approximately 20 doors. 95% it will be residential. This will vary depending on how close to a major city it is and other factors. I can stretch and do the deal on my own if I had to, but the plan is to keep working my skills and have other investors join me. I will give you more of how the plan started in the next few days.
My soft deadline for this investment is December 2021

-----------------
2) What I did today to further my plans
Followed the tip from one of my planning guides which advises "Analyze your progress on a daily basis."
wrote 2 emails to short term renter for my warehouse. Updated my warehouse profile. Invited one trade (fire inspection company) that left donuts in my office, to join my network on Linkedin.
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Old 11-13-2019, 11:54 AM   #10
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Re: Mindflayers journey to 100k PMNI

Can you talk more about your investment properties in Detroit?

Did you invest in economically depressed neighborhoods? I don't have much firsthand knowledge of Detroit, so I assume it's all bad, but it probably isn't.
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Old 11-13-2019, 02:03 PM   #11
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Re: Mindflayers journey to 100k PMNI

Do you have a time-frame for this 100k a month? When you say net income you mean total passive income minus all expenses, 100k profit? Do you have an idea of what that will look like? Purely cashflow from x number of units? Are you counting mortgage paydown as net income?

Im lost as to what your plan actually is. Is it more just a goal where you are open to how exactly you will get there or do you have a set plan like, own 1000 units that net $100 each a month?

Can you give more information on your last business? What area was it in, how much profit did you make from it, how much did you sell it for. I get you may not want to be specific but any information your willing to share would be cool.

Sorry for all the questions! I am subbed to this thread and look forward to updates.
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Old 11-13-2019, 07:11 PM   #12
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Re: Mindflayers journey to 100k PMNI

Cool thread idea. In terms of percentage, how much do you attribute your success to your investing acumen vs the massive bull run in Vancouver real estate in the last 20 years?
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Old 11-13-2019, 07:13 PM   #13
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Re: Mindflayers journey to 100k PMNI

Would also be interested to hear your future projections for Vancouver real estate values and maybe the Canadian housing market in general.
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Old 11-13-2019, 07:14 PM   #14
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Re: Mindflayers journey to 100k PMNI

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Originally Posted by mindflayer View Post
The quarterly reports for my Kansas City Development started out ok, but right around 6 months there was already trouble brewing. I questioned the General Partner's decision to take on all of the 97 units utility bills (sticking the partnership with $3000/month in expenses ) in the hopes of getting a government rebate for installing Solar Panels on the buildings. On the application forms, only the individual paying the bills could get the rebate. As soon as the General Partner signed the contract for installation, the problems of that project started popping up; No permits, delays, stolen panels, delays in installation, nonsensical planning (ie our plan is to install the solar panels in the parking lot etc.)

Things got worse over time and I was unable to do anything about it except point out to the General Partner that he had taken a project that was net +10k income per month and in one year had dropped it to 0.

I felt really frustrated with the GP's response time and resistance to take other partners suggestions to improve occupancy. It was around this time that I decided to take a course in property (Strata) management.
Sorry this happened to you. Huge bummer. Partnerships are the devil's work.
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Old 11-14-2019, 12:59 AM   #15
mindflayer
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Re: Mindflayers journey to 100k PMNI

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Can you talk more about your investment properties in Detroit?

Did you invest in economically depressed neighborhoods? I don't have much firsthand knowledge of Detroit, so I assume it's all bad, but it probably isn't.
Absolutely yes. I bought Detroit when it was bankrupt and Mayor Kwame was going to jail for his Pay to Play. His father had a famous saying .. "no deal without me."
https://en.wikipedia.org/wiki/Kwame_Kilpatrick
When I first bought in Detroit, if i had 50% occupancy I was happy. I always seemed to have one of my homes in some state of eviction. You had to tough it out there. I ended up contacting a gentleman by the name of Shea Woods. He is more famously known from his youtube channel and periscope and the SHEA SHOW. He took over my more difficult properties and turned them around.
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Old 11-14-2019, 02:41 AM   #16
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Re: Mindflayers journey to 100k PMNI

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Originally Posted by Sideline View Post
Do you have a time-frame for this 100k a month? When you say net income you mean total passive income minus all expenses, 100k profit? Do you have an idea of what that will look like? Purely cashflow from x number of units? Are you counting mortgage paydown as net income?
Do I have a time frame? .. yeah before I die or my health gives out. I figgure that gives me around 20years to get there. The problem is/was for me so nicely described in many motivational speakers secrets for success. The problem is not setting your goals to high and not reaching them, but setting them too low and achieving them.

Yes, I want this to be 100k NET of any expenses related to the income.
No It does not count mortgage paydown. One of the reasons for this is that my plan involves getting other investors involved. If it was just me, I would just keep paying down a mortgage and build principal. Because i have just a bit of experience with other investors, they all seem to like to get their original investment back and make a small amount of free cashflow. This allows them to re-invest that original sum in a totally separate location/investment and be able to say yeah I am in "Arizona and I have also invested in Texas , even though they are making less than if they left the original investment all in the first location ..." The motivation tends to be to re-finance the mortgage when the principal gets too high and give the money out as a bonus payout. I don't like it, but new investors do. I won't say no to the idea since I will be trying to get some of that money invested in new projects of my own in Year 4 or so.

------------------
1) The plan is very long and has many parts. I have hardly scratched the surface of it and was trying to describe why i got into this. I am here to develop the plan and make it better that it is right now.
-----------------
2) What I did today to further my plan.

Part of my training is to gain the skills of running properties. Tonight I ran an Annual General Meeting for a Strata. 17 units, 76k budget to run the place. I produced the budget for the next fiscal year and it has line items for (not taxes) but operating expenses including pest control/snow removal/de-icing/landscaping/Insurance (this is a huge expense)/management fees (2nd biggest expense)/mechanical equipment inspection/elevator inspection/ elevator permit/ garbage and recycling/common area utilities/power washing the garage and common walkways/window washing/dryer vent cleaning/annual fire inspections/backflow device testing/Contingency reserve fund allocations/photocopying and mailing/ filing a corporate return/gutter cleaning. That is off the top of my head. My meetings run pretty smooth now. I consider them quizzes and AGM's exams. When I started, it was a lot of, "I dont have that in front of me and I need my computer to check that...but I will and I will get back to you tomorrow with an answer." Tonight there were 0 questions that I could not answer with confidence.
-----------
I also negotiated a settlement of a contractors holdback. The original project was 159k, the holdback was 15,900 and there were some deficiencies that were repaired , but the owners where still not happy with it. The contractors settled for a $2400 discount.
-----------
just so you know, I am able to look at other properties that my company manages and I randomly looked at a similar property in Arizona and by far the largest expense is Landscaping and insurance was about 1/4 of what it is in Vancouver.
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Old 11-14-2019, 03:15 AM   #17
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Re: Mindflayers journey to 100k PMNI

Quote:
Originally Posted by Chaos_ult View Post
Can you talk more about your investment properties in Detroit?

Did you invest in economically depressed neighborhoods? I don't have much firsthand knowledge of Detroit, so I assume it's all bad, but it probably isn't.
If you want to see the real Detroit, watch some of the Shea Show early episodes. click on Videos and look for evictions etc.
https://www.youtube.com/channel/UCEq...lXovxtE26PMeDQ
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Old 11-14-2019, 03:20 AM   #18
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Re: Mindflayers journey to 100k PMNI

https://www.youtube.com/watch?v=n676WbUu6X8

hahahah.. man, watching that brings back some memories
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Old 11-14-2019, 01:43 PM   #19
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Re: Mindflayers journey to 100k PMNI

I'm interested. Not sure about the usage of the term passive though.
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Old 11-15-2019, 01:38 AM   #20
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Re: Mindflayers journey to 100k PMNI

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Cool thread idea. In terms of percentage, how much do you attribute your success to your investing acumen vs the massive bull run in Vancouver real estate in the last 20 years?
Thanks for the questions Love Sosa.

I would say that my success was probably 20% related to me living in Vancouver. 80% of where I live now is related to living in Vancouver.

I said before that one of the + i like when investing in RE is Free infrastructure. I purchased my office and Warehouse in a location where two known infrastructure upgrades were planned. The first upgrade completed several years ago in gave my property a healthy boost. The second upgrade should have been fully underway now, but was put on hold when our provincial government changed.
in the same way I purchased my second home Right where I knew a transit station was going to be built. I went to all of the open houses and town hall meetings put on by the city and heard everyone grumble about the problems and crime that It would bring..... I dove right in and bought right at that location. I had to suffer for two years when it was being built and there was gigantic trench run in front of my home (cut and cover for you Engineer types) I had to drive a mile out of the way just to get across the street, but when it was done, it was a huge win for me.

It affected where I live now since i cashed in and moved to a very nice home, still in the middle of the city.

If Vancouver did not have a gigantic upswing in property values, I would be living in home #2 instead of #3 and the rest of the plan would likely be the same. When i sold #2 I was planning to buy an empty lot and take 3 years to build a home. While I was looking for ideas, I must have gone into at least 100 open houses over a two year span. I found a brand new home almost exactly like I wanted to build and ended up making that #3 and doing pretty much random classes for 3 years.
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Old 11-15-2019, 01:50 AM   #21
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Re: Mindflayers journey to 100k PMNI

1) The plan.. continued
I didn't take the Strata management course with the expectation that I would be able to manage property like I do now. I didn't even really know what Strata Management was. Only after working in the industry for a while and solving property problems non stop for a year i am more or less confident that if I was able to go back in time to when the Kansas property was in trouble, I could have taken over and stopped the bleeding.
------------
I was really motivated by listening to a lot of Jordan Peterson talk about the right place to be. "One foot in Chaos and one foot in Order" I found that when I started working I was always in Chaos. Over time when my skills developed, I see other property owners reaching out to me because they are in chaos and I am supposed to put things back in order for them. The time it takes me to do that now is probably half of what it was when I started. My contractor list has grown very long and problem descriptions no longer baffle me.
-----------------
when i was retired, there was too much order in my life. When I first started work, there was too much chaos. Now things are leaning towards too much order (I have a new very large skill set.) I will be switching to Rental Management soon and the Chaos will start all over again.
--------------
2) what I did today to further my plan
I worked on the portion of my plan relating to "Float" which I will eventually explain.
Enough for today.
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Old 11-16-2019, 04:24 PM   #22
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Re: Mindflayers journey to 100k PMNI

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Im lost as to what your plan actually is. Is it more just a goal where you are open to how exactly you will get there or do you have a set plan like, own 1000 units that net $100 each a month?
I will give the 60 second elevator pitch. The pitch is in Bold, the unbolded is not part of the 60 seconds, but an explanation of my thinking when people ask. I am not asking anyone here to invest. I am asking that you smash my plan and tell me why/where I am off and if I have looked into XYZ or not.

1) I will be investing in more real estate and holding most of it as long term passive income generating streams and I want YOU to join me. The reason that I am pitching this is that
2)I get to bring a lot of my friends along who have always asked about my investing in real estate. "Several have asked to invest before before but I always refused because I did not want to be responsible for their money. "
3) The returns on investment are very good. "8-10% is what I am shooting for, Not the moon, but something I think i can sustain for an extended period of time. "
4) This is my area of expertise. I can monitor and put things back on track when they go sideways. "I just read a bunch of stock investment threads and am not able to make heads or tails of it, my version is Low MER, when managed, and good quality dividend paying, when I manage them. I also cannot fix anything if something goes wrong in a company that I invested in: two years ago in my My Kansas investment I was not in a position to fix things, now I could take it over and fix it with confidence"
5) I get to accelerate the speed of my investments by using other people's money, building my credit and credibility.
That's it.
--------------------------
What I did to further my plans today.
I read about a GST investor rebate in a book called Real Estate Action by Ralph Case. It will take more research but is just one more thing to add to my plan.

Last night I had a dream about the logo of the new company I will be forming. I am not joking! I do not even have the details of how I want this set up. When I woke up I sketched the logo out in rough format.
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Old 11-16-2019, 05:38 PM   #23
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Re: Mindflayers journey to 100k PMNI

So you will be a real estate syndicator? I don't quite get, it seems you are learning to manage these properties, instead of learning to find properties that are worth buying.

Wont you hire managers? If you oversee that much you might aswell manage it yourself why are you even paying them
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Old 11-17-2019, 08:36 PM   #24
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Re: Mindflayers journey to 100k PMNI

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So you will be a real estate syndicator? I don't quite get, it seems you are learning to manage these properties, instead of learning to find properties that are worth buying.

Wont you hire managers? If you oversee that much you might aswell manage it yourself why are you even paying them
Thanks for the question kekeeke. I am not sure what you would call what I do. My plan will be to start looking for properties starting May 2020. I am still working up my skills. I have milestones set up, not carved in stone, but the next 3 steps are
1) to finish the rental licencing course, (Exam on April 15, 2020)
2) switch to the rental department of my company and get paid to learn their tricks to renting/ qualifying renters/ evictions. etc
3) start looking at properties to invest in.

Yes I have managers for all Out of province/state properties that I own (MPM,Woods Management and RMD Global (I won't mention the KC company as that is complicated.) If the property manager tells me there is a problem with the MUA or i need a tube vault or a backflow device sensor is faulty or some other random technical term I know exactly what they are talking about. I cannot personally manage any of the properties in the USA, but the company I work for has offices all over the USA and Canada and that will be a + when determining if I purchase a property. If the property that I eventually purchase is not managed by the company I currently work for, I will always have a back up to go to (if the current management company running the property works well, I may leave it.) If I do move it to my current company, all of the properties financials and other information will be available to me on the company's systems.
If I purchase a property in my area, it will likely be a commercial / office / warehouse space and i will manage it. There is only a small % that this will happen due to other factors such as land values and the difficulty of actually getting a positive cash flow.
--------
What I did today to further my goal: completed assignment #10 of the rental licence program
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Old 11-20-2019, 02:47 AM   #25
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Re: Mindflayers journey to 100k PMNI

I though more on the definitions of Net income and I currently have a salary and expenses that are related to regular work and home expenses. I do have a home mortgage and payments that I make but this will also not be a factor used in calculating my Net income. (it will just be from the properties that generate income and the expenses related to those properties.)


What I did today to further my plans.

Currently working on a 7 year lease for my warehouse. If I get this thing set up properly and signed, I will look at accelerating my current plan from a deadline to invest in my next property by December 2021 up by 6-12 months. It is mostly paperwork and finding creative ways to offset "conditions precedent." Essentially these are conditions/subjects that must be waived before the lease is executed such as permits, licences and agreement on the lessee's ability to pay and any other conditions we toss out there. There are already some complications involving the timing of the lease, a fixturing period, and the tenant's access to all of the property.
I will let you know how that goes in the next few months.
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