Here’s Why You Always Add a Buffer to Your Reno Budget

If you have done a couple large renovation projects then you know what I’m talking about.   When estimating rehab costs – always add a buffer on top of your total number.

Here’s Why You Always Add a Buffer to Your Reno Budget

This isn’t about how good an investor is at estimating the costs of repairs and replacements.   Most of us can get good at that with some experience.

This is about the stuff that you generally can’t foresee. The stuff that just pops up, and trust me there will be things that pop-up.  Especially if you are working with properties that are much older.  In fact, the older the property the more likely you will have “surprises.”

Real Life Examples

I’m going to keep it simple and give you a “cheapie” I’ve personally experienced so not to scare you off.  Just know, the surprises can range much higher is cost.

This is one of the reasons I stress performing as much due diligence on a property as you can before purchasing.

There are many “surprises” that can be avoided – then there are some that are just part of doing business.

My latest example fits into that category.

Main Water Valves and Sleeves

We are finishing up a major renovation on a property that was built in 1901.  However, along the way we got caught with a few surprises.  One of which had to do with the main water shutoff and the sleeve pipe that runs to the water department’s main valve.

Long story short is the sleeve had become so cockeyed that it was not possible to access the valve to turn it back on.  Considering you need water in a home this was a bit of a must fix.

The real question was – is the sleeve bad or the valve too.   Either way we needed to have a qualified operator come in a do his thing to repair.

After widening the opening to the exterior piping/valve and doing a little digging out the earth he was able to access the sleeve to replace and test the valve.  

Good news – valve was fine.  Bad news – sleeve needed to be replaced.  $1200 later all is good an we can got water turned on.

Unexpected cost, yes, but at only $1200 feelt like a win.  Here’s the things though.  What happens when you have 4 or 5 items come up that cost that?

Since this property was so old that is exactly what happened because things needed to be up to code.  Replacing the side door entrance became a $1500 costs instead of $300 because of all the layers of siding that had been slapped on over the decades.  The flashing had been bumped out so far it was a mess and we basically needed to re-frame it.

These examples are the cheap ones.  I have heard plenty of stories from other investors that got hit with $5-10K “surprises.”

Add a Reno Budget Buffer

This is why on the majority of big rehab projects I always slap an extra $10K on my total expected budget.

If the numbers still work with that then I know in the end I should come out in decent shape and better yet, if the “surprises” are limited or not existent than the deal becomes even more profitable.

Always be working your numbers and buying right!

To get the full guide on how I buy right check out the videos or the book.  Remember to use the property calculator when analyzing deals!

Why to Use Land Trusts to Transfer Your Property to an LLC

It’s amazing how many tools there are at our disposal when it comes to real estate investing.  I’d like to talk about one that can come in handy when dealing with the issue of getting loans, but wanting to have your property in an LLC.

Note: this is not legal advice, please check with your attorney when making any such transactions.

Get the Loan – Then transfer into LLC by way of Land Trust

Using a land trust is always a good idea, regardless.  It provides anonymity for the owner which protects you because you can’t get sued if it cannot be proven you own the property.

Additionally, when a title is transferred to a land trust it doesn’t trigger the due on sale clause that is part of a traditional mortgage. 

Generally when title changes hands it triggers the loan to be paid in full.

Now push it to the LLC

Once the property is in your land trust you can then transfer the title to your LLC.  Then make sure your LLC has an operating agreement in place to manage that property within the trust. 

Basically this gives us a way to take a property that we buy in our own names, usually in order to qualify for a traditional mortgage, and move it into our LLC.

Remember – owning investment properties in your own name is a liability risk.  Yes, insurance is great but only goes so far.  Having properties in entities like land trusts and LLCs provides protection for you and the assets you’ve worked so hard to accumulate.

If you are just getting started in real estate investing then check out the ScaredyCatGuide to Investing in Rental Properties Video Tutorial

 

 

Benefits of Investing in Designated Opportunity Zones

One of the good things about real estate (and there are many) is that the government generally creates incentives for investors and developers to provide housing in certain areas.

This is the case with the fairly new “opportunity zones” initiative that launched in December of 2017 with the tax cuts and jobs act legislation.  Let’s discuss what the benefits are of investing in one of these areas.

Investing in Designated Opportunity Zones

By investing in opportunity zones you can save a bunch on capital gains taxes.   Similar to a 1031, but with more flexibility, you only need to designate the gains from a property into the opportunity fund.

That money obviously needs to be used to invest in one of the many opportunity zones designated by the government entities.   You can see a map of opportunity zones here.

Tax Benefits of Opportunity Zone Investing

A basis step-up for capital gains reinvested in an opportunity fund

A temporary deferral of taxable income for capital gains reinvested into an opportunity fund.

A permanent exclusion of capital gains if the investment is held for at least 10 years.

For us buy hold folks that last one is very enticing as normally you will hold a rental for atleast 10 years.  Capital gains being excluded permanently sounds nice to me!  It’s likely a 15% savings staying in my pocket!

Tax benefits are just one of the reasons rental properties are so awesome.

How One Guy CRUSHED IT Trading Beyond Meat

Active trading is more than just reading charts.   Sentiment, news announcements and sometimes just simple logic can all play a part in making a trade, especially one that offers a big move.

That’s what Guy Gentile did trading Beyond Meat (BYND)

How One Guy Crushed It Trading Beyond Meat

Beyond meat is a meatless food company (think burgers, etc.).   They had an initial public offering back in late May and the stock had basically skyrocketed since.

The hype around the company and stock was a big part of that.  Kind of like anything “new” that gets the “this is the next big thing to boom” vibe throughout the masses.

Granted meatless food products isn’t new, but they have a burger that is apparently very good and used that fact to expand like crazy and then raise a ton of money to fund it.

Either way there were plenty of signs, that atleast in the near-term the stock was far ahead of itself.

Higher Valuation Than JetBlue and Coors?

As shared in @rollandthomas post has beyond meat seen its best days the value of beyond meat had blown past some rather larger companies that do way more business such as beer maker coors and airline operator jetblue.

I’m sure the meatless burger is good, but can they sell enough to generate more revenue than the two companies above?

The chart also gives us a nice indication that things may be a bit ahead of themselves…..

There is always a Catalyst

As you can see the stock ripped higher into earnings and gave us a nice doji candle meaning the buyers were not fully in control anymore.

Now it was just a matter of what happened at earnings.  Here is the thing though, the hype around the stock was so high that even an earning beat might mean a sell off.   Buy the rumor sell the news is a mantra for a reason.

Shorting with Leverage and Safety to Crush It

Mr. Gentile made a big play with the use of options (which is good cus it establishes your risk up front) by buying weekly put options heading into the earnings announcement.

If the stock goes down he has the right to buy the stock at those lower prices or he can just sell the put option for the higher valuation it has at that point.

With the stock trading around 230 on Friday he bought 230 strike prices down to the 215’s in 5 point increments, thousands of them.  If he was right he gets paid.  If he was wrong he loses only what he spent no more.

Well, he was right and the stock is down 30 plus point from Friday’s close.  Just booking the profits by closing out those put options is a homerun.

However, he leveled up (and did take on my risk) by selling a bunch of the 220 calls that expire this week.  Basically if the price of BYND closed below 220 this friday he will also keep all the premium collected from selling those calls.

Conviction Meets Size

There are times to make regular trades and times to load up.  He saw this as a time to load the truck up and get paid.  You won’t always be right, but to make real money actively investing you need to take the occasional big swing when all the signs line up.

Just be sure that if you are wrong it doesn’t knock you out of the game.  Never put yourself in a position where one trade can blow out your whole account.  Always live to trade another day.

You can read a detailed article about the trade including an interview with Mr. Gentile here:

Guy Gentile Made $4M In Beyond Meat, Sees 50% Downside By December

 

Bears Have Bulls Backed In a Corner!

Bears have bulls pushed against major support at $9,950. This is not just visual support, but also the 0.619 fib level of the larger structure. A decisive break (daily open and close) below this area would be significant.

Screen Shot 2019-07-23 at 12.44.11 PM.png

Bulls are still defending the 8 week EMA at the time of writing this.

Screen Shot 2019-07-23 at 12.44.34 PM.png

In today’s video we’ll look at the macro and micro picture. We’ll discuss where price may go from here, key areas to watch, I’ll answer your questions and so much more. I hope you find it helpful.

Video Analysis:

If you don’t see the above video, navigate to TIMM (https://mentormarket.io/profile/?workin2005/) or Steemit in order to watch.

I hope this has been helpful. I’d be happy to answer any questions in the comment section below. Until next time, wishing you safe and profitable trading.

Workin

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Live On the ScaredyCat Investor Show Build Team CEO @thecryptodrive Talks DLease! 8pm UTC (4pm EDT) on MSPWaves

You are not gonna want to miss this one!  DLease has made earning passive income off your steem coins easier than ever – and even better, the rate of return is a market best.

Show agenda for…

  • Interview with Build Team CEO @thecryptodrive as we talk DLease
  • Let’s make it rain some PAL Coin
  • The Crypto Market Check (Cat’s Price Chart Calls are on Fire)
  • And some good music if we have the time!

———————————————————————————————————————–

Come and Join Us!

Hear it on discord: https://discord.gg/ZvwASjs

Join audience chat: https://discord.gg/77MCBer
Vimm TV: https://www.vimm.tv/@msp-waves

Only on…

Why You Should Self Manage Your First Rental Property

When it comes to investing my favorite saying is “experience is the best teacher.”  It is something that holds true in much of life, but I love how experience has a positive financial impact on my future real estate investments.

Why You Should Self Manage Your First Rental Property

This is one of the reasons I believe everyone should self-manage their first rental property.  This is assuming you can of course.  If you are investing out of state to start then it may not be an option, but for anyone with a place less than 2 hours away the experience is valuable.

What does good management look like?

Here’s the thing about hiring property management.  How do you know if they are any good if you have no idea what managing a property entails.

Now, of course there is the tag line “no one will look after your own investment as well as yourself” but that does not mean property management is a bad idea.

You just need to know what you are looking for.

Here are a couple examples of experiences I’m glad I had before turning to property management:

1.) Tenant Screening Process

I can tell you first hand – screening tenants is a bit of a pain.  However, once you do this process yourself you will know exactly what you are looking for in a tenant.

Granted much of the criteria is dictated by fair housing laws, but there are plenty of variables that you are allowed to decide for yourself.  Things such as credit and pets, for example.

More important though is the actions of the applicant.  I once had a lovely couple with a young child apply for a property.  I was very happy with what I saw from them, but when it came to getting me pay tubs and such, something that should take a day, they struggled to supply them.

It wasn’t like they were lying about employment as I knew where the guy worked and the type of money made in his position.  He was just that much of a disorganized mess.  Doesn’t bode well for getting my rent on time and the property being taken care of.

After a few days passed by I told them I had to go with someone else.

The tenant I went with was awesome, she supplied me everything right away.  Was always punctual and stayed in the unit for two years before moving out of the area.

In fact, when she moved out the place was in such good shape I didn’t have any turnover.  No repainting, no wall patching, nothing.   Not every tenant will be like that, but what a dream.

You value stuff like that when you have a tenant much the opposite, which I have had.  When it came time to turnover the property, it felt more like a rehab.  Deposit money only gets you so far.  Quality of tenant still counts.

I guess it’s the nuances that make a difference within all the standard criteria.

2.) How is that lease looking?

When you research leases and acquire even a standard one for your state it gives you a much better idea of what you can and can’t do.

I always advise having a lawyer look at your lease to ensure you are on the right side of the law, but remember there are many options you can decide on in your lease.

Along with the aforementioned pets policy, how about things like broken glass, unlicensed vehicles and minor plumbing issues?

These are just examples and are items that may not be in the lease the property management company uses.

Plus, how do you know where you stand on these items until you have had to decide and experience what works.

Final Thoughts…

Self-managing my first three properties was an invaluable experience.  It is very easy for me to tell when a property manager is doing a solid job or doesn’t have there stuff together.

Yes, there were times I hated self-managing, like that one month when all three properties had issues.  That happened one time though over that three year span.

If you are able to self manage at first, why not get the experience?  Good Luck!


You can learn the ins and outs of investing in rental properties through the scaredycatguide to investing in rental properties video series.

The Price of STEEM – Destination 10 Cents

We get so caught up in the day to day that sometimes I like to zoom out and look at a monthly price chart of a crypto to see what my broad guess would be for future price.

Boy I Wish I Wouldn’t Have Looked

This monthly chart of steem seen in the post.  Well, it definitely doesn’t give you the warm and fuzzies about future price action.

25 cents is a key area on the daily chart and price just bounced off it today.   It is important to hold that level because otherwise we are likely going to see 20 cents which is the most recent bottom on the monthly chart.

However, for tried and true support from the past though, we are looking at 10 cents steem.  TEN CENTS!  I really don’t want to experience that again.  I was here for it the first time and boy is that ride depressing.

Here’s hoping we see an uptick in alts, steem included.

The Sell Programs Need to End Already

I can say this, until these sell programs from some whales (not to be named) end it will be unlikely we see good price appreciation.  So many good things going on in the steem community and on the blockchain, but damn if that selling pressure just won’t let up!

You know what is UP when the Market is Down? $TWTR

The ole MO strikes again with the Twitter bird. The market gets smoked, and $TWTR rips higher. You can’t make it up folks, it happens regularly.

I have been long $TWTR a while since last earnings and still sitting green. It looks like I am going to have to be in it this earnings as well and looking for a run up. $TWTR is a no brainer IMO and I have been saying this from the early 20s and been on the platform 9 years. I am looking for this to make a VERY BULLISH move here.

Buy $TWTR.

Is Bitcoin Still in a Bear Market? Analysis and Answering Questions

Bitcoin jumped today from $11,350 to our known resistance at $12,000.

Screen Shot 2019-07-08 at 12.11.07 PM.png

Zooming out on the weekly chart, we can see price is trading above the last 3 weekly candle’s close. Bitcoin has been defiant of the bearish reversal candle we saw 2 weeks ago.

Screen Shot 2019-07-08 at 12.12.31 PM.png

As most of you know, I believe the bottom is in and bitcoin is now in a bull market. Could I be proven wrong? Of course…and I’ll be the first to admit it if I am.

In today’s video we discuss the case for the bear market continuing and lay out why I think it’s over. I also answer your questions on how I learned to trade, discuss where price my be heading next and so much more. Hope you find it helpful.

Video Analysis:

If you don’t see the above video, navigate to TIMM (https://mentormarket.io/profile/?workin2005/) or Steemit in order to watch.

I hope this has been helpful. I’d be happy to answer any questions in the comment section below. Until next time, wishing you safe and profitable trading.

Workin

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