Doing the supported lunges and the slow pushup on my knees really made me feel like a bitch, but I had to do it to avoid injuring my toe again. Still a good workout, but not as much sweat as before. Starting to notice my cheeks are slowly losing their puffiness, and I no longer have to unbutton my pants to sit down.
No Workout Today
Yesterday I had my monthly dinner with Damon. We met at Red Lobster and it was his turn to pay. I ate a nice and healthy salmon with steamed broccoli, but really messed up with those tasty biscuits they serve. They were like crack to me.
Real estate-wise, I learned a few things from our dinner. The first was how he uses Excel to do rent rolls:
I love this. It has a full breakdown of how much money came from each apartment every month. The big block I had to white out on the right was the "Comments" section, which has the actual names of his tenants and any changes to the tenancy or payments. For example, May 2013's comment section says
(Apartment) A: New Tenant - John Doe 400 rent/$400 sec dep
B: Jane Doe - Evicted
C: Juan Doe (by writing the name of the tenant each month, it means the same tenant is in the apartment as the previous month)
D: Jawackamatima Doe
One may think that Quicken Rental Property Manager (QRPM) does this but it doesn’t. They make it so complicated to change who’s living where, as well as listing security deposits and labeling payments. Maybe I’m just an idiot who doesn’t know how to use it, but the two tables I’ve tried with QRPM have been pathetic. I’ll keep trying but, until then, I’ll stick with Damon’s way of rent rolling. Almost every landlord or bookkeeper will say the best way to keep track of rent roll is with an Excel spreadsheet because it’s fully customizable to add/subtract info as the individual landlord sees fit. QRPM is not customizable and sucks ass. After that, he showed how he keeps receipts and organizes them through Excel as well. While I like his method, Smart Receipts has him beat in this department. Smart Receipts actually lets me take a picture of the receipt and add whatever comments I need to. The final page was all about calculating annual depreciation. I had no idea how he did this, so I’ll ask him about that at our next dinner.
Next was his philosophy on how to quickly calculate ROI (Return On Investment) when doing a property search. Cap Rate, which I wrote about when I was doing those definitions back in 2012, is the same as ROI because they both analyze how much money will be in my pocket at the end of the year. Damon’s method is quite easy. First, he takes 10% of the listing price and counts that as the mortgage. Then he takes half of that mortgage and adds that in to cover for taxes, fees, and maintenance. Subtract the total from the amount from the paid rents and he now has a clear idea on how much that property will make him a month. Example? Okay. Take property Beta. I bought that shit for $59,000, so my mortgage would be $590. Add half of that ($295) to the mortgage and I get $885 ($590 + $295). I’m currently getting $1200 a month from Carver and Nick, so my monthly ROI would be $315. Now currently I make $460 profit, but that doesn’t factor in the water bills and repairs, so the estimate of $315 is pretty safe estimate. My mind was blown away by just how easy it is to calculate something as important as ROI, and I’ll now use his method when searching for properties.
Finally, we talked about LLCs. He asked me in our last meeting to find out the reasons for putting property under an LLC and I did. The two best reasons are to protect personal assets and the ease in transferring property ownership (instead of paperwork, all one has to do is change the owner of the LLC and that person would become the owner of the property). Damon explained that he likes the idea of an LLC, but only after one buys a certain amount of properties. He prefers to do it his way, which is to get umbrella insurance for his property that’s on top of the insurance he currently pays. This covers him for the amount specified in his insurance agreement, plus $1M on top of that. So, say someone sues him for 500K and wins the case. If the amount of money he’s insured for is only 400K, he would have to come up with the rest out of pocket. Instead, he can count on his umbrella insurance to cover the remaining 100K, and he pays nothing out of pocket except for the $14 a month he pays to keep it going. I like that, and I really have to think about which way is best for me right now.
While we were talking, Damon carefully inserted that he and his “partner” have been together for 15 years. Since it was related to something we were talking about, I ignored it and tried to pay attention to the overall topic of conversation. See? I knew he was a homo. My NYC gay-dar never fails. So, how does this change things? It doesn’t. After he talked about that, I inserted a story about a broad I dated that was into real estate. Talking about the sex one dates appears to be the modern way to say whether you’re a homo or straight. Since he wanted to start revealing stuff, I decided to let him know that I don't want to bring anyone else to these dinners. I remember his suggestion that we invite one of the REIG members to our dinners last week. I let him know how much I despise people and will only continue these dinners as long as we're the only ones that show up. He agreed. With that out of the way, Damon seemed more relaxed than usual and the discussions continued. All in all, our dinner was from 6:15pm to 9:57pm, close to 4 hours bouncing ideas back and forth. If it wasn't for the fact that I had to take a dump, we probably would have kept going. Sweet! Any dinner where I can learn something and eat for free is a dinner worth having. Excellent dinner...
P.S.: The bill was $63. I have to learn from his mistake of choosing an expensive place like Red Lobster for the dinner. Since the next one is on me, I have to find a nice cheap place. He could blow me and it still wouldn't be worth $63 of my hard earned dollars.
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