The Freedom Formula: How to turn $244,000 into $1.4M in 14 years 

Today’s post is exciting for me to write primarily because of what it can do for investors that actually heed the advice. Since the beginning of Investing Architect, I’ve argued that quality real estate purchased in the context of and according to a sound overarching long term strategy can alter an investor’s life in fundamental ways. Surely, it can have an impact in that investors financial life - namely her passive income and net worth. But that’s only part of the magic. Most importantly, … [Read more...]

How to assemble a “judgment proof” asset protection strategy – A comprehensive guide

Note: Today I have the honor of welcoming Scott Smith as an expert guest contributor to Investing Architect. Scott is an Attorney that specializes in asset protection strategies for long-term real estate investors. He is a real estate investor himself and uses the same strategies he will share with us to protect himself and his portfolio. What I admire most about Scott's writing is that it is all substance and no fluff. Enjoy! --  *** This information is not legal advice and I am not your … [Read more...]

Capital, Income and Net Worth are not the Goal

Have you ever had that experience where you set an important goal for yourself, get intense about achieving it, work hard and grit your teeth to push it over the finish line and when you arrive there’s absolutely no joy? Just a whimper. I have - and it feels like you just ran a whole marathon only to find out that the actual marathon isn’t until next week. And you were wondering why participation seemed so low this year. You get the wind knocked out of you and all that’s left is a deep … [Read more...]

Why property taxes rise on your investment properties (and what to do about it)

Sometime in March, county appraisal districts across Texas have an epic party. There’s loud music, dancing, cake, party hats and party horns. Oh and they send out the new property tax appraisals to property owners. Coincidentally, around the same time of the year, I receive numerous calls and text messages from clients. “Ouch”, “Getting killed over here” and “This is out of control” are some sentences that may be uttered. I’m trying to make light of it, but truth be told ever increasing tax … [Read more...]

Forget the Nest Egg Approach: How to create retirement income, grow your net worth and leave a legacy

Take a good hard look at the Net Worth Timeline Comparison graph below: It’s a colorful, damning indictment of the Nest Egg approach to retirement that an overwhelming majority of investors in the developed world follow. Let me set the scene for you so the meaning of the graph can come into better focus: A very disciplined high net worth individual (over $1MM) with a six figure job income maxes out contributions to tax advantaged retirement accounts (401k) and college savings accounts. Her … [Read more...]

How to keep great Tenants without squeezing your margins

A little less than a year ago we got the hardest part right. Like leasing Sherlock Holmes-es we pored over lease applications, ran countless credit checks, background checks, prior eviction checks, cross reference checks, written and verbal rental and employment verifications and found a great Tenant. Over the course of the year, our predictions came true. The Tenants paid rent on time, took care of the property like it was their own and even went over an above to improve it without costing … [Read more...]

The most amazing real estate deal of all time

Imagine for a moment that you just orchestrated the most amazing real estate deal of all time. This deal is so impressive Scorsese will make a movie about it with Di Caprio playing your part. People who aspire to become successful real estate investors will hold week-long case studies of this deal for years to come. All the elements are present. Through world class negotiating skills during purchase, you locked in so much equity it should be illegal. Price to rent ratio is in the low single … [Read more...]

How the oil market crash impacted the Houston real estate market

Every conversation I have with Investing Architect clients or prospective clients these days eventually veers into the impact the oil market crash has had on the real estate market in general and investment opportunities in particular. With all the dramatic media coverage on the topic their expectation is one of a Buyer’s market with increased opportunities both in terms of options (inventory) and better deals (lower prices). When you look at the aggregate numbers (all price segments lumped … [Read more...]

The state of Houston’s rental market: A year over year study [UPDATED]

Note: This article was originally written on October 27, 2015 and it has been updated to reflect all data from 2015 now that it's in. To request a full copy of the report  or if you're viewing this in your email, please hit reply.  -- “Are we here yet?” A concerned Investing Architect client asked me that question out of the blue. In his email he sent a link to a BiggerPockets article (link in the footnotes) that warned about the risk of over … [Read more...]

The Fermi Technique: How to analyze investment properties in under 5 minutes 

Over the last decade,  I have worked with many successful long term real estate investors. They have different personalities, different professions and often employ different strategies. But they all have one critical thing in common: Successful long term real estate investors possess the ability to quickly and accurately “size up” a potential deal.  If someone were to call you on the phone to offer you a potential real estate deal, would you know how to evaluate it quickly and accurately … [Read more...]

5 Critical Real Estate Investing Lessons I learned in 2015

Today is the last day of 2015. In a few hours, the bubbly will flow and we get to write a new chapter. That’s why this is the best time to reflect back on the year that was, learn the critical investing lessons it taught us and become better investors in the process. Year in Review Real estate markets across Texas entered 2015 with a lot of momentum from the previous year but one giant “elephant in the room”. Oil prices had dropped by 50% at the end of 2014 and everyone questioned how it would … [Read more...]

Investing Architect explores DFW

Over the years, I've been asked by several long time clients about investing in the Dallas Fort-Worth market. At the time, the main reason for their interest was location diversification. While I always thought it a good idea to diversify holdings over markets with different characteristics, I thought there wasn't a significant difference in location characteristics to achieve any meaningful diversification. Then oil prices dropped in the $40s and calls about investing in DFW became more … [Read more...]

How to compound real estate investing results with a little extra effort

If I could show you a way to compound your real estate investing results by investing a little extra effort over time, would you be interested? I know it sounds too good to be true but lend me your mind for a short while and I’ll explain exactly what I mean. For the past couple of weeks I have been reading Darren Hardy’s fantastic book “The Compound Effect”. Darren is a protege of the late Jim Rohn whose teachings have had a great influence on me. (I like to think of Jim as a great mentor I … [Read more...]

What to expect when you are investing – Houston 2015 Edition

Consider the following scenario: You are a successful professional and through hard work and living beneath your means you have managed to set aside some capital. Thus far, your career has been fine but you want something more. You wonder what might be possible if you were to invest the capital you have managed to save in real estate. Would it be possible to create enough of an income stream to achieve financial independence? Or  put a different way, can this investment lead to an income stream … [Read more...]

The fascinating paradox with long term real estate investors

There is this fascinating paradox I encounter regularly in our real estate practice. The overwhelming majority of real estate investors I have the privilege to help, fall on the conservative end of the investing spectrum. They are driven by unbiased logic, need empirical evidence and have a long term focus. If you haven’t left this site yet after reading an article or two, you can probably relate. But with all that focus on logic, numbers and the “long game” they still succumb to doubts that … [Read more...]

Should you sell your investment property? A comprehensive guide

If you are a real estate investor that purchased well-located investment properties between 2008 and 2012, you are faced with somewhat of a dilemma. On one hand, you have watched the value of your property rise significantly in recent years on top of any built-in equity you may have secured at the time of purchase. Not to mention that in this market properties sell in a heartbeat for full asking with multiple offers. So you look at the current market value, then look at your mortgage balance … [Read more...]

Regret > Loss

The current strategy most Americans use to save and invest for retirement is fundamentally flawed. In order to evaluate the effectiveness of any strategy in an empirical way let’s look at the final results.  Then let’s compare them to the results you employed the strategy to achieve. We will go through that very process using two well known and often quoted studies. First, a 2007 study performed by the Employee Benefit Research institute found that the average Baby Boomer had an average … [Read more...]

Why did oil prices drop in 2014

Last year, on the morning of June 12, the market price for a barrel of West Texas Intermediate Crude Oil was $107.12. When the ball dropped to announce the arrival of 2015, the price of oil did a spot-on impression and dropped 51% (to $53.45). As I write this article, the price sits even lower at $44.80. As you read through those numbers, you are probably asking yourself two critical questions: Why did oil prices drop in 2014? How will the drop in oil prices impact the real estate … [Read more...]

How to avoid “getting married” to a rate of return and a pyramid scheme story

The year was 1997 and the country was on the brink of civil war. Just under two years prior, several “investment” firms had appeared offering a very enticing opportunity: Invest a sum of money and in 90 days receive three times the amount. People could smell that something wasn’t right but they felt drawn to the easy profit nevertheless. So they started investing small amounts: $100 at first that became $300 in three months time. And the word started to spread as more and more people decided … [Read more...]

The curious case of the Houston real estate bubble – An empirical analysis

The Houston real estate market has been on fire over the past 18 months. Since the start Q2 of 2013, we have experienced double digit increases in sales as well as rising prices and rents fueled by low inventories and high demand. The gallop has felt incessant. Just when you might expect that the market will take a breather for seasonal reasons or otherwise, it keeps sprinting forward. So, in this market climate, it's no wonder that the hypothesis of a Houston real estate bubble has arisen … [Read more...]