Indianapolis, IN · Member since 2017 · 63 posts · 41 votes
For me, I have been a lurker on BP for about 4 months now. I've been reading every book I can get my hands on and burning through podcasts. I knew when I first got on the site, I would be moving across the country within a few months, so that kept me from diving into my local market. This week is the first week of being settled into my new home in Lowell, IN (shout out to Northwest Indiana Investors). Having the dust and chaos of moving finally begin to settle, I realized that I have no more excuses stopping me from diving in and learning first hand. I am eager (and finally able) to get started, get active, and broaden my horizons.
@Cody L. In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities. So even losing money is okay for some of these investors. It's all about capital preservation for them. So they will outbid any investor who's in it to make money. And this money has pushed the local money into out of state markets where it never would have gone before.
@Adam Detig Still want to network and grow positive relationships. Also, I just moved to SoCal, and prices are quite high. I'm hesitant to jump in yet due to the chance that we see a market correction soon. Turnkey properties have been on my mind, so I'm starting to read more in that area.
Welcome to San Diego. Not sure how long you've been here or where you moved from but you may not want to wait too long. There are opportunities out there, just have to search for those diamonds in the rough. I'm also looking to get into the MF space myself.
San Diego sits at 28 on the affordability index, which is 4 points below the state average of 32, for end of the 1st quarter, 2017. Compared to 2016-Q1, we saw a decline of 1 point from 29. Although not earth shattering by any means, this is just a single data point and a potential indicator of a slow down in the local market. The national affordability index is at 57% as a whole.
Compared to the overall market in 2007-08, I believe we still have some breathing room. Back then the affordability index had us hovering around 10%. There may be some course correction, but I don't believe it will be as drastic this time. Just thought I'd pass along some info that I try to keep track of in the local market area.
Stephen Watt : may be semantics but prices are not too high. But rather rents are too low relative to prices.
I don't mind if a single family cost $1m to buy. So long as I can rent it for enough. In fact I'd love to buy some $1m homes and shove $ renters in there.
And that's the problem with SD. A multifamily might be 5x the price per door of the equiv building in Houston. Yet the rents are only 2x.
@Cody L. In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities. So even losing money is okay for some of these investors. It's all about capital preservation for them. So they will outbid any investor who's in it to make money. And this money has pushed the local money into out of state markets where it never would have gone before.
@Cody L. In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities. So even losing money is okay for some of these investors. It's all about capital preservation for them. So they will outbid any investor who's in it to make money. And this money has pushed the local money into out of state markets where it never would have gone before.
I don't disagree at all. You also compete with people who are betting on appreciation over cash flow. And competing against people who want a 'trophy property' and 'pride of ownership', etc. A nice beach house might have crappy financials but it's cool to show it to your friends as something you own. "Ego investors" I call them. Nothing wrong with that... Just not what I'm into.
@Adam Detig I’m in a very similar boat to you. I plan on relocating across the country in the next 6 months and I personally don’t like my current location (El Paso) for owning property. Not that there’s anything wrong with El Paso just anecdotally, based off my neighborhood, I see a lot of frequent rental property turn over and a lot of for rent signs out for an extended period of time. So like you just building my knowledge base through reading, looking into properties in the area I plan to move to, made initial contact with some agents and saving capital.Best of luck in Indiana! I'm eager to get started myself.
@Chris Thomas I'm in the northeast. Like I mentioned my observation is purely anecdotal and I don't pay any attention to the El Paso market so take my opinion on it with a grain of salt. I've just seen a lot of rapid turn over. I've been in my house (I'm renting) for 3.5 years and I'm on the 4th different set of neighbors on one side and the 4th just moved out on the other. Maybe it's me? Nothing wrong with the neighborhood, its just a bit out of the way which is probably the cause of the turn over.
I guess I'm technically not waiting any more as of two weeks ago when I closed on a note to a TK provider. That tied up 90% of my capital while I wait to start on our primary goal of buy and hold SFH rentals. But I AM waiting until I turn 59 1/2 in July and can take that money out of my self directed IRA (the IRA made the loan) saving the 10% penalty. So after July and the repayment of the note (hopefully early :) ) we will start the real search for that first property. Then we'll be off to the races!
In my local market, Lake Havasu City, the price of property on the mls is just to high for duplexs compared to the rents. I bought a SFH as my primary residence and will be renting a room for now while still searching for a good 2nd roommate (3/3 house). Thus capital is tied up. I feel that I do not know enough to be giving advice on RE discussion yet. I mostly read threads to learn what I can not get from books. Hopefully one day Ill have a great REI track record to be taken seriously.
Adam Detig great post. I just moved from the Bay Area to Sacramento in order to cut my living expenses in half - so I like to think I haven't completely been inactive (maybe I'm rationalizing this!) I was in escrow on a 4plex in the Sac area but the deal fell through and I decided to buy a primary residence first (the months kept going by and I saw all my expensive Bay Area rent money flying out the window). Now I'm back to saving up for the next downpayment, which is a lot easier now! My biggest paralysis is whether I should invest locally or out of state. I know I'll get much better cash flow outside California but I'm having a hard time deciding which market I want to focus on. Ideally it would be within a 2 hour commute (plane or driving) from where I live currently..been thinking about Nevada or AZ. On the other hand, Sacramento is on the upward trajectory in terms of population and economic growth. Who knows if that will slow down..so if I decide to keep buying assets here I think I'd start a direct mail campaign to get off market deals. On market is crazy competitive out here in my price range.
@Cody L. In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities. So even losing money is okay for some of these investors. It's all about capital preservation for them. So they will outbid any investor who's in it to make money. And this money has pushed the local money into out of state markets where it never would have gone before.
Do you have a credible source for this expropriation as a cause for this? I know a lot of foreign (Chinese usually) investors are parking money here, but I haven't seen any credible evidence as to why.
I always knew I would get into rentals but I thought it would be when I had paid off all of our debt and our mortgage and likely when I was in my 50's so that I could supplement my income into retirement. I'm almost embarrassed to say that it never even occurred to me that I could do it sooner. I found a variety of financial freedom blogs and like you @Adam Detig devoured everything I could in the last year. About 6 months ago we put our house on the market, sold it, bought a fixer upper that we will stay in for a few years to rapidly pay off our debt and then add the house to our rental portfolio eventually. Similarly, I have been setting up my life to make significant strides in my real estate purchases but I haven't technically bought an actual rental house yet as the dust is also just settling for us now too. We've been talking to a real estate agent and are just waiting for the right deal now!
@Adam Detig the thing that is keeping me from jumping in right now is my active duty military commitment and the fact that I live 20 hours away from where I would like to settle down at. I have the option to use a VA loan which is amazing but I have to live in the state that I purchase the home in. So for now it is just a waiting and saving game.
@Cody L. In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities. So even losing money is okay for some of these investors. It's all about capital preservation for them. So they will outbid any investor who's in it to make money. And this money has pushed the local money into out of state markets where it never would have gone before.
So true! $1.2 m houses closing cash from foreign capital is not unheard of here in queens.
And keeping on topic, this is my first post, so I guess Im a lurker no more :)
@Jessie Nunley if you can find a good property manager at your next duty station there's no reason you can't buy one. My first rental isn't where I plan on settling down and I bought it with a VA loan. We lived in it while I was stationed there and turned it into a rental when we had a change of station. I'm planning on using a second VA loan to buy my next one. You can use more than one so long as you haven't maxed your entitlement.
@Michael Reyes Loving the statistics you've got (I'm an engineer, so math gets me far too excited). Are you using the NAR Affordability Index here? I don't quite understand how you connect a decline in affordability to a slow down in the market. Do you mean a slow down in purchases?
Just moved here to SD two weeks ago, and it's great to me another REI looking for multis. Let me know if I can help you out, from one tech professional to another.
@Cody L. As a newbie, I appreciate the semantics. If I'm interpreting you right, it sounds like you're saying the GRMs in San Diego are too high for you right now. In that case, are you just looking elsewhere for multifamily investing? Or maybe commercial multis for better ROI? I've begun looking at 5+ unit multis as a first venture into REI, but the couple of brokers I've spoken with over the phone seemed turned off (maybe appropriately so) when I told them I'm looking for my first deal.
@Michael Reyes Loving the statistics you've got (I'm an engineer, so math gets me far too excited). Are you using the NAR Affordability Index here? I don't quite understand how you connect a decline in affordability to a slow down in the market. Do you mean a slow down in purchases?
Just moved here to SD two weeks ago, and it's great to me another REI looking for multis. Let me know if I can help you out, from one tech professional to another.
@Cody L. As a newbie, I appreciate the semantics. If I'm interpreting you right, it sounds like you're saying the GRMs in San Diego are too high for you right now. In that case, are you just looking elsewhere for multifamily investing? Or maybe commercial multis for better ROI? I've begun looking at 5+ unit multis as a first venture into REI, but the couple of brokers I've spoken with over the phone seemed turned off (maybe appropriately so) when I told them I'm looking for my first deal.
Correct. I can't see myself buying a 5 unit for $1.5m in San Diego that might rent for $10k when I can buy a 40+ unit in Houston for $1.5m that has a $25k rent roll.
But like I say, that's just me. Plenty of people buy stuff that is a fit for what they want.
I looked for 18 months for my first house because it is two houses on one property so I will have a caregiver house when/if I need one. I am retired and move to my beach on central oregon coast to fulfill a life long dream. I will be closing later this summer as it is taking 4-6 weeks to get an appraisal this time of year here (2 people for our county).
As soon as I can get both units repaired and move in I will start saving for my next purchase.
@Jessie Nunley Hey man check out Biggerpockets podcast show #206. I actually just listened to it and it came to mind because you said you were full time military. I recommend it along with all other podcasts.
Also @Adam Detig 1st, well done on such an interactive post that brings people into the conversation and is getting people involved. 2nd, super proud of you little bro for jumping headlong into your first REIA meeting tonight right after moving. My advice to you and all of the "Lurkers" out there is that when going to a REIA meeting and connecting, try to bring something of value to the group. This can be time, knowledge, deals, cash, or sweat equity (willingness to work for free). The quickest way to be taken seriously as a new person, willing to learn, is to offer to work for free for 10 hours to people you talk to help you learn.