Why I am happy to be loosing money in a month

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Why I am happy to be loosing money in a month

Chris SvendsenPro Member
Front Royal, VA · Member since 2016 · 306 posts · 240 votes

So my venture into real estate investing at this moment may seem on the surface to be a dismal failure, but to me it is an opportunity at this moment.  Why you ask, I will explain.

Currently I own 3 homes. First house we purchased 3 years ago, rehabbed and rented to a family who was paying well and cash flowing about $600 a month. A year later we purchased our second home, a student rental, which before we even technically owned the home had it fully rented and was making $500 a month cash flow. Home 3 we purchased in April, with a HELOC from home one's increased value and working on rehabbing and most likely be putting on the market to sell.


That all sounds great, but the reality is less rosy.  Since COVID we have been collecting reduced rent on home number one, and was cash flowing $100 a month.  Now tenants having even harder time paying and I am looking at loosing $100 a month.

Home number 2 went from 3 students down to 2 thanks to a developer building a huge apartment complex by campus and killing the single family student rental market about a year ago, then second student left to live with boyfriend and last student just informed me she is buying a home with boyfriend and be leaving at end of December.

Lastly, home number 3 is about 3 months behind, 10k over budget to date, looking like going to be 17k over, and will take until after first of year.  So being that I am staring down the prospect of 2 mortgages and ever exceeding cash going out to finish reno why am I not worried?  The reason why is because I followed the number one rule I try to live buy, you make your money on the buy.

See, house number one was purchased for $107k, put $35k into reno, and now is valued at $250k.  House 2 we purchased for $72k and is currently valued at $84k, and house 3 we purchased for $80k, will have $92k into it, and be valued at $250k plus.  The first home allowed the purchase of home number 3 thanks to a heloc.  With home number 2 being vacant soon we will be fixing up some and renting to a family and should stabilize the house income.  Home number one will be working with tenants to get back on track or move them on after sell house number 3.  If house 3 cannot sell due to market then we will finance the property, get all our money back out of it and rent for $1700-$2000 a month.  If did not follow the rule of making your money on the buy and stretching the numbers I would be under water.  If I have to spend some of our personal money to cover the mortgages on the properties it is just me protecting my investment.  

Figured I would just tell my tale so others may learn.  Don't fudge your numbers, be true to yourself and your estimates.  I currently have $45k of my own money tied up into all 3 of these homes and have equity of over $250k if I need to sell all three homes.  Once get House 2 fixed I should be back to making $300 a month cash flow, and if cannot get house 1  back on track with rent, will turn over and get new tenants in home and increase cash flow to $900 a month on that one.  Everyone out there still trying to get a handle on this, just remember to keep numbers honest and eventually the right deal with come your way.  



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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Chris John:

@Joe Villeneuve and @Jay Hinrichs

Hey guys.  I've definitely come across several of your posts in the past and respect your opinions.  I'm curious to know why you advocate for selling properties and moving on?  I've recently refinanced several properties and pulled cash out to buy more figuring that I'm getting to utilize the current equity, but can still keep and cash flow the current properties.  These were purchased in the Central Valley of California from around 2009 to 2012 and appreciation and rents have been bonkers since then...  In your opinion, should I have sold instead?  I'd appreciate your thoughts.

Thanks

perfect timing to buy CA rentals  no question. and being a Bay Area guy appreciation has been very good to us.. But to be fair we are not in the rental house game.. and have other places to use capital that we prefer to drip income..  So I would take my thoughts with a grain of salt. the grass is not always greener and i would certainly not sell just to try to chase yield in far off places of the US  Unless your moving up in asset class.. IE  B class Multi in a larger metro area that you have checked out 3 ways from Sunday..  Be happy with what you have.

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  • Tommy AdeoyePro Member
    Investor · Member since 2020 · 164 posts · 87 votes
    5y

    Perfect advise. I enjoy reading this.

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y

    You're rationalizing a bad situation into a good one.  If you have that much equity I'd have sold it a while ago.

    The statement, "You make money when you buy", is a lie.  You make money on the spread.  The cost to buy is only half of the equation.  The Total Cost of a property isn't equal to the Investor's Cost for the property, if it is, you are losing money.  The investor's Cost is ONLY what comes out of their pocket in the form of cash.  This should be restricted to the Down Payment ONLY.  When you add payments, or use your money to pay down the mortgage, or have negative Cash Flow, you have examples of paying out of pocket, and you are just adding to the Investor's Cost...and it's that Investor's Cost that you have to recover before you make a profit.

    Unless you access that equity now, that equity has no actual value...it's virtual money that exists only on paper...and more importantly, can be here today, and gone tomorrow.  Just look at history.  Look at current history.

    5Reply
  • Chris SvendsenPro Member
    OP
    Front Royal, VA · Member since 2016 · 306 posts · 240 votes
    5y
    Originally posted by @Joe Villeneuve:

    You're rationalizing a bad situation into a good one.  If you have that much equity I'd have sold it a while ago.

    The statement, "You make money when you buy", is a lie.  You make money on the spread.  The cost to buy is only half of the equation.  The Total Cost of a property isn't equal to the Investor's Cost for the property, if it is, you are losing money.  The investor's Cost is ONLY what comes out of their pocket in the form of cash.  This should be restricted to the Down Payment ONLY.  When you add payments, or use your money to pay down the mortgage, or have negative Cash Flow, you have examples of paying out of pocket, and you are just adding to the Investor's Cost...and it's that Investor's Cost that you have to recover before you make a profit.

    Unless you access that equity now, that equity has no actual value...it's virtual money that exists only on paper...and more importantly, can be here today, and gone tomorrow.  Just look at history.  Look at current history.

     Thanks for input but homes have provided for me greatly.  Have used profits to pay back cost of repairs and updates to homes and the equity from first home allowed cash purchase of 3rd home.  I disagree on assessment, while situation is not perfect I do not fear it, a small lose for a few months will lead to large gains years later.  And don't want to sell, going to tap into equity again once house 3 sells to buy more properties.

    2Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Chris Svendsen:
    Originally posted by @Joe Villeneuve:

    You're rationalizing a bad situation into a good one.  If you have that much equity I'd have sold it a while ago.

    The statement, "You make money when you buy", is a lie.  You make money on the spread.  The cost to buy is only half of the equation.  The Total Cost of a property isn't equal to the Investor's Cost for the property, if it is, you are losing money.  The investor's Cost is ONLY what comes out of their pocket in the form of cash.  This should be restricted to the Down Payment ONLY.  When you add payments, or use your money to pay down the mortgage, or have negative Cash Flow, you have examples of paying out of pocket, and you are just adding to the Investor's Cost...and it's that Investor's Cost that you have to recover before you make a profit.

    Unless you access that equity now, that equity has no actual value...it's virtual money that exists only on paper...and more importantly, can be here today, and gone tomorrow.  Just look at history.  Look at current history.

     Thanks for input but homes have provided for me greatly.  Have used profits to pay back cost of repairs and updates to homes and the equity from first home allowed cash purchase of 3rd home.  I disagree on assessment, while situation is not perfect I do not fear it, a small lose for a few months will lead to large gains years later.  And don't want to sell, going to tap into equity again once house 3 sells to buy more properties.

     I don't disagree with the value of the properties in the past.  This is now.  If you are willing to sell for the equity in the future, why not do it now?  If you wait for the future, you will be spending money (added cost to you) from the negative CF until your can change the CF situation.  How long will you accept your negative CF before you sell?

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Joe Villeneuve:

    You're rationalizing a bad situation into a good one.  If you have that much equity I'd have sold it a while ago.

    The statement, "You make money when you buy", is a lie.  You make money on the spread.  The cost to buy is only half of the equation.  The Total Cost of a property isn't equal to the Investor's Cost for the property, if it is, you are losing money.  The investor's Cost is ONLY what comes out of their pocket in the form of cash.  This should be restricted to the Down Payment ONLY.  When you add payments, or use your money to pay down the mortgage, or have negative Cash Flow, you have examples of paying out of pocket, and you are just adding to the Investor's Cost...and it's that Investor's Cost that you have to recover before you make a profit.

    Unless you access that equity now, that equity has no actual value...it's virtual money that exists only on paper...and more importantly, can be here today, and gone tomorrow.  Just look at history.  Look at current history.

    agreed take the cash..  cash flow is just a place holder for when U make money on forced appreciation or organic.

    for me the only dead equity I would sit on would be my personal residence and second or third home I want to use for personal use.  it they are investment properties I take the cash and move on.  but thats just my thought

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    3Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Joe Villeneuve:

    You're rationalizing a bad situation into a good one.  If you have that much equity I'd have sold it a while ago.

    The statement, "You make money when you buy", is a lie.  You make money on the spread.  The cost to buy is only half of the equation.  The Total Cost of a property isn't equal to the Investor's Cost for the property, if it is, you are losing money.  The investor's Cost is ONLY what comes out of their pocket in the form of cash.  This should be restricted to the Down Payment ONLY.  When you add payments, or use your money to pay down the mortgage, or have negative Cash Flow, you have examples of paying out of pocket, and you are just adding to the Investor's Cost...and it's that Investor's Cost that you have to recover before you make a profit.

    Unless you access that equity now, that equity has no actual value...it's virtual money that exists only on paper...and more importantly, can be here today, and gone tomorrow.  Just look at history.  Look at current history.

    agreed take the cash..  cash flow is just a place holder for when U make money on forced appreciation or organic.

    for me the only dead equity I would sit on would be my personal residence and second or third home I want to use for personal use.  it they are investment properties I take the cash and move on.  but thats just my thought

    My thoughts too.  Falling in love with the property, and thinking that the property is your asset, is a mistake.  The equity and cash flow are your assets.  The property is, as you say, "just the vehicle" that your asset is temporarily riding until it can be moved to the next vehicle.

    4Reply
  • Sam Lewis
    Real Estate Agent · Baltimore, MD · Member since 2018 · 285 posts · 228 votes
    5y

    Sounds like you are making lemonade with lemons. Kudos to you, every investor has a story of things not working out, but in the end it will. Buy and hold is an incredibly powerful strategy.

    Wishing you the best,

    Sam

    0Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    5y

    @Joe Villeneuve and @Jay Hinrichs

    Hey guys.  I've definitely come across several of your posts in the past and respect your opinions.  I'm curious to know why you advocate for selling properties and moving on?  I've recently refinanced several properties and pulled cash out to buy more figuring that I'm getting to utilize the current equity, but can still keep and cash flow the current properties.  These were purchased in the Central Valley of California from around 2009 to 2012 and appreciation and rents have been bonkers since then...  In your opinion, should I have sold instead?  I'd appreciate your thoughts.

    Thanks

    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Chris John:

    @Joe Villeneuve and @Jay Hinrichs

    Hey guys.  I've definitely come across several of your posts in the past and respect your opinions.  I'm curious to know why you advocate for selling properties and moving on?  I've recently refinanced several properties and pulled cash out to buy more figuring that I'm getting to utilize the current equity, but can still keep and cash flow the current properties.  These were purchased in the Central Valley of California from around 2009 to 2012 and appreciation and rents have been bonkers since then...  In your opinion, should I have sold instead?  I'd appreciate your thoughts.

    Thanks

    1 -  When you refinanced, how much of the equity did you pull out, and how much of it stayed in the original property? 

    2 - If you sold the property, how much of the equity would have been pulled out?

    3 - At the end of the day, what would the difference in total equity be between the two options?  Would you have more total equity doing a refi or sale?

    4 - If you take the Face Value of the Equity, in either case, what would the total corresponding property values be?

    When you use cash (and your equity is cash...just not liquid...yet) for a DP, that cash buys you a Property Value that is 5 times the Face Value of the Cash...assuming a 20% DP.  When your equity grows, either through principal paydown (thank you tenant and their rent), or appreciation (thank you economy), it increases on a 1 to 1 basis.  For every dollar increase in paydown or property value, the equity increases by that same dollar.  

    Taken to a logical conclusion, when you have a property that has 100% equity, that properties Face Value is equal to the Equity (1 to 1).  If you sold  the property, and used the Equity as a 20% DP, the new FV of the Cash coming out and used on the next property has a Property Value 5 times that of its Face Value.  This also means that if both properties appreciate at the same rate, the appreciation (new property value) will also be 5 times greater.

    Example:  $100k in Cash
    A - 100% Equity
         Equity = $100k
         Property Value = $100k
         Appreciation (5%) = $100k + $5k = $105k

    B - Sell A above and buy using 20% Down Payment
          Equity = $100k
          Property Value = $500k
          Appreciation (5%) = $500k + $25k = $525k

    3Reply
  • Jonathan Crawford
    Member since 2020 · 7 posts · 8 votes
    5y

    @Chris Svendsen

    What I like about your story is you can cash flow these for the short term from personal money if you NEED to. Many people get over leveraged and can get into hot water when such situations occur. Seems like this is more of an inconvenience for you rather than a crisis. Kudos!

    Agree with other posters that you should try to get these cash flowing again as soon as possible. While you have the ability to burn your hard earned cash to keep them afloat that money would be better spent elsewhere, like on further DPs! Or a new DateJust for the wife :)

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Chris John:

    @Joe Villeneuve and @Jay Hinrichs

    Hey guys.  I've definitely come across several of your posts in the past and respect your opinions.  I'm curious to know why you advocate for selling properties and moving on?  I've recently refinanced several properties and pulled cash out to buy more figuring that I'm getting to utilize the current equity, but can still keep and cash flow the current properties.  These were purchased in the Central Valley of California from around 2009 to 2012 and appreciation and rents have been bonkers since then...  In your opinion, should I have sold instead?  I'd appreciate your thoughts.

    Thanks

    perfect timing to buy CA rentals  no question. and being a Bay Area guy appreciation has been very good to us.. But to be fair we are not in the rental house game.. and have other places to use capital that we prefer to drip income..  So I would take my thoughts with a grain of salt. the grass is not always greener and i would certainly not sell just to try to chase yield in far off places of the US  Unless your moving up in asset class.. IE  B class Multi in a larger metro area that you have checked out 3 ways from Sunday..  Be happy with what you have.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    6Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Chris John:

    @Joe Villeneuve and @Jay Hinrichs

    Hey guys.  I've definitely come across several of your posts in the past and respect your opinions.  I'm curious to know why you advocate for selling properties and moving on?  I've recently refinanced several properties and pulled cash out to buy more figuring that I'm getting to utilize the current equity, but can still keep and cash flow the current properties.  These were purchased in the Central Valley of California from around 2009 to 2012 and appreciation and rents have been bonkers since then...  In your opinion, should I have sold instead?  I'd appreciate your thoughts.

    Thanks

    perfect timing to buy CA rentals  no question. and being a Bay Area guy appreciation has been very good to us.. But to be fair we are not in the rental house game.. and have other places to use capital that we prefer to drip income..  So I would take my thoughts with a grain of salt. the grass is not always greener and i would certainly not sell just to try to chase yield in far off places of the US  Unless your moving up in asset class.. IE  B class Multi in a larger metro area that you have checked out 3 ways from Sunday..  Be happy with what you have.

    I agree 100%. REI isn't a game of one property at a time, and buy the best you can find at that time. You need to follow a plan, that should take from what you can afford now (not just afford, but that also must bring you profit and/or cash flow), and gradually work your way up the ladder. The decisions of what you buy at the start, should be predicated on what you plan on doing next. Look at it as the path your cash takes along the way. The goal shouldn't be to accumulate properties. The properties are just the steps your cash takes to the end goals.

    Every decision you make, of where to move your cash, shoud be based on and entrance/exit, and entrance/exit, etc...scenario.  In other words, base all your decisions of what deals to move your cash into, on how your cash will exit from that decision (with friends) and move into the next deal. You should be thinking of the movement of your cash (this includes the build up of equity...which is one of the groups of "friends" you cash makes along the way), not the places your cash "stands still"...and make sure the path your cash takes generates and exponential amount of friends, with every exit to the next entrance.

    2Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    5y

    @Joe Villeneuve and @Jay Hinrichs

    Thank you both for the replies.  I definitely plan on leveling up with the money I've refinanced, but I'm a little leery of the market right now.  We (my brother and I) bought a few houses in Jacksonville with cash and a local 4-plex in an effort to offset our higher mortgage payments in the short term, but we're just sitting on the rest right now and waiting.  I expect to use the last of our 10 "good" loans on duplexes and 4-plexes, finance the Jax houses to pull cash out, and then try to buy a small apartment or two just to see what that game is like.

    I definitely agree with leverage and all, but my thoughts for financing to an 80% LTV instead of selling were that it would essentially be the "5th" house anyway and I'd avoid selling costs. Let's pretend these houses had no loans on them (they did, but that gets in the way of the thought exercise). My logic is that I could:

    A - Sell the property and use the money to buy 5 similar properties (20% down each).  However, I'd have to pay selling costs, extra buying costs on the 5th house in terms of title fees, etc., and it would create a 1031 situation (I believe it would anyway and I could absolutely be wrong on this) where I'd be rushed into buying the extra properties.

    Or

    B - I could refinance to 80% LTV and use that money to buy 4 similar houses, keeping this current house as the "5th" and avoiding all of the negatives, such as the fees, from Scenario A.

    Jay, if you don't mind answering, what do you invest in?  The "B class Multi in a larger metro area" that you mention?

    Again, I really appreciate both of your times and opinions.  I know that iron sharpens iron, but in this case it's sharpening a wood stick!  haha.

    @Chris Svendsen

    Sorry for hijacking your post!  It sounds like you've hit a "perfect storm" of unfortunate situations, but it sounds like you'll see your way through it.  You are definitely in an enviable position overall!

    4Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Chris John:

    @Joe Villeneuve and @Jay Hinrichs

    Thank you both for the replies.  I definitely plan on leveling up with the money I've refinanced, but I'm a little leery of the market right now.  We (my brother and I) bought a few houses in Jacksonville with cash and a local 4-plex in an effort to offset our higher mortgage payments in the short term, but we're just sitting on the rest right now and waiting.  I expect to use the last of our 10 "good" loans on duplexes and 4-plexes, finance the Jax houses to pull cash out, and then try to buy a small apartment or two just to see what that game is like.

    I definitely agree with leverage and all, but my thoughts for financing to an 80% LTV instead of selling were that it would essentially be the "5th" house anyway and I'd avoid selling costs. Let's pretend these houses had no loans on them (they did, but that gets in the way of the thought exercise). My logic is that I could:

    A - Sell the property and use the money to buy 5 similar properties (20% down each).  However, I'd have to pay selling costs, extra buying costs on the 5th house in terms of title fees, etc., and it would create a 1031 situation (I believe it would anyway and I could absolutely be wrong on this) where I'd be rushed into buying the extra properties.

    Or

    B - I could refinance to 80% LTV and use that money to buy 4 similar houses, keeping this current house as the "5th" and avoiding all of the negatives, such as the fees, from Scenario A.

    Jay, if you don't mind answering, what do you invest in?  The "B class Multi in a larger metro area" that you mention?

    Again, I really appreciate both of your times and opinions.  I know that iron sharpens iron, but in this case it's sharpening a wood stick!  haha.

    @Chris Svendsen

    Sorry for hijacking your post!  It sounds like you've hit a "perfect storm" of unfortunate situations, but it sounds like you'll see your way through it.  You are definitely in an enviable position overall!

    Check the interest rates of a refi compared to a new buy. Also, are you assuming there are no fees, etc...when you refi? You might want to check those out also. 80% refi? is that an actual percentage you are going to get (for sure) or are you just using that number thinking that you are comparing apples to apples. If you haven't checked out the LTV on a refi, you might want to do that first too.

    1Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    5y

    @Joe Villeneuve

    Yeah, you're right. We pulled the trigger on these loans a couple of months ago and I just checked. 75% LTV, not 80%. Whoops! haha. If my succeeding despite myself is not the greatest commercial for real estate investing, I don't know what is...

    Anyway, APR was a bit below 4% on the refinances and around 3.75% on the 4-plex purchase. Definitely fees involved, but I was honestly surprised at how low they were...

    I appreciate your thoughts and in 5-15 years when we do our next round of refinances to go buy more, I'll strongly consider selling instead.  Having said that, they're so dialed in with the pm at the moment that the upside of selling will have to win out by quite a bit to get me to get over the inertia of just refinancing.  It's just so easy, I don't have to get a house sellable, deal with agents, etc.

    0Reply
  • Claudio Salvatorelli
    San Diego, CA · Member since 2020 · 150 posts · 54 votes
    5y

    @Chris Svendsen This makes a lot of sense, especially if your strategy in the long term is a clever move.

    0Reply
  • Jake Drappi
    New to Real Estate · Brick, NJ · Member since 2020 · 115 posts · 39 votes
    5y

    @Chris Svendsen good stuff here Chris. Where are you investing?

    0Reply
  • Joe Edwards
    Investor · Northern New Jersey · Member since 2020 · 94 posts · 96 votes
    5y

    @Chris Svendsen Love the positive attitude when you are hitting a few bumps in the road. This moment is showing you you are built for this game Chris. Way to hang in there. Only the strong will survive!

    0Reply
  • Joe Edwards
    Investor · Northern New Jersey · Member since 2020 · 94 posts · 96 votes
    5y

    @Chris John

    Your in a very expensive market with great appreciation like here in the north east. Do not sell. Rents and appreciation will always out pace the ROI of selling when you think it's high.

    The west coast and north east are most certainly 2 markets that pay you tremendously well while we sleep. Keep accumulating them until you are fully free.

    1Reply
  • Dustin Robinett
    Specialist · Denver, CO · Member since 2019 · 5 posts · 3 votes
    5y

    @Chris Svendsen

    So you’re a genius because home prices are through the roof? Take the increase in values over the last 3 years out of the equation and you’ve got 3 less than stellar outcomes right now. Instead of patting yourself on the back I’d suggest you get real honest with yourself and reevaluate your approach.

    0Reply
  • Bill P.
    Investor | Syndicator | Instructor · Cincinnati, OH · Member since 2008 · 435 posts · 198 votes
    5y

    @Chris Svendsen Don't be happy your losing money but be happy you have grown your equity. I used to own a car dealer and you did make money based on your buying prowess. Same thing with property...you make the best deals based on the price you acquire.

    0Reply
  • Ross Yeager
    Rental Property Investor · Mountain View, CA · Member since 2017 · 83 posts · 59 votes
    5y

    @Joe Villeneuve was about to write the same thing here. Definitely agree. So many people are not making a profit in RE if you consider everything from start to finish. I keep a lifetime ROI spreadsheet so I can know if that ever changes. If you're not making a profit it's just a time consuming and stressful hobby.

    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Ross Yeager:

    @Joe Villeneuve was about to write the same thing here. Definitely agree. So many people are not making a profit in RE if you consider everything from start to finish. I keep a lifetime ROI spreadsheet so I can know if that ever changes. If you're not making a profit it's just a time consuming and stressful hobby.

     Way back when I first joined BP, the first Post I participated in was one that was titled, "Is it OK to lose money in the first few deals, because it is a learning experience?".  If I had immediately answered that the way I wanted to, I wouldn't be here today...I probably would have been banned.  I was smart enough to go to lunch and think before I wrote.

    When I came back, this is what I wrote (as best I can remember), "Of course it's OK to lose money in your first few deals, because it is a learning experience.  In fact, I want to meet the person who lost the most money when they started out.  That person must be an absolute genius".

    Losing money, knowing you are losing money, is NEVER a good thing...no matter how you rationalize it.

    1Reply
  • Chris SvendsenPro Member
    OP
    Front Royal, VA · Member since 2016 · 306 posts · 240 votes
    5y

    Sorry I am a horrible thread starter as been tied up doing work and rehab but no time get back to this. Can't wait to read through all this and get back to everyone. 

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Joe Edwards:

    @Chris John

    Your in a very expensive market with great appreciation like here in the north east. Do not sell. Rents and appreciation will always out pace the ROI of selling when you think it's high.

    The west coast and north east are most certainly 2 markets that pay you tremendously well while we sleep. Keep accumulating them until you are fully free.

     Not true.  Cash flow, because it is liquid, has the potential to have an exponential return.  Equity, because it isn't liquid, has only a linear return...unless it is strategically (as in timing) converted to liquid.

    If a property has negative CF, it is losing an exponential return...not just the face value that is negative...and it is eating into any gains from appreciation.

    Truth is, one without the other is not good either.

    0Reply
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