Anyone Buying Class-A Single Family Homes?

90 Replies

Originally posted by @Steve K. :
Originally posted by @Matthew McNeil:
Originally posted by @Andrew Neal:

 I buy rent ready 3 bdr /2 bth Class A SFHs using conventional loans.  $200k - $250k price range.  I usually pay 30-35% downpayment.  Avg rent in my area is $1600/month.  Cash flow works, and I Recast at years 1 and 2 resulting in new amoritization and increased cashflow.  Appreciation is healthy; double digits.  My strategy is buy and hold.  

 @matthew , I like your double digit appreciation! I'm curious; why do you put 30-35% down (if 25% would do) and why refi in 1 to 2 years? I'm curious your opinion on how much leverage you like?

Steve, yes, the double-digit appreciation is very nice.  There are several markets in the US that are really growing, and I’m happy I started investing in Boise/Meridian in 2008.  According to several reports, including a recent Forbes article, Boise is the fastest-growing area in the U.S.

Yes, I realize that 25% down is all that’s necessary, but I generally wait until I have a higher amount to put down simply because it helps with the cash flow.  I realize most BP members don’t follow that approach, but my strategy is different and has been gleaned from some very insightful comments and advice that some well respected members have posted.  

The added strategy I use is Recasting – not REFI as you wrote.  Recasting results in a new amortization (the general rule is $50 for every $10k paid).  My goal is to pay off my existing SFHs which supports my long-term plans, and I use Recasting to accelerate that.  I won't put money into an asset (whether it be a down payment or Recast) unless I get something in return out the gate.  

Lastly, I think “leverage” and “wealth” have different definitions involving a multitude of variables respective of the values and strategies of each BP member.  I don’t consider myself a real estate entrepreneur who maximizes leverage because I’m just not wired that way.  Rather, my leverage increases through utilizing the higher down payments and Recasting; both of which accelerate the cashflow I need to increase my portfolio while simultaneously gaining on the appreciation side of the equation.

My next target area for SFH investments will be the Coeur d'Alene, Post Falls area which is where many people from California and other "insane" areas are migrating to.

Please remember that everyone gets into REI for different reasons, and while there are better ways to do some things, it is not always better for everyone. A lot of things depend on market cycle as well as personal goals. All of my properties were purchased at the bottom or middle of the cycle, I was betting on wealth protection and building, and also working with limited knowledge (pre-BP) and the propertIes that I bought for personal use. My goal? Invest this money, have someone else pay my mortgage and build equity without adding any more of my own money. Oh... And do it with minimum effort. I’m lazy . Now let’s look at the numbers that I was basing my assumptions on. Keep in mind, I’m not a professional. This is just something I came up with: 200k house. 20% down = 40k Assume a modest appreciation of 3% annually = 6k. Keep in mind, the investment was only 40k so 6/40 means you earn a 15% rate of return on your investment because appreciation works on the value of your entire property, not just the amount of your down payment. 5% appreciation = 25% return 8% = 40% 10% = 50% Most years I’ve seen better than 11%. Keeping in mind, cash flow wasn’t my concern, just asset protection and hopefully some growth. The properties all cash flow, which is just a bonus.

@Matthew McNeil the use of recasting is interesting, I don't think I have heard of anyone using that strategy. Could you give an example of how you use it? Assuming you bought a 200K house with 25% and have a mortgage of 150K on it? Do you then save up cash to make the lump some payment toward principal and have your lender recast at that point? Are you doing 30 year mortgages and if so how much quicker do you think this strategy will allow you to pay off the property? It sounds like you want to own free and clear properties for max cashflow in the future.

Also Coeur d'Alene is beautiful! I have spent a ton of time in Lakeside Montana and always travel through Coeur d'Alene.

I'm investing pretty close to the strategy discussed in this post. In the last 10 months, I bought 4 SFH (3 bed 2.5 bath) in an A-/B+ neighborhood totaling $668k. My combined rents are $6470/month. It's highly competitive for housing and rentals in my area. All of my townhouses are within a 1/2 a mile radius. The school district is the top in the area, inventory for affordable housing is scarce and the townships in the school district will not approve the construction of housing greater than 4 units. There are no apartment complexes in the district. I've won these bids for less than asking because of no contingencies and 20% down. Tenants are high earners, been at their jobs for years and have credit scores over 720. Will they buy a house in the district in the next 1-3 years? Probably. I also agree with a previous post that these are the type of tenants that I'm comfortable dealing with. I'm not interested in the b/c multi market at this time. I used approx $150k of my cash for down payments/closing costs.

Originally posted by @Matt K. :
Originally posted by @Andrew Neal:

@Matt K. very true, to me class B+ to A would mean built in the past 30 years or so, needing maybe some minor cosmetic updating and great schools. I see a lot of homes like this in some of the Dallas suburbs I was researching when my wife and I were considering moving out there.

 https://www.redfin.com/MO/Kansas-City/8124-N-Elmwo...

would probably rent for about 1000-1200. You'd probably be able to find a less updated one for bit cheaper/get little aggressive on the offer. You'd likely see better quality renter pool and longer term renters in a rental like that w/ less headache during turnover then you would on lower ender property. 

With that said, you're losing a bit on the numbers side because the rents don't always align well w/ higher end properties.  Sometimes the rents are only slightly higher and depending on the school district it could drive up buying prices when your rents might not have kids... so it could be a gamble.

I'd say this could be easily an A by most definitions... but I have hard time because I feel like the ratings should take into account the exclusiveness of a neighborhood. Something like a historic or gated/semi private neighborhood should be needed for A or A+....  B/B+ would be normal neighborhood but top schools/low crime... B/B- would be good schools etc... 

But I'm probably getting way into the weeds on this lol...

 Dang that’s a reasonably priced house! That area must be where you all are hiding the $50k houses discussed at bigger pockets. lol                 A row home falling down in the most dangerous part of the inner city is $130k in my area. 

Originally posted by @Andrew Neal :

@Matthew McNeil the use of recasting is interesting, I don't think I have heard of anyone using that strategy. Could you give an example of how you use it? Assuming you bought a 200K house with 25% and have a mortgage of 150K on it? Do you then save up cash to make the lump some payment toward principal and have your lender recast at that point? Are you doing 30 year mortgages and if so how much quicker do you think this strategy will allow you to pay off the property? It sounds like you want to own free and clear properties for max cashflow in the future.

Also Coeur d'Alene is beautiful! I have spent a ton of time in Lakeside Montana and always travel through Coeur d'Alene.

I was introduced to Recasting by a lender after I completed a couple of REFIs on two of my properties. Recasting isn’t to be confused with a principal paydown alone, although that’s what it entails with the exception that you can request a re-amortization on the loan whereby the original monthly payment fee is reset according to the original interest and maturity date.

Not all lenders allow for a Recast.  However, based on my understanding, you can Recast as many times as you want if the loan was sourced from Fannie Mae or Freddie Mac. You just have to ask your lender.

Yes, the assumptions you’ve listed are correct. I use a 30-year mortgage (as a buffer vs 15 year).  I’ll combine the cash flow with revenue from other streams and Recast at year 1 or 2 or 3 or whenever I feel ready.  Typically, my Recast amount is $50k which generally results in added cash flow ranging between $250 - $280/month.

Other BP members would balk at this and, trust me, I get it.  But that’s not my strategy.  I realize this is arguable, but I can put the same $50k as a down payment on another house and earn positive cashflow.  However, the benefit of Recasting is that the $250 gained due to the reset amortized payment is added to the original cashflow amount.  This accelerates my ability to revenue stream faster and pay off the house sooner – at a timeframe I choose.  And, it accelerates my ability to buy more properties faster because the revenue stream picks up steam and builds on itself. 

As to your last question, It sounds like you want to own free and clear properties for max cashflow in the future. Well, yes and no, but here's a thought. I could have 7 SFHs owned free and clear in a healthy Class A area in a growing city (like Boise) that are cash flowing $8500/month or be dealing with 30 -50 units (SFH, MF, apartments) spread around various states with all the oversight, logistics, management coordination needed that are cashflowing a cumulative of $10k/month. Which option allows me to sleep better at night?

Yes, Coeur d'Alene is beautiful.  My wife grew up in Troy, Montana and I used to live in Bonners Ferry.  Beautiful country up there!

Originally posted by @Matthew McNeil :

I was introduced to Recasting by a lender after I completed a couple of REFIs on two of my properties. Recasting isn’t to be confused with a principal paydown alone, although that’s what it entails with the exception that you can request a re-amortization on the loan whereby the original monthly payment fee is reset according to the original interest and maturity date. 

Other BP members would balk at this and, trust me, I get it.  But that’s not my strategy.  I realize this is arguable, but I can put the same $50k as a down payment on another house and earn positive cashflow.  However, the benefit of Recasting is that the $250 gained due to the reset amortized payment is added to the original cashflow amount.  This accelerates my ability to revenue stream faster and pay off the house sooner – at a timeframe I choose.  And, it accelerates my ability to buy more properties faster because the revenue stream picks up steam and builds on itself. 

 Matthew, that really does sound interesting. I've also never heard of recasting. As for what other BP'ers would say, everyone is entitled to their own opinions, but there really is no "right" way to do this, regardless of what some people think. The reason I made my last post with the equity appreciation numbers is specifically because some people were starting to talk down about other methods, or people who are or aren't smart investors. I get what they're saying about their own strategies, and some of the stories I hear really sound good. At the same time, I watched HUNDREDS of friends, families, and acquaintances, and yes some of them were investors just like the BPers, lose their shirts during the last crash. They lost everything because they were overleveraged on either their single or multiple properties and let's face it... even with cash reserves, how many people were prepared to weather out the sheer length of that last crash? I sat through it and had enough equity that I never went "underwater" on my property... and then bought my second and third properties as prices were just starting to recover. 

But that wasn't even my first encounter with real estate implosion due to overleveraging. The first one was actually even more impactful, it was called the LA riots. Some of the most valuable real estate in the world at the time sunk like a rock from just a single event. My employer at the time had a very successful business and also significant real estate investment in the area. I don't know his exact net worth, but I'd be willing to bet that he was worth probably at least 50 million at the time, but everything collapsed because of... overleveraging. I'm okay with getting rich slowly. Strategies like BRRRR are too risky for my blood. I bought my first three properties on a 45k salary with cash flow negative spouse. I didn't want to risk my hard earned money on risky tenants.

I'm willing to diversify now and try some other markets and strategies because I feel that I have a relatively stable base now, and I can risk some of my new capital (I also don't want to get stuck in a single market, for obvious reasons). Don't let the haters get you down, I believe they all have good strategies and wish them all the success in the world, they're certainly working hard for it, but that's just not my jam. Yours either. I plan to keep working another 25-30 years until these initial mortgages are all clear, then 1031 the equity to some new, fully paid off properties for pure cash flow, and then retire. I'll keep investing from now until then, so hopefully I will be a multi millionaire by the time I retire, hah! At the same time, even if I lose all of the appreciation on these initial properties, I really and truly doubt that at least in the case of 3, the value will never fall lower than my purchase price, that will still be a decent sum of equity... that someone else paid for (the renters). If we want numbers again... let's assume that 200k property again. 40k down payment. After 30 years, with ZERO appreciation, you still end up with 160k for a 400% return, or 13.3% simple interest per year even if your rental income is only sufficient to cover your mortgage and costs (repairs, vacancy, etc) . Since it's just simple interest, it's not the best return in the world, but it still isn't bad. As I said, for me... any additional cash flow and appreciation are just gravy.

Originally posted by @Martin L. :
Originally posted by @Matthew McNeil:

 Matthew, that really does sound interesting. I've also never heard of recasting. As for what other BP'ers would say, everyone is entitled to their own opinions, but there really is no "right" way to do this, regardless of what some people think....

Martin, thanks for your comments. Many posts tend to go sideways when someone offers an idea or lays out a strategy that doesn't follow the popular mindset of maximizing leverage. I liken it to the LLC topic which has been dissected ad nauseum on multiple BP posts. In the end, it's a 50-50% matchup where 50% insist it's not necessary and 50% put their properties into various LLC mechanisms.

You and I seem to be cut from the same fabric in our approach to investing.  I agree with all you wrote.  And, as you wrote, people are entitled to their own opinions and there is no “right” way to invest or land on one strategy because there are far too many variables involved respective of each investor.

I’m a conservative investor (raised in Eastern Oregon cattle/logging country) and something in my bones (not Dave Ramsey) tells me to pay off my properties, which I do in sync with investing in businesses and the stock market; all of which follows the prudence of diversification. I've done REFIs and 1031 exchanges, and now my instrument is Recasting which I see as a valuable mechanism that positions me in a healthy place to build my portfolio faster while following a strategy I'm comfortable with.  I may do more 1031s in the future as well. 

I’ve learned so much reading hundreds of posts from other BP members, and I’m honored to be part of the BP family.  But I’m just not wired as most people are regarding all the leveraging they do.  I admire them, but that’s not me and more importantly I don’t aspire to be like that.

Cheers!

@Matthew McNeil , thanks for the explanation. Appreciate hearing another approach.

I'm invested partly in Denver rentals. I like the tenants paying off the 30 yr mortgage and the 8-10% appreciation in Denver right now. I feel like the 75% LTV leverage allows me to make 20% IRR or so.

I've posted on BP before that my wife's friend owns one Denver duplex rental with no mortgage; she loves the cash flow....and she gets appreciation too. However, she could have chosen to own 4 duplexes with 75% LTV and had 4x the appreciation. So, we each choose our comfort level with leverage/debt.

I have always looked at pre-payment of my 4.25% APR mortgage is to earn exactly 4.25% on that incremental ($50k as you say) investment....versus buying another rental to try and make 20%+ IRR. Wouldn't you grow your nest egg faster by putting your $50k as 25% down on another $200k home, and earn $20k/yr appreciation in your double-digit Boise market? $50k earns $20k, is a simple 40% IRR on appreciation alone (in addition to cashflow and mortgage repayment equity growth), rather than 4.25% APR). The 4.25% APR on the $50k principal repayment earns you $2125 per year in interest saved. Did you not choose that, instead of $20,000 in Boise appreciation?

I realize principal preservation and debt levels are mutually exclusive goals to the seeking a 40% leveraged return there......but with your belief that Boise is growing....isn't the risk/reward in your favor to own more houses with an acceptable level of leverage, than to own fewer with mortgages paid off?

I ask your reply, not because I'm trying to prove myself "right"....I have this debate with my wife....who wants the rental mortgages paid off someday. I'm wanting to learn what works for other investors.

thanks, Steve
 

@Matthew McNeil and @Martin L. You both have shared so much valuable insight and I appreciate your participation in this thread. Giving people lots to think about. Thank you!

@Andrew Neal - That has been our primary type of rentals in Boise.  Been very pleased, especially because our tenants tend to stay a long time (one has been there a decade now, and others are at 5+ years), and it is fun to see those balances go down on the mortgage statements.  Not living off of any fancy cash flow, but something tells me we will be especially glad we did this in 10 more years.  

Does anyone use lease options to make investing in these class A areas more reasonable?

@Steve K. I actually have these conversations with my wife all the time, and HER risk tolerance is far lower than mine. She wants everything paid off, while I want to expand at a moderate rate. It all comes down to risk. "Risk" is not inherently good, or bad. High risk just means that there can be a very large "swing" - basically a large variation in outcomes. Low risk means that your outcomes are more predictable, not wholly predictable, just more so. An example of extremely high risk would be something like betting on a number at the roulette table, you might lose your money but you also might hit a pretty big return (typically 35x your bet). If you bet $100, that's basically a range of -$100 to $3500, hence "high risk", a less risky bet (less risk, not low risk) would be betting on black or red giving you a range of -$100 to $100. No risk would be keeping the money in your pocket and walking away because gambling is a pretty bad idea in the first place (I work in casinos, so don't tell my boss I said that). 

Strategies like BRRRR are high risk for many people, because frankly... far too many get excited and want to "strike while the iron is hot". They don't maintain enough cash reserves for each property, because it would slow down acquisition... grow Grow GROW! And they're right. If they can keep striking while the iron is hot, they will continue to grow wealth at a fantastic rate. Get rich quick. But if they don't slow down in time, when a large dip in the real estate market happens... some of them won't be able to weather it.

Don't get me wrong, I'm envious of the ones that grow like crazy. Striking when the iron is hot and making a fortune before resting on their laurels. They are a lot braver than I, but hindsight is 20/20. The funny thing about the economy is that.... no one can really predict it. If the economy crashed before they became stable, they would have lost all of it. Prior to the trade war, we were in the midst of a near record-setting decade long bull market. Keep in mind that we are STILL in that bull market, but the trade war has been making it fizzle a bit. The fact that it is very close to record setting means... we're in totally uncharted territory and some people may say "overdue" for a correction. But once again... it could collapse tomorrow, or go on for another decade. People said the real estate markets in Hong Kong and China was unsustainable and in massive bubble territory... about 10 years ago. Some of the people who didn't listen have seen their properties grow 500% or more.

There are people out there that will only do cash outright, they miss a lot of opportunity that way but they have almost zero risk. If the economy collapsed tomorrow, all they need to worry about are insurance, taxes, and maybe some repairs. There are people like Matthew that like to play it very safe, aiming for some leverage but carefully measured. I'm a little more risky, especially now that I'm looking to diversify a little more, but that's because I've "built in" some security first. But that's a key word.  Security. Better properties, mean you're less likely to have issues with both the properties and the tenants. Matthew and I belong to the turtles of the real estate world. Slow and steady wins the race.

Then you have the early birds that catch the worm. An early bird that started when I did would probably be in dozens of properties right now, possibly worth double, triple, 10x what mine are worth. Or... the early bird might have gotten unlucky on one of the early acquisitions and ended up 20k in the hole for major foundation issues that somehow got missed, or 5k for a new AC unit. (Did I mention that my one B-/C+ property had the copper coil stolen from the AC unit on the DAY I signed escrow? 4K to replace that one.) One or two really big setbacks early on can break a new investor. A big slide in the economy could break many investors. Or... we could have a record-setting, decade long bull market, and the ones that made it look like geniuses right now. They're in the strike while the iron is hot camp, and they've been the real winners for the past decade. But it could have just as easily gone sideways much sooner.

I'm okay being a turtle. The other guys have been doing great, many have made fortunes, but I don't want or need the kind of stress that operating like that would bring me. Sometimes I'm envious, but it's just not me. What good would an extra million or two do me if I die an extra 10 years earlier because of the ulcers? I'll just turtle along with Matthew, and let those guys make their fortunes. They've certainly been RIGHT this past decade, but that doesn't mean that I've been wrong.

@Jonna Weber you're now the second person to mention the Boise area. I know of at least 2-3 families from down here who either have moved or are planning to move that way. Another few have gone to the Kalispell Montana area. Thanks for sharing your experience!

Hi All,

I am newbie from San Jose CA. I am also a very conservative RE investor. I also want to invest in A/B+ properties

I want to invest OOS for a better return.  The problem for me is finding these deals

I prefer A and B+ rentals over the C and lower due to the higher level of care my tenants take while in my properties. I have good luck so far.

Originally posted by @Dave Vu :

Hi All,

I am newbie from San Jose CA. I am also a very conservative RE investor. I also want to invest in A/B+ properties

I want to invest OOS for a better return.  The problem for me is finding these deals

 what's the requirement for it to be a "deal" to you?

Originally posted by @Matt K. :
Originally posted by @Dave Vu:

Hi All,

I am newbie from San Jose CA. I am also a very conservative RE investor. I also want to invest in A/B+ properties

I want to invest OOS for a better return.  The problem for me is finding these deals

 what's the requirement for it to be a "deal" to you?

For a truly class A property, I would be happy with a 6-8%  cash on cash return. 

It's good to see some discussion about higher quality properties. I've been helping clients invest in good neighbourhoods in the Dallas/Fort Worth area for several years through my company, Better Coast Capital. Quality schools and solid growth in middle class employment are two of the major factors we consider when looking at new developments to invest in. Our target tenants are families moving to the area for a stable job who may not have the money for a down payment. With prices in the $140-190k range we are still able to make these properties cash flow. Appreciation also ends up making up a large portion of the return.

Our clients pay a higher price for a brand new property in a desirable area. But in return they get lower maintenance costs (because the homes are still under warranty) and the ability to be more picky when selecting a tenant. All this adds up to longer leases, better quality tenants that don't cause problems, and fewer unexpected repair expenses. Our clients are often buying from afar, so the ease of this kind of ownership is very attractive.

Everyone should pick a strategy they are comfortable with. Our strategy would sound crazy for someone who wants to spend time on a daily basis managing their properties. But for our clients, who are more interested in wealth protection and easy management these properties make a lot of sense.

Originally posted by @Dave Vu :
Originally posted by @Matt K.:
Originally posted by @Dave Vu:

Hi All,

I am newbie from San Jose CA. I am also a very conservative RE investor. I also want to invest in A/B+ properties

I want to invest OOS for a better return.  The problem for me is finding these deals

 what's the requirement for it to be a "deal" to you?

For a truly class A property, I would be happy with a 6-8%  cash on cash return. 

 https://www.redfin.com/KS/Overland-Park/14427-Russ...

rental comp at 2300

https://hotpads.com/14416-russell-st-overland-park...


That'd be close to 6% and that's about 5 min search....  if I really tried I could find better deals. That's a clear cut definition of A (low crime, prestige, top schools)... stretch that out more and you can def hit better returns

@Andrew Neal . I have one class A in Carmel Indiana a sub market of Indianapolis. There are some value add properties that can be had but you must do a lot of digging to find them. The entry points in the northern Indy suburbs are reasonable compared to California. The market is still tight for any homes below $250K, but as the market begins to turn, I think there will be more opportunity for A’s. Lots of aging owners here that built in the 80’s and 90’s.
Originally posted by @Andrew Neal :

@Jonna Weber you're now the second person to mention the Boise area. I know of at least 2-3 families from down here who either have moved or are planning to move that way. Another few have gone to the Kalispell Montana area. Thanks for sharing your experience!

 Andrew, come check out Boise.  We serve cookies!  Talk to Jonna :)  Although I've not used her as an agent I've heard really good things about her and she can set you up. 

Originally posted by @Jonna Weber :

@Andrew Neal - That has been our primary type of rentals in Boise.  Been very pleased, especially because our tenants tend to stay a long time (one has been there a decade now, and others are at 5+ years), and it is fun to see those balances go down on the mortgage statements.  Not living off of any fancy cash flow, but something tells me we will be especially glad we did this in 10 more years.  

 Ditto Jonna.  Anything can happen with the economy, but I agree with you that we're going to be very well positioned 10 years from now.  The last house I bought in Meridian 3 years ago has already appreciated $60K. 

Originally posted by @Steve K. :

@Matthew McNeil , thanks for the explanation. Appreciate hearing another approach.

I'm invested partly in Denver rentals. I like the tenants paying off the 30 yr mortgage and the 8-10% appreciation in Denver right now. I feel like the 75% LTV leverage allows me to make 20% IRR or so.

I've posted on BP before that my wife's friend owns one Denver duplex rental with no mortgage; she loves the cash flow....and she gets appreciation too. However, she could have chosen to own 4 duplexes with 75% LTV and had 4x the appreciation. So, we each choose our comfort level with leverage/debt.

I have always looked at pre-payment of my 4.25% APR mortgage is to earn exactly 4.25% on that incremental ($50k as you say) investment....versus buying another rental to try and make 20%+ IRR. Wouldn't you grow your nest egg faster by putting your $50k as 25% down on another $200k home, and earn $20k/yr appreciation in your double-digit Boise market? $50k earns $20k, is a simple 40% IRR on appreciation alone (in addition to cashflow and mortgage repayment equity growth), rather than 4.25% APR). The 4.25% APR on the $50k principal repayment earns you $2125 per year in interest saved. Did you not choose that, instead of $20,000 in Boise appreciation?

I realize principal preservation and debt levels are mutually exclusive goals to the seeking a 40% leveraged return there......but with your belief that Boise is growing....isn't the risk/reward in your favor to own more houses with an acceptable level of leverage, than to own fewer with mortgages paid off?

I ask your reply, not because I'm trying to prove myself "right"....I have this debate with my wife....who wants the rental mortgages paid off someday. I'm wanting to learn what works for other investors.

thanks, Steve

Steve,

Happy to reply to your questions.I understand your assessment asking why I wouldn’t buy another house with my $50K.  Actually, before I forget to mention this; my wife’s comfort level (like your wife) is a variable I need to factor into our decisions - primarily because she grew up in poverty in Montana with no running water or electricity.So, she’s ultra conservative and I need to honor that.

Two things;

1) I always seek advice from my financial advisor before I pull the trigger on any new investment because his expertise far exceeds mine.He has insight I don’t have with his intimate knowledge of his other client’s investments and strategies. Sometimes, we tend to get lost in our spreadsheets and we need outside perspective. In our case, Recasting a loan that was fixed at 4.75% on that property was the best idea.

2) I did my most recent $50K Recast last month. Comparatively, I could have bought another house, but the best rate I could get was 5.75% for investment property. And, the inventory for $200K rent ready homes (which I buy) was sparse at best. So, the numbers at the time tipped in favor of the Recast rather than buying another house. The Recast put an additional $280 cashflow in my pocket.

Originally posted by @Matt K. :
Originally posted by @Dave Vu:
Originally posted by @Matt K.:
Originally posted by @Dave Vu:

Hi All,

I am newbie from San Jose CA. I am also a very conservative RE investor. I also want to invest in A/B+ properties

I want to invest OOS for a better return.  The problem for me is finding these deals

 what's the requirement for it to be a "deal" to you?

For a truly class A property, I would be happy with a 6-8%  cash on cash return. 

 https://www.redfin.com/KS/Overland-Park/14427-Russ...

rental comp at 2300

https://hotpads.com/14416-russell-st-overland-park...


That'd be close to 6% and that's about 5 min search....  if I really tried I could find better deals. That's a clear cut definition of A (low crime, prestige, top schools)... stretch that out more and you can def hit better returns

Matt,

Thank you so much for being so helpful. I really appreciate if you should share your process of screening . This will help us newbies to learn a lot quicker. I have seen people in here mentioning about KC, but I am sure that is not the reason or the only reason you picked it as an example. It would be great if you could share the process and any tool that you use for your search. I have always used zillow to find out rent estimates. Now I know hotpads is another one. Please do not take me wrong, I will need to to put in my own effort  to gain knowledge in RE investment, but people like you could really help us cutting down the learning curves... 

Thanks again for your help,

Dave

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