Rookie Prospective SFR Investor

Rookie Prospective SFR Investor

Las Vegas · Member since 2019 · 18 posts · 3 votes

Good afternoon all,

My name is Matt. (I apologize for the lengthy post.) A couple years ago, I was in a crappy call center job(I now work for AmEx) with no sense of what I wanted to do with my future. I was visiting my Aunt and Uncle in Plano, Tx that summer, and the conversation came up about my terrible job. My Aunt asked me if I would be interested in doing what my uncle does, which is apartment syndication. Seeing the lavish lifestyle they lived, I was intrigued, but of course my first response was, "Where am I going to get the money he uses to purchase these $30 million properties?" She mentioned that he uses OPM. Before my wife and I headed back home to Las Vegas, my uncle gave us a book: Rich Dad Poor Dad. Of course. Ha. Like many others, that book completely changed my mindset on how I look at creating income. I then read 2 more Kiyosaki books and a few more mindset and real estate books. As one of his students, my uncle recommended we attend Brad Sumrok's "Rat-Race to Retirement" seminar in Dallas. We attended. After hearing this phrase multiple times,"I was able to quit my 6 figure job..." I realized apartment syndication is not something you just jump into without some serious capitol to get started. Now, my wife and I are planning to begin our journey with SFR investing. We've decided to list our current home for sale next week as it's appreciated significantly in the 3 years we've been there and it's a ton of wasted space. We will use some of the profit to pay down bad debt and the rest we will save for investing next year. During the next 12-14 months, I'll be focusing on my education, networking, and saving. Because our ultimate goal is apartment syndication, I am interested, not so much in monthly cash-flow right now, but building equity in multiple single family homes over the next 5-7 years so that we may one day sell them and have enough to get into large multi-family. My biggest concern after all the reading I've been doing is, who do you trust? There seems to be so many people out there that just want to take your money and that worries me a bit. This may be a terrible idea, but that's why I'm here. I'm looking for some guidance/feedback. After some brainstorming my current plan is: Next year we're going to purchase another less expensive home to live in(FHA), and when we're ready, we will purchase our first SFR to rent out that year. By next summer, we'll have around $30k-$40k to get started. I know it's not much, but you have to start somewhere right?

I appreciate any and all feedback, and I thank you.

Matt

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Specialist · Las Vegas, NV · Member since 2018 · 33 posts · 19 votes
7y

Hi Matthew,

You sound like you have the right mindset!  Keep at it.  What if, I told you I could help you with what you're looking for, and ask for no $.  I live in Las Vegas myself, and love to help the right ppl.  Anyone and everyone can bring value to each other imo.  If you're interested... dm me. 

Best regards

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  • Specialist · Las Vegas, NV · Member since 2018 · 33 posts · 19 votes
    7y

    Hi Matthew,

    You sound like you have the right mindset!  Keep at it.  What if, I told you I could help you with what you're looking for, and ask for no $.  I live in Las Vegas myself, and love to help the right ppl.  Anyone and everyone can bring value to each other imo.  If you're interested... dm me. 

    Best regards

  • Investor · Front Royal, VA · Member since 2013 · 586 posts · 418 votes
    7y

    @Matthew Middleton seems like you’re on the right track. If multifamily is what you want to do I would stay involved and get educated on that. You don’t need a ton of capital to start. It helps, but there are ways around it. It’s easy to get distracted on BP so pick a strategy and stick with it. Good luck!

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Luke Miller I appreciate the feedback, thank you. Multifamily is my ultimate goal. I was just a little discouraged because I assumed you needed at least $100k to even get started at all. I'll be moving to the Dallas area in a couple years. Until then, I'll continue my education, save, and attend REI meet ups.

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Matthew Middleton

    If I'm reading your post right, you quit your 6 figure job? A 100k job in Las Vegas is very good and should keep until you are able to save enough for a down payment. If syndication is your ultimate goal, then unless you have the backing behind you, you will need to take steps. Maybe purchase multi's (2-4) before multi's 10+. 

    Real estate is a learning process and journey that one takes years, and not often do you jump to the front of the line.

    Terry

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Terry Lao

    Hello Mr. Lao. What I meant to say was, at the seminar, there were quite a few guest speakers who were students in the program. Most, if not all stated they were able to quit their six figure job as an engineer/doctor/lawyer etc. after 3 years. This led me to believe that apartment syndication is only for those that have $100k+ to invest. I totally understand that and I applaud them on their success. I just won't have anywhere near that kind of capital anytime soon, which is why I'm considering starting with buy and hold SFR until I can raise enough to "graduate" to large MF. To be honest, I'm looking for the story of "Joe Shmo" the construction worker, making $50k a year starting with less than that, and building up capital with SFR and after years of hard work and patience was able to purchase his first multi-family property. I considered the house hacking technique but, here in Las Vegas, duplex/triplex/quad-plexes are in some, less than desirable areas(D class neighborhoods). I will probably seek out a partnership of some sort when I've built up more capital, but I'm looking for a place to start.

  • Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
    7y

    @Matthew Middleton With regard to your question: "who do you trust?"... Trust those who are doing the SAME THING you are doing, not those who have something to gain from what you are doing.

    Also, you need to read a few more books. You are still seeing the small picture. Try reading "The Magic of Thinking Big" by David Schwartz, or talking more to your uncle.

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Matthew Middleton

    Thanks for clarifying. I'm in that salary range, and would never quit my job because that is what pays the bills. I use real estate as a way to build passive income and increase net worth. In my opinion, you are in the best market for appreciation, as 2018, Las Vegas came in at #1, 10.2% This year, LV is still in the top spot, but forecasts has LV around 7-8%. While most other large metro cities are 3-4%. 

    You can have all the knowledge, and lose money because of the timing. Meaning, everyone who bough in Las Vegas 2012-2016, and held for at least one year, made money. However, if you bought in 2006-2008, you pretty much lost your shirt as properties lost 50% of their value. 

    Your aunt mentioned " OPM" which is what I used to buy 4 plexs in LV, and use the rents to pay my mortgage and all expenses. I still had $500-700 each month after all expenses. You should also use OPM............as in other people's mistakes, to learn from and not make the same.

    Las Vegas SFR high was 315K, Jun'06. March 2018 was $300k. Getting close to peaks again. Only saving grace is that while other cities like Los Angeles, Orange County, SF, San Jose, reached their peak and established new peaks. Las Vegas is one of few that has not done that.

    You never lose money when taking profit.

    Terry

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Steve Hall   Thank you. I have that book. I'll read it again. It's been a while.

    @Terry Lao I appreciate your insight sir. Thank you for sharing that with me. I am a little worried with investing in SFR in Las Vegas, as the market does seem to be cooling off a bit though with rising inventory, but I guess that could be a good sign for buyers? I've been hearing many locals saying they want to list their homes for sale next year when the Raiders get here(thinking that will cause prices to shoot up), but I have a feeling they're in for disappointment when they realize everyone else had the same idea.

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Matthew Middleton

    Raiders moving to Las Vegas is mostly hype, and will help the local economy now, as currently building $3B stadium Will also help the local economy during home games. Mostly, will help sell the high end homes in Summerlin to players and coaches. 

    I just listed a 4plex, near strip, and will take profit to the tune of 200k. I don't mind taking profit now, because it is the busy spring/summer season. I don't want to time the very peak, as now is a good time. You are correct as inventory is increasing, and will effect the supply/demand equation. However, even with increase inventory, brings it to a 3 month supply. Most realtors, say 6 months supply is balanced market. 

    If you want to know what will happen in the future, study the past as in 2006-2008. When the jobs are gone, then a domino effect will happen. No job, then cannot pay mortgage, bank will foreclose, banks will tighten loan requirements, and home values will go down.

    Currently, economy good, rates low, banks loaning, people buying homes. 

    Terry

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Terry Lao Again, I greatly appreciate you taking the time. So, I'm thinking I may stick with my plan of educating myself over the next year while saving up as much as possible so that I may purchase my first property sometime late next year. I'm 30yrs old and my goal is to have my first MF investment in the next 5 years. 

  • Member since 2018 · 214 posts · 175 votes
    7y
    Originally posted by @Terry Lao:

    @Matthew Middleton

    Raiders moving to Las Vegas is mostly hype, and will help the local economy now, as currently building $3B stadium Will also help the local economy during home games. Mostly, will help sell the high end homes in Summerlin to players and coaches. 

    I just listed a 4plex, near strip, and will take profit to the tune of 200k. I don't mind taking profit now, because it is the busy spring/summer season. I don't want to time the very peak, as now is a good time. You are correct as inventory is increasing, and will effect the supply/demand equation. However, even with increase inventory, brings it to a 3 month supply. Most realtors, say 6 months supply is balanced market. 

    If you want to know what will happen in the future, study the past as in 2006-2008. When the jobs are gone, then a domino effect will happen. No job, then cannot pay mortgage, bank will foreclose, banks will tighten loan requirements, and home values will go down.

    Currently, economy good, rates low, banks loaning, people buying homes. 

    Terry

    To Study 2006 to 2008, Sounds like you predict the future will be like 2006 to 2008.  Instead of studying 2006 to 2008, I would study 1989 to 1994, I think the future will be more like 1989 to 1994, which is not bad.  

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Account Closed

    Thank you sir. I'm going to research those years and see how they may correlate with today's market.

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Matthew Middleton

    @Account Closed

    I believe the next recession will not be as bad as 2006-2009, but I thought it might be pointless as Matthew was only 1 or 2 years old. That period was called the Great Recession. I do believe next will not be as severe. Maybe Las Vegas will lose about 15-20%? 

    However, all recession have elements in common, and repeat. All surround a key issue or issues that result in loss of jobs. 

    Terry

  • Real Estate Agent · Las Vegas, NV · Member since 2016 · 107 posts · 57 votes
    7y

    Hi @Matthew Middleton, great question. I'm a local LV investor, and Realtor doing ~100 transactions per year so I have a good pulse on the market. I would be VERY cautious about the common "we're in a bubble" / "we're in a peak" / "recession is looming" line of thinking.

    Las Vegas has very limited land resources which are quickly being exhausted. Urban sprawl is not possible here due to unusable federal land surrounding the valley. This, combined with economic factors such as the California exodus (and other migration patterns) lead me to believe there will be long term growth here. 

    People who "wait" for prices to come down are often creating an excuse to not take action. In my opinion, a lot of these people will be kicking themselves later.

    Las Vegas is on sale right now.

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Dan Mumm You make some great points sir, thank you. I feel much more confident in the market here now, especially because I just listed our home for sale yesterday. Ha. It's nice to see people are so helpful on this site.

    Thanks again. 

  • Investor · Las Vegas, NV · Member since 2014 · 471 posts · 241 votes
    7y

    Hi @Matthew Middleton...welcome to BP and the Investing game.  Understood about getting educated and a "lay of the land" Mentality right now.  I'm happy to help point you in the right direction with those in my network who focus on multi-family.  Lets talk with you have the time.  Also you can find local vegas investor events here:  https://www.biggerpockets.com/forums/521-events-and-happenings

  • Las Vegas · Member since 2019 · 18 posts · 3 votes
    7y

    @Jon Lee  Thank you very much sir. Yes, I'd love to talk sometime soon. Thanks for the link to the events, as well.

    Matt

  • Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    And for the 9th month in a row Las Vegas lead the nation in month over month appreciation. (After trailing in the top 3 with Seattle and Phoenix for the previous 2 years.)

    Obviously the worst city in the nation to invest in. Try to find somewhere prices are dropping instead. Or wait a few years, pay 20% more with a loan interest rate a couple percent higher. Maybe plow everything you own in to the stock market or gold until then so you aren’t losing money to inflation. 

  • Member since 2018 · 214 posts · 175 votes
    7y
    Originally posted by @Account Closed:

    Mr Lao is cashing out.  Im staying the course but i dont own C class quad.

    Ran should think about cashing out a bit too......................hehehe.

    After all the rental expenses, my portfolio provide me $20k net monthly rental income, why should I sell it?

    If I sell it now, I would lose $240k net yearly rental income, or $1.2 million net rental income in 5 years.

    Never sell the cash cow properties.

    ;)

  • Member since 2018 · 214 posts · 175 votes
    7y

    I grew up in a city where the population density is very high, had lived in two different high population density cities before. About 30 years ago, people in those two cities thought $1700 rent for a $300k property was insane.

    It then developed to $1800 rent for a $530k house 16 years ago. today, a $1.23 million market price house (1800 sq ft) is renting at $3500, and still have demand.

    Clark County population was about 1.3 million in year 2000.

    Today, Clark county population has grown to 2.2 million, and population is still growing steadily every year.

    Shelter is a major necessity that everyone needs. Nobody wants to be homeless. People still need to rent/buy a place to stay although they are expensive.

    Just like people would not stop driving car because gasoline has gone up from $1 to $3.20 per gallon. We will need to pay for the gasoline even it goes up to $4 per gallon, unless people stop driving and walk/take transportation, but then the transportation would raise the fare too because of the raised gasoline price.

    After watching and studied the history of those two cities population, $1700 rent at a $300k house in Las Vegas does not look insane to me.

    The older history a city has, the worse rental income ratio it will be. 

    In the other words, buying a rental today has a much better ratio than 15 years or 30 years later. 

    If people wait another 15 years to buy a rental property, the rental income ratio will be much worse 15 years later.  It “may become” $2000 rent for a $500k house in Las Vegas 15 years later.  

    LOL.  ;)

  • Member since 2018 · 214 posts · 175 votes
    7y

    After reading Sarah post, I feel that, this is Sarah's point of view: 

    Sarah's messages are: 

    Buyer, don't buy anymore properties, hold up all your cash until the houses drop 70%...

    Seller, take action to sell all your houses immediately before you would have panics very soon...

    Sarah, am I reading your mind?  Is it your point of view? is it the message you would like to tell us??

    ;)

  • Wholesaler · Temple, TX · Member since 2017 · 44 posts · 17 votes
    7y

    Hey @Matthew Middleton my wife and I are new to real estate investing as well! I’d love to connect with you and see how we can help along the way!

  • Member since 2018 · 214 posts · 175 votes
    7y

    Sarah, do you own any primary residence or investment properties today?

    Have you saved enough cash for the down payment to buy the next primary or investment property yet?

    If the housing market start to crash tomorrow, will you be sad or happy?

    If you are happy that the housing market crashing tomorrow, is it because, then you can use your saved cash to buy a discount house?

  • Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    Las Vegas is still a great place to own. Lead the nation again with another 9% in appreciation. If you can’t make money here you can’t make money anywhere. 9% may not sound like much but if you put down 20% you made 45% on your money in the last 12 months. if you bought 7-8  years ago the property is probably worth about double your purchase price, so you’ve made 500%, not too shabby  

    Buy and hold and hold and hold. I’m trying to buy another lake home in MN for $475k that the original owners bought 40 years ago for $28k. 4 doubles in 40 years, that’s only 7% yearly appreciation. 

  • Member since 2018 · 214 posts · 175 votes
    7y

    I like the idea of buy and hold and hold and hold.  In the long run, it will be a winning for certain.  

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