Buying multiple properties in year 1 - can I keep this up?
Rental Property Investor · San Jose, CA · Member since 2018 · 46 posts · 26 votes
Jumping in to real estate was a well-calculated move. I live in San Jose, and this market is notorious for making people lose faith in their ability to purchase.
I bought my primary residence in May of 2017 - a brand new million dollar 3 story 2200 sq ft home and closed on a 500k vacation/rental in Lake Tahoe right before the new year.
The primary was financed with 10% down and the rental was financed with 20% down.
I strongly believe the the community I purchased my primary in has massive potential upside, and have been blown away by the prices i've seen my neighbors sell their properties for within just a year of owning.
I'm sharing this in the "success stories" section because I can't stand how discouraged people get, and I truly despise the mindset of "i'll just wait for the market to crash"
We need to find a way to make it work - no one will do it for us
We have been hearing that the market is going to crash for four years now; so, many investors agree that sitting on the sidelines for extended periods is very costly.
If you have strong market knowledge, buy in good locations, use prudent debt, and have reserves, buying (predictable) appreciation plays can be a very profitable strategy.
On a side note, buying property is not a success story...making a profit over the long-term is.
@Nick Colvill Not really familiar with the San Jose RE market, but if it is like any other CA market; a recession will hit it hard. Biggest reason why investors will not start in CA unless they have the funds to sustain the value of a recession when it was inflated when bought.
I do know the economics of San Jose due to being a stock investor and San Jose is the one of the biggest manufacturing city in the West Coast. However, manufacturing companies are the first to cut when a recession starts.
There's already a lot of investors pulling out of California (not just Residential Investors), due to the Stock Market showing signs of potential recession. So while your plan for appreciation is good, what will happen when there is a recession? Many experts are already saying it will most likely happen towards the end of next year. The only thing that saved it from happening this year was the tax bill.
What@Account Closed is most likely talking about are subject to. I would be very careful with those since it technically is not illegal, but if the property is still under a mortgage, the mortgage lender can call the loan. a very useful tool if you know what you are doing, but I personally wouldn't want to go that route.
Just to give you an example: in 2007-08 recession, the California Housing Market went down by about 35%.
I’d be careful throwing around numbers like “the California housing market went down by about 35%”
CA is a huge state with a wide variance in prices - but the Bay Area was most certainly not hit as hard as you suggest.
What other data do you have to support an upcoming crash in the Bay Area other than historical anecdotes? Or anecdotes of people saying they think it might happen.
It’s interesting that you use the tax bill as a cause for the recession NOT to hit - many people blame the tax bill and subsequent increase in rates as an indicator that prices WILL drop
You're right, you don't have to believe me or majority of investors on here. If you know anything about economics, you know that increasing the rates and the tax bill HELPS the economy and prevents recession. Don't really want to get into economics since it'll be too much to put on here if you don't even know how rates and the tax bill are keeping the recession at bay.
Wow! "you know that increasing the rates and the tax bill HELPS the economy"
@Eziekel interesting economics! Well then, may your rates and taxes rise to the moon. ;-)
LMAO, have you even read the actual tax bill? Do you know what the fed rates are for? Really got to research the market. Easy to make a ton of money when for the past ten years every money has been nothing but up...
;-) Actually, yes. I am a student of macro economics and geo-political impact on the economy. I also have learned about gravity. What goes up, must come down. We have a national debt that has to be addressed and unfunded liabilities that have to be funded. That means states like California and Illinois and New York are going to see substantial real estate property tax increases to meet the requirement. People will move from those states to better run states. I know about (economic) contagion, the fact that demographics put us on a negative yield curve and that gold is currently at $1200 but will go up when the S&P drops (or so they say.) I know that Russia and China are trying to dump the dollar, which won't work, and that Turkey, Venezuela and Argentina are on the verge of collapse. I know that South Africa is threatening to take the land of white farmers which will cause starvation because blacks in South Africa don't know how to farm. I know that China is instituting laws making it illegal to invest outside of the country. I know a lot of that money has been going into Seattle, the Bay Area and So. Cal. I know that once that supply line of easy cash dries up, the market will correct in the areas that the Chinese have been investing in. I know that when the Fed raises rates, many people are shut out of purchasing a house because it causes their ratios to no longer support the financing, it also scares home buyers who were affected when their parents lost their homes to foreclosure in the great recession.
But, I never tell people this because 1) They can't handle the truth (actually they just won't take the time to learn it) 2) It gives me a tremendous investment edge.
I’m just curious about the data suggestion we are nearing a downturn in the San Jose area
Your comment: "I’m just curious about the data suggestion we are nearing a downturn in the San Jose area"
Relax, There isn't any or he would have given the source.
@Nick Colvill Not really familiar with the San Jose RE market, but if it is like any other CA market; a recession will hit it hard. Biggest reason why investors will not start in CA unless they have the funds to sustain the value of a recession when it was inflated when bought.
I do know the economics of San Jose due to being a stock investor and San Jose is the one of the biggest manufacturing city in the West Coast. However, manufacturing companies are the first to cut when a recession starts.
There's already a lot of investors pulling out of California (not just Residential Investors), due to the Stock Market showing signs of potential recession. So while your plan for appreciation is good, what will happen when there is a recession? Many experts are already saying it will most likely happen towards the end of next year. The only thing that saved it from happening this year was the tax bill.
What@Account Closed is most likely talking about are subject to. I would be very careful with those since it technically is not illegal, but if the property is still under a mortgage, the mortgage lender can call the loan. a very useful tool if you know what you are doing, but I personally wouldn't want to go that route.
Just to give you an example: in 2007-08 recession, the California Housing Market went down by about 35%.
I’d be careful throwing around numbers like “the California housing market went down by about 35%”
CA is a huge state with a wide variance in prices - but the Bay Area was most certainly not hit as hard as you suggest.
What other data do you have to support an upcoming crash in the Bay Area other than historical anecdotes? Or anecdotes of people saying they think it might happen.
It’s interesting that you use the tax bill as a cause for the recession NOT to hit - many people blame the tax bill and subsequent increase in rates as an indicator that prices WILL drop
You're right, you don't have to believe me or majority of investors on here. If you know anything about economics, you know that increasing the rates and the tax bill HELPS the economy and prevents recession. Don't really want to get into economics since it'll be too much to put on here if you don't even know how rates and the tax bill are keeping the recession at bay.
You and I are on the same page about the effects of increasing rates (they couldn’t stay so artificially low for so long without consequnces) and the benefits of the tax bill
I asked you if you had any data or could at least point to any tangible signs of the Bay Area market taking a “hard hit” (your words) any time soon.
Look at the S&P 500 trend. it basically encompasses the stock market. You would see that in the past year the prices are starting to consolidate instead of a steady up. That is a sign that investors are liquidating assets. When that starts trending down, that will initiate full liquidation of companies. That's the simple version of it. But when investors liquidate companies will start cutting jobs due to the loss of income from stock market. The bay area has a lot of those companies. When jobs are cut, people start to foreclose on homes. When homes are foreclosed, the surrounding homes' value are lowered.
I imagine since you play the stock market and you are noticing that we are nearing a downward trend that you are holding some pretty large short positions in the S&P?
But I know results talk and people can lie. So here is one of the last trades I did (stopped trading to focus on setting up RE business):
One of my best trades actually. 37% gain in less than 1 hr. Of course when you do option trades, you normally don't want to put too much in the line (all the purpose of leveraging). I normally average about 20-25% per trade though (which is why I had a screenshot of this one).
I’m just curious about the data suggestion we are nearing a downturn in the San Jose area
Didn't get a notification, but here is the data for S&P500 using the program that stock investors and traders uses (it's called thinkorswim by tdameritrade if you are curious). I'll try to make it short.
That is 15 yr timeframe measured daily. Do you see the consolidation in the beginning of 2017 and 2018? basically consolidation is where the market is basically just going up and down without no clear direction. Now look into the the 2006-2007 before the dip in 2008. Looks similar where it has huge 'swings' compared to the other times it went down a bit. Won't spam this forum with pictures, but if you zoom in to look at every single tick mark, it shows that within days, there has been huge sell offs.
While I play the stock market, I don't hold positions longer than a week. I am what is known as a swing options trader in the stock market community. Basically I draw up contracts putting 'option' money down to control large amount of stocks without paying for it. Someone buys my contracts when I predict right and I get the difference. Same thing as subject to or wholesale.
I also play the FOREX market (currency, but instead of companies the whole country), that you have to get approved by banks since I control 1:400. Meaning for every dollar I put in, the bank or broker will put 400 in. I collect all the profit, bank collects the interest. Reason why I know about economics. If you are not successful in trading, trusted brokers will not approve you to trade. IF they somehow does and your trade goes wrong, all your money in the account will be taken.
Looks impressive. The only flaw in your theory is that your trade can never be as quick as a Hedge Fund trade. You will be left holding the bag when that happens. It doesn't happen slowly, it happens like when the "Flash Crash" took place. All gone. Fast!
@Nick Colvill Not really familiar with the San Jose RE market, but if it is like any other CA market; a recession will hit it hard. Biggest reason why investors will not start in CA unless they have the funds to sustain the value of a recession when it was inflated when bought.
I do know the economics of San Jose due to being a stock investor and San Jose is the one of the biggest manufacturing city in the West Coast. However, manufacturing companies are the first to cut when a recession starts.
There's already a lot of investors pulling out of California (not just Residential Investors), due to the Stock Market showing signs of potential recession. So while your plan for appreciation is good, what will happen when there is a recession? Many experts are already saying it will most likely happen towards the end of next year. The only thing that saved it from happening this year was the tax bill.
What@Account Closed is most likely talking about are subject to. I would be very careful with those since it technically is not illegal, but if the property is still under a mortgage, the mortgage lender can call the loan. a very useful tool if you know what you are doing, but I personally wouldn't want to go that route.
Just to give you an example: in 2007-08 recession, the California Housing Market went down by about 35%.
I’d be careful throwing around numbers like “the California housing market went down by about 35%”
CA is a huge state with a wide variance in prices - but the Bay Area was most certainly not hit as hard as you suggest.
What other data do you have to support an upcoming crash in the Bay Area other than historical anecdotes? Or anecdotes of people saying they think it might happen.
It’s interesting that you use the tax bill as a cause for the recession NOT to hit - many people blame the tax bill and subsequent increase in rates as an indicator that prices WILL drop
You're right, you don't have to believe me or majority of investors on here. If you know anything about economics, you know that increasing the rates and the tax bill HELPS the economy and prevents recession. Don't really want to get into economics since it'll be too much to put on here if you don't even know how rates and the tax bill are keeping the recession at bay.
Wow! "you know that increasing the rates and the tax bill HELPS the economy"
@Eziekel interesting economics! Well then, may your rates and taxes rise to the moon. ;-)
LMAO, have you even read the actual tax bill? Do you know what the fed rates are for? Really got to research the market. Easy to make a ton of money when for the past ten years every money has been nothing but up...
;-) Actually, yes. I am a student of macro economics and geo-political impact on the economy. I also have learned about gravity. What goes up, must come down. We have a national debt that has to be addressed and unfunded liabilities that have to be funded. That means states like California and Illinois and New York are going to see substantial real estate property tax increases to meet the requirement. People will move from those states to better run states. I know about (economic) contagion, the fact that demographics put us on a negative yield curve and that gold is currently at $1200 but will go up when the S&P drops (or so they say.) I know that Russia and China are trying to dump the dollar, which won't work, and that Turkey, Venezuela and Argentina are on the verge of collapse. I know that South Africa is threatening to take the land of white farmers which will cause starvation because blacks in South Africa don't know how to farm. I know that China is instituting laws making it illegal to invest outside of the country. I know a lot of that money has been going into Seattle, the Bay Area and So. Cal. I know that once that supply line of easy cash dries up, the market will correct in the areas that the Chinese have been investing in. I know that when the Fed raises rates, many people are shut out of purchasing a house because it causes their ratios to no longer support the financing, it also scares home buyers who were affected when their parents lost their homes to foreclosure in the great recession.
But, I never tell people this because 1) They can't handle the truth (actually they just won't take the time to learn it) 2) It gives me a tremendous investment edge.
True, I never tell other investors in my area about the certain projects that I am privy to or have researched. Kinda defeats the purpose if everyone knows a good deal. I actually minored in macro economics as well.
I’m just curious about the data suggestion we are nearing a downturn in the San Jose area
Didn't get a notification, but here is the data for S&P500 using the program that stock investors and traders uses (it's called thinkorswim by tdameritrade if you are curious). I'll try to make it short.
That is 15 yr timeframe measured daily. Do you see the consolidation in the beginning of 2017 and 2018? basically consolidation is where the market is basically just going up and down without no clear direction. Now look into the the 2006-2007 before the dip in 2008. Looks similar where it has huge 'swings' compared to the other times it went down a bit. Won't spam this forum with pictures, but if you zoom in to look at every single tick mark, it shows that within days, there has been huge sell offs.
While I play the stock market, I don't hold positions longer than a week. I am what is known as a swing options trader in the stock market community. Basically I draw up contracts putting 'option' money down to control large amount of stocks without paying for it. Someone buys my contracts when I predict right and I get the difference. Same thing as subject to or wholesale.
I also play the FOREX market (currency, but instead of companies the whole country), that you have to get approved by banks since I control 1:400. Meaning for every dollar I put in, the bank or broker will put 400 in. I collect all the profit, bank collects the interest. Reason why I know about economics. If you are not successful in trading, trusted brokers will not approve you to trade. IF they somehow does and your trade goes wrong, all your money in the account will be taken.
Looks impressive. The only flaw in your theory is that your trade can never be as quick as a Hedge Fund trade. You will be left holding the bag when that happens. It doesn't happen slowly, it happens like when the "Flash Crash" took place. All gone. Fast!
Reason why I am getting into RE market. Too many big dogs in the stock market. Worse in the FOREX market. With FOREX you are playing against the government reserves. At least in the RE market, you can get deals and get inside scoops which are harder to do in the other markets.
@Account Closed Also, just want to give a tidbit. The reason why people say that gold rises when S&P drops is due to the fact that as stock investor/trader it is easier to liquidate and buy into gold then to completely pull the money out of the stock market and not gain anything while the recession hits. When there's more demand on a supply, prices go up =].
I’m just curious about the data suggestion we are nearing a downturn in the San Jose area
Didn't get a notification, but here is the data for S&P500 using the program that stock investors and traders uses (it's called thinkorswim by tdameritrade if you are curious). I'll try to make it short.
That is 15 yr timeframe measured daily. Do you see the consolidation in the beginning of 2017 and 2018? basically consolidation is where the market is basically just going up and down without no clear direction. Now look into the the 2006-2007 before the dip in 2008. Looks similar where it has huge 'swings' compared to the other times it went down a bit. Won't spam this forum with pictures, but if you zoom in to look at every single tick mark, it shows that within days, there has been huge sell offs.
While I play the stock market, I don't hold positions longer than a week. I am what is known as a swing options trader in the stock market community. Basically I draw up contracts putting 'option' money down to control large amount of stocks without paying for it. Someone buys my contracts when I predict right and I get the difference. Same thing as subject to or wholesale.
I also play the FOREX market (currency, but instead of companies the whole country), that you have to get approved by banks since I control 1:400. Meaning for every dollar I put in, the bank or broker will put 400 in. I collect all the profit, bank collects the interest. Reason why I know about economics. If you are not successful in trading, trusted brokers will not approve you to trade. IF they somehow does and your trade goes wrong, all your money in the account will be taken.
Looks impressive. The only flaw in your theory is that your trade can never be as quick as a Hedge Fund trade. You will be left holding the bag when that happens. It doesn't happen slowly, it happens like when the "Flash Crash" took place. All gone. Fast!
Reason why I am getting into RE market. Too many big dogs in the stock market. Worse in the FOREX market. With FOREX you are playing against the government reserves. At least in the RE market, you can get deals and get inside scoops which are harder to do in the other markets.
Air Force is good. If you ever want to discuss details of real estate investing, let me know. My daughter's best friend is an Academy Grad .
I’m just curious about the data suggestion we are nearing a downturn in the San Jose area
Didn't get a notification, but here is the data for S&P500 using the program that stock investors and traders uses (it's called thinkorswim by tdameritrade if you are curious). I'll try to make it short.
That is 15 yr timeframe measured daily. Do you see the consolidation in the beginning of 2017 and 2018? basically consolidation is where the market is basically just going up and down without no clear direction. Now look into the the 2006-2007 before the dip in 2008. Looks similar where it has huge 'swings' compared to the other times it went down a bit. Won't spam this forum with pictures, but if you zoom in to look at every single tick mark, it shows that within days, there has been huge sell offs.
While I play the stock market, I don't hold positions longer than a week. I am what is known as a swing options trader in the stock market community. Basically I draw up contracts putting 'option' money down to control large amount of stocks without paying for it. Someone buys my contracts when I predict right and I get the difference. Same thing as subject to or wholesale.
I also play the FOREX market (currency, but instead of companies the whole country), that you have to get approved by banks since I control 1:400. Meaning for every dollar I put in, the bank or broker will put 400 in. I collect all the profit, bank collects the interest. Reason why I know about economics. If you are not successful in trading, trusted brokers will not approve you to trade. IF they somehow does and your trade goes wrong, all your money in the account will be taken.
Looks impressive. The only flaw in your theory is that your trade can never be as quick as a Hedge Fund trade. You will be left holding the bag when that happens. It doesn't happen slowly, it happens like when the "Flash Crash" took place. All gone. Fast!
Reason why I am getting into RE market. Too many big dogs in the stock market. Worse in the FOREX market. With FOREX you are playing against the government reserves. At least in the RE market, you can get deals and get inside scoops which are harder to do in the other markets.
Air Force is good. If you ever want to discuss details of real estate investing, let me know. My daughter's best friend is an Academy Grad .
I don't regret it one bit! Actually turned down full ride scholarships and Academy to enlist at 17 (skipped a grade). My investment income actually matches my military pay right now, but I will probably continue to stay in until I hit that 20 year retirement. Just finish my 6 yr mark so still have plenty to go lol.
I will probably take your offer on that in the future. I feel like there are better ways to finance deals.
In very simple terms, unless your properties cash flow you are speculating, and you need to be prepared in the event that the housing market sees a downturn. Many people believe, based on historical events, that states with very high taxes and an unfriendly business climate will not have long-term growth due to out-flow of skilled jobs and people. CA is a state that companies with remote workers who have CA clients avoid hiring in because of the draconian taxes on employers. In an economy where white collar workers are moving to remote positions this doesn't bode well for that reason, and if you aren't tied geographically to your employer, why move somewhere where a 2200 sq foot house is $1 million when you can get a house that size for 350K in other areas without the congestion? There is nothing the matter with speculation, its just more risky, which certainly can garner more reward, but is difficult to sustain long-term.
Everyone has a different outlook. Because my first primary residence was bought years ago before a down turn (when we were told "it can only go up") we know what can happen. Our investments are bought well, fixed up, and cash flow enough to pay themselves off in about 10 years. Appreciation is the icing on the cake.
@Nick Colvill maybe I am missing something here, but it seems like you don't own any income producing properties. Just like any business, you can't operate at a loss long term. I am guessing your W2 salary is paying the bills, but what happens if you lose your job?
@Nick Colvill what’d ya mean? We’ve been nearing a downturn in the Bay Area for the last 3 years ;)
For those interested in actual, long term data, there is this: (and a hint- appreciation isn’t the icing on the cake, it’s the entire cake.)
This is a fun thread I love all the banter back and forth
@Amit M. and everyone else talking about a supposed downturn - you guys (collectively the people who have been bearish on real estate) have been saying we are nearing a downturn for years. You said it in 2015, 2016, 2017, and so on. Now @Account Closed you're not missing anything, I don't own any cash flowing properties nor did I ever claim to - this original thread was posted in the real estate success forum because I successfully purchased 2 pieces of property in 1 year and am very proud of my family for making this happen. Talking about what happens if we go unemployed is a completely different thread - but i'm fortunately not a w-2 earner (self employed) so I feel less stress when I think of "losing my job", because i'm not going to fire myself (that isn't to say that something couldn't take my business away)
Jumping in to real estate was a well-calculated move. I live in San Jose, and this market is notorious for making people lose faith in their ability to purchase.
I bought my primary residence in May of 2017 - a brand new million dollar 3 story 2200 sq ft home and closed on a 500k vacation/rental in Lake Tahoe right before the new year.
The primary was financed with 10% down and the rental was financed with 20% down.
I strongly believe the the community I purchased my primary in has massive potential upside, and have been blown away by the prices i've seen my neighbors sell their properties for within just a year of owning.
I'm sharing this in the "success stories" section because I can't stand how discouraged people get, and I truly despise the mindset of "i'll just wait for the market to crash"
We need to find a way to make it work - no one will do it for us
Hey Nick, fellow CA investor here (LA area, but used to live in SF and lots of friends and family in the Bay Area). I like San Jose as a market. I think that while a lot of our of state folks (no offense intended) tend to focus on the absolute prices in the Bay Area, reality is most San Jose zip codes are far from the most expensive parts of the Bay Area.
I have a cousin who bought in San Jose in 2005 or so, were a bit underwater during the crash but stayed there, and sold in late 2017 with quite a bit of appreciation, to move to Saratoga, since their incomes had improved, and the school they were zoned for was not the best one in San Jose. The people who bought their house were perhaps much earlier in their careers, and saw San Jose as a good place to start out (for over 800 thousand bucks, lol). San Jose is thus not too expensive or too cheap relative to the Bay Area in general, or so it seems to me.
Point being, I do think there's upside IF you are holding for a while, and planning to live there, or if you move, you can put in a good tenant (which is not an issue at all in your market). Still, if you are going to invest up north, I firmly believe you'll enjoy the most success if you avoid newer construction and try to get into deals that need at least some rehab, assuming you can build a good network of construction folks. Obviously different for the house you live in, I get that.
I bought one in LA County in a gated community earlier this year, that was built almost 15 years ago and needed some interior work, and the return on the work we did, in terms of both value and rental price bump, has been great, and the area is really growing. San Jose can be a great market if you focus on the right deals - there are people making money hand over fist by doing so.
@Nick if you are self-employed and couldn't make your payments (not just on your real-estate, but on other debt and bills) for a few years without your income, I'd get short-term and long-term disability insurance in place for you and any other breadwinner if you don't have them, they are expensive, but will protect your assets and lifestyle for your family in the event that something happens, regardless of a downturn. Podcast 286 would be a good one to listen to, AJ Osborne recounts his experience with being comatose and having his net worth increase. Stuff happens.
This is a fun thread I love all the banter back and forth
@Amit M. and everyone else talking about a supposed downturn - you guys (collectively the people who have been bearish on real estate) have been saying we are nearing a downturn for years. You said it in 2015, 2016, 2017, and so on. Now @Account Closed claims 2021. Anyone who invests in anything knows there is a saying that goes something like this
"whether you are bearish or bullish on [insert ticker symbol, market index, real estate, etc], you will be right sooner or later - the question is when"
People who are bearish on real estate just keep pushing the year further and further out, until finally they see a pullback that is large enough to say "I told you so" when in all actually, I personally believe that todays highs will still be higher than next years lows. Especially 2016s highs, and 2017s highs - way higher than 2021s lows (my speculation)
Also @Account Closed I mean this with all due respect, but I wouldn't call yourself a stock investor when your account balance is 2k (granted, i'm sure its higher by now?) - that isn't even enough for robin hood to allow you to day trade
@Joe Splitrock you're not missing anything, I don't own any cash flowing properties nor did I ever claim to - this original thread was posted in the real estate success forum because I successfully purchased 2 pieces of property in 1 year and am very proud of my family for making this happen. Talking about what happens if we go unemployed is a completely different thread - but i'm fortunately not a w-2 earner (self employed) so I feel less stress when I think of "losing my job", because i'm not going to fire myself (that isn't to say that something couldn't take my business away)
SMH... that’s my trading account... I keep 1,500 in there and pull the profit out to invest in high yield dividend stocks... like I said, if a trade goes wrong, your whole account gets taken out with options trading. Investing is all about risk management so why would I put everything in one basket?
I’m still investing in RE and not waiting for a crash, but we are trying to tell you that you need to prepare for the worse when it comes to it. Having no cash flowing properties as a buy and hold strategy is asking for trouble. You are right, trying to time/predict a recession is impossible which is why you have multiple income source. One of the main reason the last recession took longer than it should to recover were people like you who saw success during the growth period and all of a sudden the recession hit with no contingency plan to keep your investment. Therefore defaulting on loans and houses.
You saying you are not a w-2 employee doesn’t matter. During a recession the rent market goes down a bit (not much) but still a bit. Having no cash flow on a property and going down will put you at a small negative cash flow. Not really all that bad if you have one or two properties, but what if you have ten? Now you have a liability.
We have been hearing that the market is going to crash for four years now; so, many investors agree that sitting on the sidelines for extended periods is very costly.
If you have strong market knowledge, buy in good locations, use prudent debt, and have reserves, buying (predictable) appreciation plays can be a very profitable strategy.
On a side note, buying property is not a success story...making a profit over the long-term is.
@Mike Dymski ^ x 1000
We have been hearing that the market is going to crash for four years now; so, many investors agree that sitting on the sidelines for extended periods is very costly.
If you have strong market knowledge, buy in good locations, use prudent debt, and have reserves, buying (predictable) appreciation plays can be a very profitable strategy.
On a side note, buying property is not a success story...making a profit over the long-term is.
I agree!
So I live in NYC...another place where most of the time you "buy for appreciation". That's worked out, and I've made lots of money over the years, but for me it's important that I don't get too leveraged. I buy now for cash flow, mostly passively in limited partnerships. That way, out of state investing is much easier since someone else is doing the work. My rule when I buy for appreciation has been "could I still make the payments if 2008 happened again and I had no W-2 job?" If that answer is "yes", then I can sleep at night. If that answer is "no", then it's not worth it to me.
@Val Jackson the CA side, South Lake Tahoe near an area called the Y. Are you in the area?
@Mike Dymski i'm going to assume that you didn't intend to sound incredibly arrogant by saying "buying a property is not a success story", so i'll politely let you know that that's how it came across. What gives you the right to dictate the definition of success story? And why on earth would you even attempt to belittle someone else like that?
Let me make a comparison to how that sounds. I was a competitive bodybuilder and a personal trainer for roughly a decade. I worked mostly with middle aged clients who struggled with general health and weight loss. Could you imagine if my response was like yours every time they were proud of accomplishing something? It could sound like this
Client "I lost 10 pounds this year!"
Me "losing 10 pounds is not a success story. You have to lose more weight and keep it off for an arbitrary amount of time that I specify in order for it to be a success story"
Sounds pretty arrogant, correct? Maybe losing 10 lbs was not my personal definition of a success story when applied to myself, but for someone who has struggled their entire life, it might be monumental
The reason I consider it a success story is because both my wife and I came from families that never owned property, never went to college, never accumulated much wealth at all, and were truly never financially stable at all. So for us to buy a house was a huge success, and it was even more of a success to say that we bought a vacation home in the same year. I consider it a success, and i'm sure that there are more people out there like me who would also consider it one.
@Gretchen P. I appreciate the input. I made sure to preface the entire post by saying that getting in to real estate was a "well-calculated" move, so i'm not sure why multiple people on this thread continue to talk about worst case scenarios and what I should be doing as if it wasn't already something I have factored in.
@Shiva Bhaskar very interested point about not going for new builds - can you explain you thought process on it? Is it just the fact that it would theoretically be a higher price entry point? I've truly enjoyed the experience with my primary being a brand new build, and COULD SEE lots of potential upside for purchasing a rental brand new from a developer. These things include the warranties that are in place, the fact that newer won't need as much rehab for a while, and the price you could potentially get in rent. The downsides of course include the higher price, but what is your take on the new vs old rental property purchase? For the record I envision being my first rental property purchase next year being older, but I enjoy hearing the cases made for both
@Holly Williams Do you find the out of state partnership results in decent enough profits? That is a VERY subjective question, but still, a question none the less!
Jumping in to real estate was a well-calculated move. I live in San Jose, and this market is notorious for making people lose faith in their ability to purchase.
I bought my primary residence in May of 2017 - a brand new million dollar 3 story 2200 sq ft home and closed on a 500k vacation/rental in Lake Tahoe right before the new year.
The primary was financed with 10% down and the rental was financed with 20% down.
I strongly believe the the community I purchased my primary in has massive potential upside, and have been blown away by the prices i've seen my neighbors sell their properties for within just a year of owning.
I'm sharing this in the "success stories" section because I can't stand how discouraged people get, and I truly despise the mindset of "i'll just wait for the market to crash"
We need to find a way to make it work - no one will do it for us
There are still deals in "Hot" areas. I bought a deal 6 months ago in downtown Houston -- across from Toyota Center. This was on loopnet so max exposure. Still got it at a deal, fixed up some units, stabilized it, and had it refinanced w/ all my money out (and then some) in about 3 months.
Just today I bought a property in the hottest (hip) neighborhood of Houston. It was on the MLS. Yes, I had to be aggressive to get it ($100k hard day 1, as is, 5 day close, etc.) but I bought it for under market and even though I just closed today, I have two people I could flip it to for ~$200k+ more than I paid.
What I suggest to those wanting to wait is the same. Don't. Just get something small. Get your feet wet. Get some experience under your belt. That first one is the hardest. So get that over with then SLAM ON THE GAS
@Nick Colvill not intending to belittle anyone. I bootstrapped everything I have too, use my real name and picture here, am an active member on the forums, and don't support internet trash talk. My reference is to real estate investing success, not personal triumphs. It's easy to overpay and buy something...not so easy to save for it. My reply supports your post.
There is no connection between property taxes and national debt. Property taxes found local expenses like schools. California property taxes are relatively low thanks to Prop. 13. They probably should get rid of it because schools are suffering because of it, but given that prop has been in place for the last forty years it is not likely to happen. There is a modification on the ballot this year but it applies to commercial property only.
I own nine properties in Mississippi and a condo in South Lake Tahoe (hi, SLT folks.) I pay the same amount of property taxes on each of the properties I paid 30-40K for as I do for my condo in Tahoe for which I paid three times as much.