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.
I'll leave you to your confused thinking Nick, have a nice day.
I'll leave you to your confused thinking Nick, have a nice day.
Im not confused at all, in fact you explicitly stated that you were confused because you couldn't decipher what question I was asking. I then further clarified that I wasn't asking a question, and that they subject/title for the post was meant as a conversation starter - much like your recent post.
Why do you have such a hard time backing up just a tad bit and saying "hey, I totally get it [seeing as you have similar titles in your posts] and I shouldn't have come off so abrasive"
No need for sword battling in these forums Dean, just don't act like a child and then pretend to be too good to further the conversation when you get stuck in a corner by saying "i'll leave you to your confused thinking"
Sorry I meant to say, "I'll leave you to your confused thinking, and your personal attacks on me".
...
Is there a page you can refer me to where it explicitly states the rules for a Biggerpockets success story? Including things like your arbitrary 50% down number and so on?
Sorry I meant to say, "I'll leave you to your confused thinking, and your personal attacks on me".
What a joke
I’m in the same boat as you. Seattle is crazy expensive due to Amazon and foreign investment. We are seeing some of it slowing down, instead of +15% appreciation YoY in some areas. I think it will be more likely to plateau and go at a moderate 5%. And forget about cash flow.
I'm investing in AZ and located an off market 19 unit property that is +10% cap, 9% CoC, and 1.4% DSCR.
I’m also looking at Nevada. basically anywhere I’d like to go visit and mix business and pleasure.
You can’t find that in Seattle/Bellevue.
I’d be interested in getting your preliminary thoughts on where to invest for MF in 2019.
Congrats on entering the REI game.
Seattle is such a great area and I do business there often, I would love to own a multi family Unit there and keep a unit open to us for visiting.
You’re spot on when you at that the slowdown is taking the insane 15% growth down to a reasonable 5% growth, and that’s about the extent I see any downturn having on my area. Of course that’s just my speculation. We all have our speculations and while we won’t all be correct, some will!
As far as I know @Nick Colvill, this is an real estate investment forum. Buying a primary residence in an appreciating area and having a rental house for friends and family in Tahoe doesn't equate to investing. Wanting to buy a multi in Seattle just for visiting purposes doesn't sound like an investment either. It sounds like you've got plenty of $....since you can buy multiple properties in 2 of the most expensive geographies in the world.
Buying a house in San Jose is an accomplishment in it's own right... but my initial thought, from an investment perspective, is you could have used that cash in other geographies getting you a higher return/dollar.- it seems like you're well traveled and that wouldn't scare you. ... I get the Bay Area is probably never going to collapse.... but Austin, Nashville, Raleigh, Atlanta--- all places guaranteed for similar if not better appreciation long term(yes, even the Bay Area has a ceiling)... while not having to spend $1,000,000 on a 4-2.
I do like the Tahoe house... when I lived in Sac I wish I'd of bought up there.... from a vacation rental perspective, you have Winter goers and Summer goers... shouldn't have any seasonal gaps.
The duplex in Seattle thing, go for it.... but at some point, don't you need some cashflow for the $$ you're investing in these expensive markets.... unless you're already wealthy... but if that's the case, why are you investing?
As far as I know @Nick Colvill, this is an real estate investment forum. Buying a primary residence in an appreciating area and having a rental house for friends and family in Tahoe doesn't equate to investing. Wanting to buy a multi in Seattle just for visiting purposes doesn't sound like an investment either. It sounds like you've got plenty of $....since you can buy multiple properties in 2 of the most expensive geographies in the world.
Buying a house in San Jose is an accomplishment in it's own right... but my initial thought, from an investment perspective, is you could have used that cash in other geographies getting you a higher return/dollar.- it seems like you're well traveled and that wouldn't scare you. ... I get the Bay Area is probably never going to collapse.... but Austin, Nashville, Raleigh, Atlanta--- all places guaranteed for similar if not better appreciation long term(yes, even the Bay Area has a ceiling)... while not having to spend $1,000,000 on a 4-2.
I do like the Tahoe house... when I lived in Sac I wish I'd of bought up there.... from a vacation rental perspective, you have Winter goers and Summer goers... shouldn't have any seasonal gaps.
The duplex in Seattle thing, go for it.... but at some point, don't you need some cashflow for the $$ you're investing in these expensive markets.... unless you're already wealthy... but if that's the case, why are you investing?
I find it interesting, as a new person in the real estate game, how incredibly defensive this forum is.
I never said I was a seasoned pro - I clearly discussed my starting dates and entry points
To see how many people come out of the woodworks to tell me that they don't think my first year in real estate (buying two properties for my family) was a success and that my preliminary plans are also no good - that I must not be privy to something for NOT investing in outside areas that have lower prices (despite me saying in these forums that my plans ARE to invest outside of my area) - its comical
I think the problem is that there are too many egos here who think that just because they have seen success doing their method, that their method is THE method
I'm here to learn, grow, be accountable (hence the posting) and transparent in my real estate decisions. Why are you guys here?
This is not a comps - CA taxable value 42 times more than AZ. Same Sq.f doesn't mean it's a comparable properties.
It's definitely different type of a house. Tax rate is much higher in AZ house: if CA house would be taxes with the same rate, the property tax would be $67,564.
Tax rate is what you pay for $100K of taxable value.
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
Are you liquid enough to put down 10% and 20% on multiple million dollar properties every year?
I would say no. By next year I plan to put up to 300k down on a multi family unit and finance the remaining 70-75%. That would constitute it as a million dollar property, but it will have been 2 years since my most recent purchase - so no, not EVERY year, but as a real estate professional with a high income w-2 spouse, the savings we get on depreciation the asset in terms of the the reduction in tax liability and subsequent check from the IRS puts our rate of savings at a decent pace
Speaking of learning and growing, I am VERY interested in hearing how you plan to "get a check" from the IRS using RE depreciation to offset your spouse's wages.
As far as I know @Nick Colvill, this is an real estate investment forum. Buying a primary residence in an appreciating area and having a rental house for friends and family in Tahoe doesn't equate to investing. Wanting to buy a multi in Seattle just for visiting purposes doesn't sound like an investment either. It sounds like you've got plenty of $....since you can buy multiple properties in 2 of the most expensive geographies in the world.
Buying a house in San Jose is an accomplishment in it's own right... but my initial thought, from an investment perspective, is you could have used that cash in other geographies getting you a higher return/dollar.- it seems like you're well traveled and that wouldn't scare you. ... I get the Bay Area is probably never going to collapse.... but Austin, Nashville, Raleigh, Atlanta--- all places guaranteed for similar if not better appreciation long term(yes, even the Bay Area has a ceiling)... while not having to spend $1,000,000 on a 4-2.
I do like the Tahoe house... when I lived in Sac I wish I'd of bought up there.... from a vacation rental perspective, you have Winter goers and Summer goers... shouldn't have any seasonal gaps.
The duplex in Seattle thing, go for it.... but at some point, don't you need some cashflow for the $$ you're investing in these expensive markets.... unless you're already wealthy... but if that's the case, why are you investing?
I find it interesting, as a new person in the real estate game, how incredibly defensive this forum is.
I never said I was a seasoned pro - I clearly discussed my starting dates and entry points
To see how many people come out of the woodworks to tell me that they don't think my first year in real estate (buying two properties for my family) was a success and that my preliminary plans are also no good - that I must not be privy to something for NOT investing in outside areas that have lower prices (despite me saying in these forums that my plans ARE to invest outside of my area) - its comical
I think the problem is that there are too many egos here who think that just because they have seen success doing their method, that their method is THE method
I'm here to learn, grow, be accountable (hence the posting) and transparent in my real estate decisions. Why are you guys here?
I have no dog in this fight but you seem to be the only “defensive” one here by challenging every single person who gives you constructive criticism.
Congratulations on your purchases and success.! Are your neighbors selling their properties for 2 -3 times what they purchased the property for? If so maybe you should consider selling as well.
Speaking of learning and growing, I am VERY interested in hearing how you plan to "get a check" from the IRS using RE depreciation to offset your spouse's wages.
@Gretchen P. he will get $500K non taxable income when the property appreciate and gets sold.
Yes, this is a speculation but the area is known for huge appreciation, just have to sell at the right time....well buying cheap is even better.
There are plenty of ways to make money in real estate! For each their own
@Irina Belkofer
I am not sure how this relates to Nick's comment. He said he'd get a check from the IRS because of depreciation on a future rental property to offset his spouse's wages, not a nontaxable capital gain on his primary residence when he sells it.
My point is: don't comment on each word - it escalates!
Just be happy for someone investing differently than you and wish him luck
I have to say I flinched twice here and when I read your initial post.
Personally, I went in the opposite direction and purchased the cheapest primary possible and didn't buy toys and luxuries until much later. With my savings from only having a very small housing outflow I was able to expand my portfolio quickly. I haven't had a w2 since 02 and can basically do what I want. Your housing outflow must be what, $10k per month? Work work work, run run run!
I understand a million dollar primary and 2nd home on Tahoe has worked for you so far, but I'd like to express that for most people, laser-focusing their dollars on cashflowing investment assets early on will serve them better. Cheers!
Before Proposition 13 we had the best school system in the country. Prop 13 gutted it.
Here are two houses of approximately the same sq ft, the Phoenix house was updated 2018 - The San Diego is from 1980 - which Tax Burden is Bigger??? Phoenix = $1,607 and San Diego = $7,584
I have no dog in this fight but you seem to be the only “defensive” one here by challenging every single person who gives you constructive criticism.
This. Reminds me of another guy that had that "go big or go home" thread that would reply to every single person that posted there lol
From OP:
"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" "
I believe most people don't have $200k liquid just burning their pockets, so I'm not quite sure what you're so worked up about. Congrats on your purchases, tho.
Are you liquid enough to put down 10% and 20% on multiple million dollar properties every year?
He can do what I've done. Put that 20% ($200k) down on a $1m property, increase the value, refi, get your $ back, buy the next one, rinse/wash/repeat.
People act like there is only appreciation on the coast. I've taken my first property (8 unit) and not put a single additional penny in and used appreciation, smart buying/selling to turn that to 1200 units in 10 years without any outside investor $ (okay, 11). There has been a TON of appreciation in Houston. Literally 2-3x in the last few years in some areas. A extreme example is an 80 unit I bought for $1.6m. Just appraised for close to $5m.