All Forum Posts by: Alan Grobmeier

My advice:  If you want something, money, advice, connections, etc., you pay for lunch.  If it is meeting of peers, you both pay.  If they want something, they pay.  ;-)

@Len Miller, is there a reason you can't manage it yourself?  It sounds like a nice place.  That should make it easy to rent, get paid, find the right type of renters, etc.

Alan

@Stephan Kraus, the only real problem I see is if the market tanks and you have to sell.  With a -300/mo cashflow, that could turn ugly.  No exit strategy at that point other than to 'feed the alligator'.  

History from the GFC showed that avg rents fell 10-15% in Phx.  Upper end properties got hammered by even more.  If you feel you can safely afford -600+/mo (worst case scenarios), then it might be ok.  The thing to remember is the rest of your portfolio will probably be getting hammered as well.

Now, with that being said, I don't see a GFC 'repeat'.  There is way too much money/cash in the system looking for a place to invest.  Many investors have refi'd and are sitting on piles of cash waiting for the next downturn.  As a result, it won't happen the same way.  The Fed is ready to run the presses 7/24 if needed with helicopter money.

But all good recessions usually start with some type of deflationary component.  You will need to have enough cash reserves to get thru that part before we get to the inflation that most are expecting.  Just like 2008-12 before everything went 'liftoff'.  ;-)

When you get to inflation, it will always be good to own 'stuff'.  No matter how you got it.  ;-)

@Alan M., it will depend on location and value of property.  In Cali you will probably NEVER see those houses come on the market.  

Many are worth a Mil+ with Prop 13 property valuations from 1974 where the owner is paying $2000 a year in property tax.  They are generally paid for & would rent for $3k, $4k, $5k+.  What better way to fund your assisted living expenses?  

Until those ppl die, there is no chance they are sold.  At least by the prudent.  Now, after they pass, it will depend on how smart the heirs are, and if they can get along.  ;-)

I see Cali is looking at repealing prop 13 for commercial properties next November.  I'd think it would probably pass.  After all, it's time to stick it to the rich.  Right?  ;-)

@Gad Amit, 10k barely covers your closing costs.

As far as the investor goes:  it looks minus to me on day 1.  But investor might want it due to other properties in the area, Airbnb, or some other play.  You really don’t know.

Good luck!

@Account Closed, the first question you need to ask yourself is why those properties get a 10% coc return.

The answer:  risk.  The risk of you getting paid and your place not being turned into a crack den is why such a high return is warranted.

I’d look at Frisco, Richardson, Plano if this is your first rodeo.  Nice easy area to pm, consistent returns.

Good luck!

@Account Closed, btw, I was being nice.  ;-)

@Account Closed, 1st rule is to not lose money.  ;-)  I was stuck w a house I didn’t want for about 10 years.  Still make 100k when it was all said & done.  There is no realized loss until you sell.  ;-)

Nothing like jumping into the ocean & not knowing how to swim.

@Pedro Jose Villaroman, what possessed you to make this your first deal?

@Rahim Pir, a lease option is like a stock option.  The option buyer has an opportunity to buy at a specific price within some period of time.  Title does not change hands until the buyer exercises the buy.

In an owner finance situation the deed changes hands.  If there is an issue, a foreclosure will need to happen.

As an FYI, many lease/options never close.  If that happens, you get to keep your option premium with no recourse.