All Forum Posts by: Alexander Felice

@Kerrel Gomes

Interesting theory.

Rates are low sure, but Fayetteville is saturated with buyers so buy and hold has become less and less lucrative as time goes on.

I've switched from buy and hold to flipping. There is no appreciation in Fayetteville so if I have to buy a property at it's peak, I certainly don't want to hold it for the long run.

Buy and hold is lower risk, so maybe that's why it's appealing during times of volatility, good lending rates create beneficial leverage but that doesn't make the deal margins better (artificial returns).

@Kyle Bergren

I'm not currently bidding on properties.

Buying anything right now during this high volatility takes on unecessary risk for no additional gain.

If the economic fallout of current events are bad (which they very well might be) then I don't want to be buying at all while prices are still high. Maybe this event will be no big deal, but it costs me nothing to wait 45 days and get some clarity.

Bruce, we can do better on the next deal

$1150 on 121k is not an attractive purchase, it's good you built some equity but at this price point you missed the sweet spot for profitability. Hope Mills is a good part of town for sure, but my opinion is that you're too far towards the top of the price range.

It's your first one, and it's rare people get great deals on their first one (mine was awful), so I'm not beating you up but you need to know where the goal post is for minimum acceptable deals and for Fayetteville the minimum is about 1.3x price/rent and 20% equity creation. You can't count on appreciation here, so when you buy deals in this town you basically have to assume the day you close is as good as that property will ever be. Also, investor saturation here is at an all time high which drives prices for distressed properties up. 

Glad you got your first one locked, that's def the hardest part. 

depends on the loan type. specifics matter. You should get a bank equal to the size of your problem.  

Wells fargo has almost no cost of capital but a huge infrastructure, so they are GREAT for big acquisitions but bad for small players to deal with.

Smaller banks are more expensive but they become much closer to partners then lenders because their success is much more closely tied to your success.

now if we are just talking Fannie Mae loans that can be issued by absolutely anyone then a local investor friendly loan broker is your best bet. 

I've used Fincher for years, I've used Bunce for years, but recently I started going to Raquel Fuchs at Tiago Title and she is incredible 

Welcome Chris! 

@Russell Brazil 

I can't speak for Vegas much since I'm not there anymore, I find it likely that it'll be a highly volatile market since it's main source of income (tourism) has basically been turned off. The total amount of damage will be a product of how long things are shut down, and that I can't know. 

The town I live in now, Fayetteville NC is next to a very large military base. So far we haven't noticed much of the lock down. Restaurants and bars are closed and a good portion of our economy is based on that service income so I don't want to say there is no effect, but in many ways it's business as usual here. During the last crash this town was highly insulated as well, simply because the military makes up about 15% of the total population here and they won't have any negative job ramifications and that stability trickles into the market. 

We have a close relationship with the section 8 office, I think that program and other housing programs will be expanded during this. Lower income assets will increase in demand and availability to subsidies. 

I'm so mad about this. I got into real estate investing because it was PASSIVE...and because I'm LAZY, now we are supposed to see what I'm made of? so annoying! 

I'm thankful for my partners right now, for exactly the reason you just said. We are both prior military and the comrade helps during times of stress. We are all still working on our projects, buying new deals, and keeping up momentum. There is definitely a path for people to feel as if the world is falling and getting excited about the next deal is difficult, but I'm 99% certain the world doesn't end from this and once the dust settles people will be scrambling for opportunity. 

Those who are lax now will miss the turn. Stay vigilant 

Fayetteville can be a bit of a tricky market over the last year or so because it's easy to get allured by deals that have good numbers, but aren't good deals. 

it's really important to remember that the FIRST rule of real estate continues to be "Location, location, location". I've seen many new investors in this area put together deals that look good on paper, but the houses are in such bad locations they aren't worth having at any price. @Justin Tahilramani is right to warn about those specific quads, so for any current or future potential investors in the area, the properties at aftonshire and tangora lanes are not to be purchased at any cost....they aren't worth owning if you could get them for free. There are many more like it in town, to include single family homes, that just aren't worth the headache even if it was pure profit. 

As for cash on cash return, COC is a dangerous metric because it doesn't' show true profitability it only shows the power of leverage which is nearly meaningless and often used to pump up perceived profitability. An asset with a low ROI can have a huge COC just by adding debt, but that doesn't' make it a good deal, just good debt. more than anyone else it's easiest to fool ourselves as investors that our deals are great, so be careful. Total ROI is most important if you want to analyze how good a deal is, CoC measures how good the debt is, reserves measure how hard of a storm the owner can weather, and equity measures how good the buyer purchased the deal relative to market conditions. All of these are important to consider, with COC being least important, imo.

Also for any Fayetteville/Fort Bragg investors who may see this, there are good resources in town for people who will steer you away from lousy areas (Murchison road) and try to help you understand the market. Justin is a good resource, I'm always around to talk to new people, there are meetups, etc, just make sure you're asking someone who doesn't have a financial benefit from you buying (...brokers). It's never fun when a new person brings me a deal that they are so excited about but it's just terrible and I have to tell them, but, it's better than watching someone buy a crappy deal. So email me and I'll happily buzzkill you if you need. 

OP I hope your deal works good for you, just make sure you've exhausted all your resources to make sure. Don't do it alone, and never ever go by just the numbers. 

Welcome!