All Forum Posts by: Bryan Cheng

@Bryan Cheng If I understood your question correctly, you’re not asking about criteria to pick out if a pool of applicants, you’re asking who do I have in mind when I buy property. If so, my tenants are majority families with kids. I don’t mean I choose someone with kids over someone without. I mean I purchased property with multiple bedrooms in desirable school districts. For me, this means a higher chance of long term renters. 1 and 2 bedroom places more quickly get outgrown by those that have kids which causes a move, and in my area the young professionals that originally rented that 1 or 2 bedroom place seem to stay a year or so and then want to purchase their own. Few people seem to want to move their kids to a new school district unless it’s for family, a new job, or bigger place. If I provide 3 bedrooms near a bus stop to a good school, no reason to move.. 

Federal Fair Housing Law has very strict guidelines against discrimination practices in housing so most things you mentioned are not good practices if not illegal. 

You can set screening criteria based on things such as credit score requirements, income requirements, violent criminal record requirements, smoking vs non smoking, pets vs non pets (there are laws about emotional support animals too).  

My rental properties range from $1100 a month to $4400 a month, they are all kinds of people. I do well with all of my tenants because I screen them carefully. I do not see one demographic is better than another. There are people who you think are good and turn out not so good and people who you think maybe not so good turn out to be your golden tenants. 

Hey all! 

I’ve been going to multiple showings every weekend in Houston with my realtor to give context as to where I am in this process. 
I understand that C class properties are generally the best middle ground when it comes to quality vs cash flow. If I’m not mistaken, most properties I’ve been looking at (C class) range between $165k-$200k with rents ranging from $1300-$1900. 
Playing around with numbers using first time home buyer down payments of 10%-15%, after monthly expenses includes taxes and insurance, I’m struggling to find anything that cash flows. Most cash on cash returns on the properties I look at are about 3%-5%. 
Being its my first property, I’m looking for homes that won’t require much rehab. 
This makes me wonder:

Am I looking at the wrong market? 
- I see a lot of investors look for $100k properties and then put in rehab. Are the discounted, run down properties what I should be looking for?

- Are the $165k-$200k move in ready properties with less than 20% down just not meant for good rentals/investments? 

Is it the high interest rate of the economy? 
- Obviously lower rates will improve my return but my concern is then that home prices will increase and then the “move in ready” homes im looking at in this price point will jump and be replaced with terrible homes 

In short: 
Should I be putting more cash into the property to improve monthly returns? (Higher downpayment) 

What kinds of properties do you look for as an investor? At what price point? 
I’m probably not providing all the information needed so feel free to ask for more details or make up your own numbers - mainly looking to learn about broader RE investment concepts for starting out.

Anything is helpful, thank you! 

Income minus expenses = cash flow

Property prices skyrocketed, mortgage interest rates increased, taxes have gone up, etc. This increases your expenses, so you'll have less cashflow. Purchase prices and interest rates would have to drop back down to 2019 values to match 2019 performance.

It's a different market now. You have to wrap your brain around that and figure out how to make real estate investing work for you given the current situation. I'll let you in on a little secret: people were investing in real estate in 1978 when rates were 7.5%, in 1980 when they were at 9.5%, and in the 1990's when they were at 10%.

The problem with many investors today is that they all want to invest without sacrifice or hard work. If you can't make a property cash flow with 10% down, you should consider working hard, cutting expenses, saving up a lot of money, and putting down 40%? Maybe you can walk the streets for six months looking at distressed properties, hunting down the owner, and using some creative negotiating to purchase the property below market price? Maybe you can spend money on a website with solid SEO that brings distressed sellers to you? Or direct-mail marketing?

Investing was much easier in 2014 than it is today. You have to figure out how to operate in the current market. Stop listening to newbies that built their portfolio in the last four years and instead listen to the grey-haired guys with 20-40 years in the market. Or talk to your old uncle that bought property 40 years ago.