All Forum Posts by: John Colburn

I agree with Nathan it is all about the screening process.  I have a family with four children under the age of five in a home that I rent.  The mother is super clean and the kids are unbelievably well behaved.  

Another important fact is that the home needs to be nice.  I find the better the home the better the tenant.  All of my homes are very nice and I am able to select the best tenants.

If the market crashes things may get tight but most folks will manage.   The key point here is that you are buying at the height of the market and the value of your property will likely drop dramatically.  

 One of the most important fundamentals is to acquire a property at the right price.   I have been around through many cycles and no one will ever get rich buying at the market high.   

 There are two many people chasing after apartment buildings right now driving up the price.   The time to buy is when the market crashes and no one wants apartment buildings.  That is where you will make your money.

One example is a six unit apartment sold in 2006 for $675K five years later in a down market I picked it up for $365K.   Now the building may be worth $650K.   

I have a few properties in the same town, and faced a similar challenge with a house in Monument Beach.   We did a total rehab on a small ranch with one bathroom, and decided to install a bathtub for resale.   The main reason is that we wanted to keep the options open for the starter families.   

This was a tough decision for us as we would prefer a nice walk in shower, but in the end it really did not make a big difference and we still have a very nice bathroom.  The are some pretty cool bathtubs out there. We installed a 5' Kohler Archer tub with 19" sides.

One last thing you should keep in mind is that the majority of folks in this area will qualify for a $250K - $275K house.   Houses in this price range will move very quickly.   Once you go over $300K for a 2 bed one bath it will be harder to move.

Real estate values in Massachusetts is very strong and there is a huge demand for multi families.  However, I don't see prices for multi's increasing much more than where they are now.  

As an investor I would stay clear of a property for $230K and rents of $1,650 this deal will likely be in the red.  That said demand is high and folks will buy these properties,  but also confirms that values can't increase much more than where they are now.

If you sell the property and take the cash you will be paying a premium on your next deal.

In your situation I would look to increase rents with college students which in turn will also increase the value of your property and actively pursue commercial properties.

If you find a commercial property you like sale your property, and invest in the commercial property.

I face the same dilemma, I have several properties in Mass with huge appreciation, but no where to invest $ when sold.    You can't put the money in the bank as interest rates are too low, and the stock market also feels overvalued.  

From your dad's perspective the $3k loss was a part of the problem, but the biggest issue is all the time and effort that your Dad put into renovating the house. 

The house is very nice, and he must have worked on that full time for several months.  The time and effort put into the project, and the lack of return is most disheartening.  If anyone of us spent that much time and effort we would feel and act the exact same way.

I agree with the earlier post this flip was a great learning experience for you and your dad.  With your Dad's skillset and this learning experience you both are positioned well to move forward in real estate investing.

You will need to take the initiative in finding the next property, invest wisely and never give up.  

I look forward to hearing your success stories. 

The current trend is for multi family housing, which are all selling for a premium. That is why I prefer single family units.  

If you have a five unit property or larger you will need a commercial loan.  Commercial loans are generally for five years or less.    With the low cap rates on MDU's and the risk of rising interest rates over the next couple of years is a recipe for bankruptcy.

The benefit of a MDU is you do have economies of scale, but a much lower class of tenant. Most families prefer to live in a SFR compared to living in a MDU.

I do love multifamily houses at the right price. 

The one thing I drill into my children's head.   Is to buy stock or houses when no one wants them and to sell stocks/houses when everyone is buying. Unfortunately , right now is a time when everyone wants multifamily units. 

The bank approved the short sale and I now own the house, with a new roof.

I had the exact same problem a couple of years ago, and it is almost impossible to prove.  I finally purchased a surveillance system,  and captured and recorded the tenant on camera stealing  a package.   I confronted the tenant, and told her she had one month to leave or we would pursue legal action.   She left without a problem and it worked out great for everyone in the building.  

If your tenant is stealing packages from their neighbors they are probably up to no good and someone you do not want in your building.

The advantages of a SFR is they are normally much easier to sell, and you will have a better quality tenant. I would much rather have a SFR that cost $70k than pay $100k per unit for an apartment.

I cannot understand why MFR's have become so popular within the last year. Two years ago with much better cap rates MFR's were hard to sale. I would not be surprised to see MFR values drop in the next few years. I think many people are entering the market (no where else to go) and are happy with 5% to 6% returns. If interest rates rise a couple of points you will see people exit the market, and with many of them having commercial loans that renew every few years it will be very easy for them to be upside down.

That said I do like MFR's for the right price. I recently sold a 6 unit for 50% more than I purchased four years earlier. I would have never sold the building but the offer was to good to pass up.

Hope this helps. 

This is my first time venturing into a short sale where I made an all cash offer to purchase a property back in April of this year.  I have been in constant contact with the realtor/short sale specialist and they assure me on is going well.  In July the agent called and said the bank approved the short sale and an approval letter would be sent within 7 days.   

Last week I drove by the house to check out the condition.  As I pull up I notice the grass was cut, must be a nice neighbor.  Then I notice a dumpster in the driveway and a brand new roof on the house. Totally surprised I called the realtor about the new roof.   They knew nothing and were surprised about the new roof, but assured me again they are in constant contact with the bank and are within days of bank approval.

On Monday morning I call my attorney, and the building inspector to find out the owner of the property.  It turns out the bank authorized the work on the house.  

My attorney told me the bank has not taken title yet that we know.  They started the process they filed the soldiers and sailors act, and are early in the foreclosure process.  The realtor is still optimistic we will receive bank approval.

Is there a chance I can get this house, or is the opportunity gone?  How could something like this happen?