All Forum Posts by: Chris John

Yeah.  This commercial thing is REALLY weird for me.   It doesn't even sound like rent asking prices are really dropping for commercial office properties which have really high vacany rates right now because it'll make the building valuations look bad with low rents. 

So, just wait and hope?  Is that really the strategy?  This must be why I'm not very good at poker because I'd be dropping my rents, lowering my sales price, whatever, to get out of some of these positions that I think some people have to be in right now...

I just read this thread and I was so frustrated for @Marcus Auerbach!  haha.  He literally stated:

"Rehab and value add will always be a thing, I have 2 projects in the
works now and rents will be higher after, but you can pretty much strike
the last R in BRRRR: a full repeat with the same cash is not going to happen, especially if home prices start going sideways."

Then, there are dozens of posts that basically say, "you're wrong.  You just won't be able to get your money out quickly..."  haha.

Marcus, you're a good sport!

@Carlos Ptriawan

I had a pretty funny experience this weekend at dinner with some friends that involved you.  We were talking about interest rates, debt, etc. and I mentioned that I'd heard that we're the only country that does 30 year fixed rates.  They didn't believe me.

So, I was like, "well, I know Canada, England, and commercial don't and there's this hella smart guy on Biggerpockets named Carlos Ptriawan and that's what he said.  Honestly, I don't even know if he's right, but I just assumed he was cuz he knows so much about so much..."

Anyway, we ended up googling it (and of course you were correct)!  haha.  So, thanks for making me look so smart in front of my friends (even though I undid it).  haha

@Terri-Leigh H.

1.  So, you spent 60k which retired a 40k mortgage and left her with 20k?  Or, you spent 100k, gave her 60k, and retired a 40k mortgage?  I'm assume it's the former, which is even more ridiculous.

2.  "It doesn't matter" about the kitchen because the work undoubtedly needed to be done anyway and I'm sure you'll benefit it from it too when she's gone.

2a.  She could've done a reverse mortgage and easily covered the cost of her kitchen (and had hundreds of thousands of dollars left over).

3.  Your estate is going to take care of her?  That's interesting.  How much are you going to pay for assisted living if it gets to that point?  She had 200K+ to pay for many, many months of assisted living...

4.  "I am sure its easier for you to believe we are awful careless selfish people"  It's honestly not hard to believe that you did this for the "right" reasons.  It's still an AWFUL look for you, whether you believe it or not.  Or whether you have the best of intentions or not.  It looks insanely opportunistic, which as someone else already mentioned, the title of your post does nothing to dissuade.

Honestly, c'est la vie.  Nobody is going to convince you.

Best wishes to you all.

@Terri-Leigh H.

I typically don't make it a habit of arguing with people on the Internet, but I'll keep going, I guess.

1.  If you retired her mortgage and it was in addition to the 60k, you should mention that.  Was it additional?  If so, your initially stated numbers aren't totally accurate.

2.  It doesn't matter if you have the best intentions.  It doesn't even matter if you do things like pay 25k for a new kitchen for her (because, honestly, it's for you too, right?)

What happens if something happens to you and your family?  She has been relieved of 200+K of equity.  Are you leaving the house back to her in your will?  Or, will she be at the whim of strangers to help her again, but this time without the 200k of equity?  Have you even considered her exposure to your health or your financial acumen?  What if you all unexpectedly die (God forbid) or unexpectedly find yourself in financial ruin?

@Terri-Leigh H.

Welp, I was shooting for "disgusted" and not "mean", so my apologies.

I did read through the thread and I came across a lot of your justification.  I'll leave you with this question, "Is this a deal that, really and truly, you would've advised your own grandmother to make?"

@Terri-Leigh H.

"We’ve taken the precautions we could to protect her and us."

The fact that you don't see how unintentionally hilarious this line is is beyond me.

Here's another take.  You didn't save her anything monthly, instead you charged her an up front fee of 230k for your "kindness".  

@Greg Scott

I won't pretend to be in the commercial lending business in any way, shape, or form, but if I were a lender I would definitely insist on a higher DSCR during low interest rate environments for this very reason.  I'm not sure if this is how it's done though.

I have only ever financed through 30 year fixed rate mortgages, so when I looked into commercial residential properties a few years ago, I was immediately turned off by the lending in that I couldn't lock in a rate for the term of the loan.  We opted to buy 4plexes instead of small apartments for this very reason.  Obviously, we still had room to grow.  The next real estate cycle will present us with bigger decisions in this regard.

We've been junkies for so long with the cheap money, it's definitely gonna be a tough adjustment. 

I feel badly for kids trying to buy their first house, but nobody else.  I'm not interested in any sob stories from a potential recession or from people that didn't position themselves well when they had the chance.

@James Hamling

Just echoing @Dan H..  I guess I don't like fishing, but I do like shooting fish in a barrel:

-Central Valley of California - 2009-2012

-Jacksonville, Fl - 2020-2021

Zero effort.  Rents vs. leveraged mortgage payments made sense.  I'll just dollar cost average into mutual funds/stocks until someone brings me another barrel.

You're a real estate professional, have connections, invest more time, effort, etc.  It's tough for a guy like me to compete against that as I'm not interested in trying to match your level of hustle.