All Forum Posts by: Chris John

@Peter Nikic

If I were in your position, I would definitely expect to pay more unless you paid them for an option on it.  Also, if prices had dropped and it was worse less than the original agreement, would you insist on going back to them and paying the higher price or would you want the new, lower prices on either that property or one similar to it?  Honestly, I think the seller would be crazy to accept this year's dollars at last year's prices...

Quote from @Evan Polaski:

@Chris John, I am guessing you only started investing or thinking about investing in SFRs over the last 3-5yrs.  In which case, single family homes have been a gimme.  

I am grateful that I have never had a terrible tenant that does 10-20k in damage on move out, but I have spoken to several people who have (ironically all of these stories come from people that invest OOS). 

To your first point, no, it's been since 2009.  You can say that it's lucky to get in after the meltdown, but there's a reason that I wasn't buying in 2006 and it wasn't an accident.

To your second point, I'd say that between damage and skipped rent, we've had a few 10-20k losses over the years.  However, so far, our issues have all been in state.  Having said that, the OOS is gonna happen at some point, I'm sure.  You do what you can to eliminate or mitigate it, but, sadly, it feels like it's just part of the game.

In the end, if people are buying real estate with no reserves, I can't help them.  SFRs are indeed, imo, a gimme.  Just gotta find ones that pencil out, have them inspected, and have reserves....

@Bruce Woodruff  and @Jim K. My comment was in response to an earlier post that posited the idea that SFRs should not be for rent, only MFRs. As if renting out a SFH is only a negative to society and has no benefits to anyone beyond the owner. I used single mothers in my example, but it's really irrelevant who the tenant might be. In the end, not every tenant wants to own a home or live in a MFR based on my anecdotal, personal experience.

LOL. I was typing my response to a guy that actively takes low income housing off of the market to turn into rentals for out of state investors while blaming STR investors for homelessness in that same area when I caught myself. The virtue signaling on this website sometimes...

@Frank McGovern So, single mothers that can't save up enough for a down payment on a house don't deserve a yard for their kids, I guess?

The willful inability to see two sides of a coin is going to be the end of this country.

@Pavan Krishna  I don't know where the local laws where your property is located, but I'd probably tell them that month to month would cost "x" more per month due to the uncertainty it will cause you over the lease terms.  IMO, they can have flexibility, but they'd have to pay for it.  Kinda like buying an option.  

Quote from @Jim Pellerin:

I bailed out a lot of wanna be real estate investors who were told to invest in SFHs. They all lost a lot of money. 

To me, this might be the craziest point made in this entire thread.  I'm not saying it's not true, but screwing up a SFH investment seems like it'd be pretty difficult to accomplish.  It's the ultimate financial "gimme" as far as I'm concerned.

@John Fernald

Definitely not for the faint of heart!  I have no doubt that there's plenty of money to be made in Portland rental properties.  I also have no doubt that none of it will ever make it into my pocket!

Thank you so much.  Extremely interesting read!

Quote from @Jorge Vazquez:

Many people incorrectly assume that interest rates are the largest factor contributing to the direction of the real estate market.

I'm not sure if I missed it, but what is the largest factor contributing to the direction of the real estate market?  Thanks.

    "However, rising interest rates have not been adversely affecting the market thus far and are not projected to have as large of an impact as
      other times in history.."

It's not the going over the cliff that's the problem, it's the landing.  I'm not saying we went over a cliff, but the increased interest rates need to dampen excess demand enough to match the low inventory to see a significant impact.  If that happens, and there's not enough buyers for such a low inventory, watch out.  All bets could be off.

    "Rising interest rates have a visible impact on real estate markets, but they are not anticipated to damage the market in upcoming years. As the
     economy grew and strengthened following the 2008 market crash, the Fed’s move to increase interest rates was expected."

The market had already crashed in 2008, we're at an all time high right now though - by a lot.  There's PLENTY of downside to housing prices.  It's gonna be a fine job of tightrope walking by the fed, imo, if they make the excess demand match the extremely low inventory and get us out of this mess with little to no pain.  Here's hoping though!

@Mike Dymski

Not gonna lie, Mike.  Normally I find your posts a lot more illuminating!  haha

@Jaron Walling  Oof!  Wouldn't we all like to know?!?!?  haha.  I'm ANYTHING but an economist, but the optimist in me hopes for weeks/months, but the pessimist in me is REALLY worried about a protracted recession.  I get really nervous when I read stuff like this:

...Bernanke said. “You know, we’ll see the effects in house prices, etc. So those are some ways in which the current situation I think is better because we learned a lot from the ’70s.”

This is a tangent, but I get really nervous when people in the present think they're so much smarter than people in the past.  As in, the people in the 70s were so stupid that they caused a giant mess, but we're so smart that...  oh, wait, we're also in a mess.  Hmm...  Well, it's a different mess because we're smarter than those dopes were in the 70s.  

People before us were "dumb" enough to write and enforce loitering laws, but we're so much "smarter" than them that we don't enforce them.  They were "dumb" enough to incarcerate repeat offenders, but we're "smart" enough not to.  And on and on it goes.  Then again, we're not sitting around eating lead paint, so there's that.

Anyway, I'm more about mitigating loss when I'm uncertain.  I'd probably throw 5-10% in a month and try to average in over the next year or two.  That way, if things change dramatically, you can accelerate or decelerate that process as we get clarity moving forward.

Not sure how much you're sitting on, but my brother told me about Series I Savings Bonds last night.  There appear to be quite a few catches to them, but they look interesting.

And finally, if you've read this long, I sometimes feel like we're in a minority in our agreement in avoiding negative cash-flow properties.  I understand the logic to do it in terms of tax advantages and apparent higher historic returns, but man, I'm way more interested in making less and not having to come out of pocket every month, I guess!