All Forum Posts by: Chris John

It sounds like an online version of Robert Kiyosaki's "Cashflow" board game on steroids.  I think it would be a great tool for teaching and learning.  I try to help mentor my high school students about investing (if they're interested - only a handful have been) and it's culminated with playing "Cashflow" a few times as a group.  I know that not everybody loves it, but I think it's really approachable and the kids enjoyed it.  A better version of that would be great.  I'm sure I'd make my own teen children play it with me against their wishes if it was well done. 

Good luck and great idea!

I pulled out of an investment property about a year ago from a flipper after the inspection came back.  They'd obviously done the lipstick on a pig thing.

I don't understand the logic that says that you shouldn't buy from a flipper though.  I'm more than happy to have someone do that renovation and deliver a finished product to me (as long as it pencils out and the work was well done) because:

1.  I'm not looking to invest the same amount of time as I did on my first investments.  I'm not rich, but I've made enough that I'll trade a slightly lower return for my time. 

2.  I'm looking for long-term plays anyway.  I don't want to burn money, but over time, I don't see the extra 5-10k here or there as a deal breaker.  These deals should do well in the end, anyway.

3.  Most importantly, if someone else does the renovation, I can finance the renovation at 25% since I'm leveraging anyway.  I'd rather pay 25% of a slightly more expensive renovation than 100% of my renovation.  I know I'm not a pro, so I don't have the same smoothly running operation or economies of scale of a true professional.  There's no reason for me to believe that I'd pull off the renovation at nearly the same price (or again, time - especially time) commitment that they did.

I don't even care about hitting "home runs".  The world is full of people trying to get them and they can all battle it out trying to find them.  They always talk about how much money they make, but rarely mention the time and effort (and possibly luck) that it takes to get to that level.  Singles and doubles are everywhere, will make you rich, and require almost no effort.  I'm totally fine with them and to enjoy my free time with my family. 

Side note.  We just bought 4 quadplexes.  They're good (not great) deals.  As tenants turnover, we're probably looking at about 7k per unit to get them the way we want them.  That's 112k out my pocket.  I'd have loved if someone had done it for me and charged 150k, so I could pay 37.5k now and the other 112.5k for 30 years at 3.625% so I could use the extra 74.5k to apply to the next quadplex...

@Peter Eberhardt

Congrats!  Awesome to hear a story about hard work paying off.  It seems like everywhere I turn, I keep hearing that there's no such thing as hard work.

Anyway, I was curious about your strategy for "and once all the units are turned over and brought up to market rent within the next 18 months...".  Are you going to be paying tenants to leave or are their rents already close to market? 

We have a 4plex a little further north in the Central Valley that cash flows, but the rents are definitely not up to market.  We bought this about a year ago and haven't had a chance to do too much yet due to existing leases, but I'd love a strategy moving forward if you (or anyone else) wouldn't mind sharing.  There's no real incentive for California tenants to ever leave once they're rents fall behind...

Thanks and congrats again.

@Ryan Jacobson

Your first deal looks like a home run.  Congrats!  That's awesome.  You must be talented to make 5k and your hard work turn into 170k of extra value!

Great thread.  I can't make heads or tails of it, but it's compelling.  I'd love to know Zillow's logic on this.  Maybe Zillow is a money laundering scheme for Los Zetas or something...

@Bruce Woodruff

@Ryan Moyer

@Ken Boone

You guys have given me a lot to think about and I definitely appreciate that.  I did hear about the boom since Coronavirus and was going to ask about that, but you've given a very clear analysis, which is awesome.  The info was from Galveston, TX, but now that I think about it, I think the data might've been a year or two old, which is probably making a big difference.  Of course, I can't really say how good the information was to begin with.  I was just doing back of the envelope calculations.

I definitely have a lot more research to go before I decide if I think I'm up for taking a swing, but I hope you wouldn't mind if I reached out to you in the future with more questions.  You guys are awesome!  haha.

Thanks again

@Bruce Woodruff

I think that's really good advice.  That reminds me that I'd heard someone had bought really "normal" homes, but had themed them and it was really successful.  I'll have to strongly consider those types of marketing strategies.

Thanks for the idea on that.

 @Jim K.

I'm not done with the thread if it should continue, but I'm with @Bruce Woodruff in that you've made a couple of concerning comments in this string.  

I enjoyed this other thread a lot more!

https://www.biggerpockets.com/...

I hope you're well.  Hang in there!

@Ryan Moyer

Yeah. That's exactly what I'm going. For instance, if I can pay 380k for a 4plex, I'm expecting I can get rents of around $3800 soon. If I went for a STR, I'm seeing it two ways:

1.  I'd expect more than $3800/mo for the extra work.

2.  I'd expect less than the $3800/mo because I figure I'd make up for it in appreciation. 

Interesting that you're saying it should be extremely easy. I found some numbers that showed I could expect around $6700/mo income for a 3BR on a STR in a specific market (median). In long term rentals, I'd expect to pay around 650-700k for a property like that. When I looked on Realtor.com, those houses were going for around 950k. It makes me think I'm missing something.

Of course, this is one anecdotal example, so...

@Dave Stokley and @Bruce Woodruff

Thank you for the responses.  My head is spinning thinking about this.  Usually I'm a numbers guy, but I'm struggling here so I'm definitely going to put more time into this.

I'm able to buy 4plexes for around 380k right now that are renting for around $3200/mo that I'm expecting to be around $3700-3800/mo by the end of the year.  Not home runs by any means, but they should pay for themselves pretty easily.  I also am betting on inflation, so it wouldn't shock me to see rents of $4000-4500/mo in the next 5 years or so.  Definitely low hanging fruit.

So, when I see the 25% COC number, is that assuming traditional financing and self-management with cleaning fees, etc. accounted for? By the way, I couldn't find the thread you were referring to, but have come across several other interesting ones, so thanks for that. If you can link it, I'd appreciate it though. Was it on BP?

When you say an ROI of 3-5 times, are you comparing that to the returns of what would probably considered high-end homes? My thought is that the typical ROI of a high-end home is probably pretty low to begin with. Would the 3-5 times ROI outpace a more traditional LTR property too? Obviously, appreciation on a nice STR is probably ridiculous compared to that of the 4plexes I'm talking about. However, I see these being in a growing market in a growing state in a growing part of the country, so I'm probably more hopeful of appreciation than I should be.

In the end, I'm not often intimidated, but you slick talking STR people have me second guessing myself! I'm concerned about jumping in late, buying an expensive house with all of the learning curve that comes with and realizing I could've made more money buying another 4plex or two... Of course, there's no growth in that and I think I'm stagnating a bit. Just don't want to get crushed with my empty STR while you self-managing ninjas make all the money! haha.

Thanks again!