All Forum Posts by: Chris John

@Account Closed

I think you make some very valid points, but a long time ago when I was sitting through finance classes my finance professor (shout-out to Dr. Vellenga - forever my favorite!) always hammered home the point that the biggest risk should be the risk of inflation.  I kind of thought he was being overly dramatic. 

Now, I keep imagining a 15 year old kid that had been saving his part-time work paychecks to buy a car, finally almost got there, and then the government dumped trillions into the economy devaluing his savings, and now that car has doubled in price.  For me, that's the greater risk and I think I see Dr. Vellenga's point.  

@John Clark

I just wanted to defend myself a little bit on the SFR in Montgomery comment. I was seeing those deals all day long about a year ago, but I decided against Montgomery and I haven't looked since, so it's definitely possible that's not a thing anymore.

However, I am under contract for two quadplexes for around 380k each with current rents of $3200/mo and market rents of $3600-4000/mo.  I don't think they need to hit the 1% rule with current interest rates being so low though.

Having said all that, I don't think the quadplexes are anywhere near a home run, but I think they should pay for themselves and leave a little leftover... but mostly I have an itchy trigger finger right now.  haha.  Anyway, I feel like singles and doubles are still out there right now.  If rates increase and the market tanks, I feel comfortable with being able to lower rents if necessary and being able to hold onto them.

In the end, I want to borrow as much money at 2-3% as people will let me as long as I can buy properties that I think will pay for themselves.  Over 15-20 years, I'm hoping it will work out.

@K F.

I guess I'll be the contrarion. I'd love to borrow 65k at 2%. It's difficult to believe that you can't find an investment that will pay you more than 2%. For instance, buy a SFR in Montgomery, AL. for 65k that rents for $700/mo. After paying for management, taxes, insurance, etc. you should have enough left over to make the payments on those debts. So, in essence, you'd still have your debt paid off, but instead of a zero balance it'd be getting paid off by an appreciating asset. (Having said all of this, I think there are better uses for that money, but it's the first thing that popped into my mind that runs around 65k).

Just a though as I know it's an emotional decision and I always lose this argument!  haha.

Best wishes with whatever you choose.

@Tony Kim

"It's also very old and unoriginal and does little more than expose one's lack of knowledge."

Pray tell?

@Gary L Wallman

I'm with you.  I live in California and all of my initial investments are in California.  However, my recent investment dollars went to Florida.  My near future investment dollars are going to Florida.  If it goes well, I'm considering slowly selling my California properties and reinvesting in Florida (or wherever).  Ultimately, I'd like to trick my kids into going to the same out of state college so my wife and I can follow!  haha.  

Do I think I'll make more money?  Honestly, no.  I believe I'll probably lose a bit in the end, but I feel like I've done enough in life that I can afford to conscientiously object to this ridiculous setup.  I'll care a lot less about how crazy this state has become when I'm no longer helping financially support it.

I will say this though, if you're a California landlord, I'd be aggressively raising rents as much as possible (even on SFRs).  Rent control hasn't impacted SFRs... yet.  There's going to be two prices for real estate.  One for investments at market rent and one for investments not at market rent.  I'm guessing the California cities that had rent control before it went statewide probably already have that.

Growing up pretty well off and taking things for granted.  Then becoming poor and losing that ability while still a kid, but being around other kids that still took those things for granted.  It lights a fire.  haha.

@Kendra Elise O'Berry

I can't speak to the SC market, but out in my part of California the 2% rule is really unheard of.  I was buying in 2009 and we were only hitting the 1% rule then on market deals.  Even just hitting the 1% rule is really, really tough to do nowadays out here.  Plus, with lower interest rates, your costs are lower, so the rents don't need to be at the same ratios to turn the same profit.  I'd focus more on cash flow, potential appreciation, debt retirement, tax advantages, and your return on investment.  Good luck!

@Joe Villeneuve

I know you've tried to explain this to me before, but I'm still a fan of the refi and keep buying method. I'm in California though and my locked in property taxes are saving me hundreds of dollars a month per house, so that helps me not want to sell. (However, I'm hoping to soon have my 10 "good" loans and planning to maybe go back and recycle my SFR for multiunits).

Anyway, it seems like:

-The cost of refinancing is well below the cost of selling and buying and acquiring another loan

-I'm having to put down 25% already, so is it really that easy to get 20% down once you get to 7-8 loans?  I've tried shopping my lender, but he was the most competitive...

-Once you get past 10 loans, where are you getting funding?  At that point should I be stepping up to commercial or should I have already done that?  Stay at 1-4 units and use harder money?

I'm sorry for trying to hijack the thread, but I'd love your (or anyone else's) thoughts on this.  BTW, my vote is to refi and keep buying real estate...

Reading this from California is weird.  You guys can have tenants leave?  Man, I forgot what that used to be like... 

I've passed on so many deals like this in my area of California recently, it's not even funny.  

"At that price and with market rents, this thing will be a winner!  Oh, wait...  Current rents are 50% below what they should be.  I can't get the tenants to leave and it will take me 6 years to get to today's current rents with rent control.  Who knows what 6 year's market rents might be?  I may never get to market rents.  Better call Florida, I guess..."

I get that appreciation and debt retirement are where the big money is, but I'd still like some cash flow to grease the wheels during the tough months when everything goes south.  I wonder if I'll regret moving my attention out of state when 2031 rolls around or be happy I did it.  Should be interesting...

@David A.

I'm looking forward to following along.  I've been kicking around this idea for a couple of our properties, so this will be great for me.

Thanks and good luck!