All Forum Posts by: Henry Clark

OP

Depends on where you are on your cash position.

If at the start go low cost.  In Texas look at all of the “Offlist Sales Tax properties”.  Get started with $5,000 to $10,000.  Do your thing

If you’re trying to do lots.  Look on mls or loopnet.  Look for the oldest listings.   Look for Nasty properties.  Also Look at farm sales or auctions.  

Sweet spot between homeowners, farmers and developers.  Look for 20 to 80 acres.  Homeowners normally won’t buy larger acreages plus build a house.  Farmers want larger acres.   Developers want larger acres.

Nasty is relative.  Look for something with a lot of hills, trees, valleys or ditches.  Preferably more than one access side for entrances.  Less driveways to build.  

Leave the trees.  Make a bunch of ponds. People like trees, water, views, walk out basements, isolation.

Check on water.  Road access. Smallest acres you can subdivided.  For this as mentioned above would not do less than 5 acres.  

Recommend you stay away from building any structures.

Use the lookup on our two posts.  Silver Springs subdivision and Journeys End.  

Your target is a minimum 100% cash on cash return or don’t do it.  Over a 3 to 5 year period.  Ask your local RE agents about the market for this product. 

Make sure you have water.  Buy someone a six pack that can do water witching. 

OP. Please use the magnifying glass lookup.  Search S&P 500.  Read all of the posts.  

If this is your first investment and you were to lose money.   It is a better investment than a S&P 500 index fund. 

OP

Stay local.  Ask a large Commercial Realtor who they recommend for Real Estate.  Then ask both the realtor and the accountant who they recommend for legal and commercial banking.  Since you’re in Texas.   Move your personal accounts to Frost bank.  Meet and start getting to know their commercial lenders.  Tell them your plans.  Also ask them for the team above. 

Shout out to Pensacola BP folks.   Great

Place.   Down thru Tuesday dropping car off for our son taking 3 month Navy training.   Let’s hookup if you want to talk Self Storage or Country Subdivisions.  Or Teak plantations.  

Y’all have a great lifestyle down here. 

OP we are past our number so the following is just for scaling considerations.  

I have one town I would build 20. 300 unit Selfstorage locations. At $10mm with Comml loan at 25% LTV or $40mm investment. Would hire 1 person for $100,000 per year to follow my instructions for 4 years. Would sell all of these starting at year 3. Would get the original $10mm back plus $30mm less taxes, say $20mm.

Then I would go to the East coast and take the $30mm at 25% LTV or $130mm asset. Around 3 major NE cities. Do the same thing with 2 hires this time. Sell again. Get the $30mm original plus $90mm less taxes say $70mm.

Now I would take the $100mm and divide into 3 investment approaches. 

A.   Would take on the large Self Storage REITS at the major West coast cities SD, LA, SF, WA, OR with a new disruptive business model.  Develop a $500mm business.  Sale after 3 years.  Have the previous 2 managers manage. 

B.   Would track down two guys I know in the Music business.  Take his idea and get Ticketmaster to back.   Develop a $1bl business worldwide.  Sell 2 years later. Hire prior business manager to manage.

C.  The last $33mm would invest in Belize Teak plantation development.  Harvest 25 years later and process for wholesale for $500mm and sale into the India, China and Europe market.  Have my current plantation manage.

I would be on this island all this time doing FaceTime with them. 

Quote from @Craig Cann:

Quote from @Henry Clark:

OP what city or market are you near?

 I’m near Fresno, Ca 

Need to really know the full gamut of your resources and situation.  Don't supply.  Example are your renting?  How much? Do you own?  Your personal housing is always the best investment.  Everyone is looking for a 3/2 great deal.  Look at those, but look at other value Add potentials others aren't looking at.  Example on Loopnet, I did a quick filter and search for Fresno.  1415 W Scott Ave, there are actually 3 properties for sale, these are Care homes.  You could look at this business.  Or you could reno and live in part and rent the others.

4421 E Hedges Ave 6 unit Apartment $800,000

3311-3315 E Sierra Madre Ave 3 buildings daycare, 6,391 sqft  $750,000 retail.

 Point beyond this exercise is to look beyond the normal.  Depends on your resource starting point and your housing situation.  This is just Fresno.  You have a lot of other towns around you within 1 hour drive.

OP what city or market are you near?

OP. I google DC population. 700,000.  Might not match your listing area.  Say 3 per household. Or 230,000 residential units.  5,000 more on 230,000 is just, not much.  

Plus if DC gets cleaned up.  Rentals go up.  Then house prices go up.  

Sounds like a buying opportunity.  

Does anyone have a background or contact for owning and living on a boat at a San Diego Harbor slip?  Thanks.

OP.  @Nicholas L. and @Henry Lazerow noted the big hitters in the discussion. This Stock versus REI comes up fairly often.

S&P 500:

The primary advantage the stock market has is Liquidity.  And that strength is a huge weakness for a majority of investors. Whereas REI takes a little more effort, time and "thought" to liquidate.

The second advantage the stock market has is it sets a Market price. This is good from a lazy investors standpoint, but I prefer REI where the investor determines the price/value add/etc.

S&P 500 index fund.  Normally a fund would be considered spreading Risk.  But today the Magnificent 7, plus they are generally in the same tech field; the S&P 500 is anything but a spreading of risk.  Plus, the P/E ratio is so high anything can take the market down.  Even a free new AI search platform out of China can disrupt the market.  Plus "Product Cycles" have grown faster and faster over history.  Hunter gatherer, farmer, horse, iron age, steam engine, auto, computer, etc.  The cycles have gotten faster and faster.  The current AI cycle which is now in the Product development stage will move to a Commodity phase in an instance.  Not being able to realize the Earnings needed to support the current P/E ratios.

Unfair REI advantages.  The US government intentionally has built in unfair advantages for REI. % downpayment leverage, 1031, $250k capital gain exclusion, year one 100% write-off, Cost Segregation, Refi, depreciation, expense write-off, etc. House hacking, BRRRR, value add, deal analysis versus Stock market determining value, 25/30 year mortgages- the debt after about 15 years goes down to half the value or relative cost with inflation, The government will have to either default, print money, or loan money. By default the Dollar has to get significantly devalued, which means your future debt decreases in cost significantly. You will make money off of your debt. This is not true of your Stock investments, they will go up in Price, but you will be taxed for that.

Who calculated the 11% COC return? Is this after income tax, is CAPEX built in- do you have a stair step model on the roof, windows, hvac, floors, foundations, etc; will property tax go up after the purchase, is this an Appreciating or Depreciating market and asset, does the 11% cover say 3% inflation, Occupancy rate assumption, current tenants, Sensitivity to 5 year balloon term refi interest change. This 11% doesn't factor in any Value add or other Appreciation so hopefully there is a greater return than reflected.

Do the deal.  Calculate your downside risk and understand or mitigate it.  Even if you break even your ahead in future deals.  If you do bad on a Stock or the Index, what learning moments will you bring to the table and how far out will you be able to apply them.