All Forum Posts by: Chad Carson

Love this discussion! 

We've got about 6 months of PITI cash reserves (as in a real savings account). Those reserves served us well in 2008-2010 as both a cushion for negative cash flow events and sometimes as opportunity fund.

We're at about 60% leverage overall. But a good bit of that leverage are private loans from me or my business partner. So, we're probably more like 40% LTV.

I didn't read this anywhere, but I think the overall LTV isn't the only thing to consider. Two people with same LTV could have drastically different risk profiles.

For example, having 10 properties all with 40% LTV loans is less desirable to me than 5 properties with 80% and 5 properties free and clear. If things get bad (i.e. deflationary events), a bank is more likely to negotiate with you at 80% LTV because they are less excited to take that property back. And obviously the free and clear property has less risk in a downturn.

Also, the type of debt and the lender matter. Like @Steve Vaughan, I can't stand the commercial stuff or anything with balloons, adjustments, etc. That's the kind of debt that killed investors and corporations in the most recent downturn. Seller financing and private loans have always been my preference instead of commercial loans because in a worst case scenario I can sit across from that real person and have a reasonable discussion. My commercial bank loan officer would likely be gone or changing his/her tune about the refinance promised earlier. 

Hey Anthony, I think you bring up a really good point and some likely biases in preferences for housing. This book that I summarized, like many others, do focus on upper middle class and upper class trends. Surban is certainly one of those.

But I don't think it has to be either or. I think either way the affordable suburbs will get a big part of the growth. It will just be different priorities and different products that different people will look for. 

@Mike Dymski - thanks for sharing my article! I think these kinds of changes are fascinating for us to watch for and take advantage of as investors.

I found Jay Hinrichs experience in Charleston very interesting. Jay, what kind of margins must you have on those new construction builds to make it worthwhile? Do you look at it as a % profit of retail or do you have some other way to analyze it? 

I own this rental property and have it listed for sale for $135,000. It's in the Upstate of South Carolina and less than 4.5 miles from Clemson University with 20,000+ students. The property includes:

• 1 single family stick built home - 298 White Rd, Seneca
• 2 single wide mobile homes 
• 1 rented mobile home lot
• 1 vacant mobile lot with septic and water in place

Current gross rents collected are $17,640 per year and the expenses for taxes and insurance are $2,679 per year. Here's a breakdown:

• $550/month - 298 White Rd (house, tenant pays all utilities)
• $170/month - 106 Lynne (lot rent, includes water)
• $350/month - 108 Lynne (mobile home, 2 bedrooms, includes water)
• $400/month - 110 Lynne (mobile home, 2 bedrooms, includes water)
• $1470/month = total
• $17,640/year = total

The expenses are as follows:

• $432/year = average owner-paid water bill for 106-108-110 Lynne
• $730/year = insurance - 106-108-110 Lynne
• $530/year = insurance - 298 White Rd
• $14/year = property tax - 108 Lynne mobile home
• $14/year = property tax - 110 Lynne mobile home
• $692/year = property tax - 240-00-05-001 parcel
• $267/year = property tax - 240-00-05-002 parcel
• $2,679/year = total

The single family home is 3 bedrooms and 1 bath with hardwood floors in almost every room and central heat and air. The home also has a 2 car carport. 

The 2 mobile homes are older but well-maintained, each with 2 bedrooms and 1 baths. Heat is baseboard electric heat and window A/C units. 

For 30+ pictures, see the Zillow listing here: https://www.zillow.com/homedetails/298-White-Rd-Se...

You can contact me here or contact the listing agent Brett Smaglia at 864-61401314.

I look forward to the meeting Steve! Thanks for having me. 

Hey @Michael Ghizzoni . I invest and live in Clemson down the road from Greenville. I would recommend flying into town and going to an Upstate CREIA meeting. There are many active wholesalers, property managers, agents, and landlords you could build relationships with. They also have a Yahoo Group where people post often, and you could let people know what you're looking to do and see who contacts you. Good luck!

Aaron, I'm not trying to convince you. You've got your point of view, which is one way of experiencing the world. My previous post was addressed to other people who might read and actually believe your comment that "$250,000/year is needed to really enjoy life."  Believing that is one of the reasons a lot of people stay locked into a work grind a lot longer than they need to. 

A very non-extreme, enjoyable life can be had for much less than that. And it doesn't involve coupon cutting, bargain hunting, broken furniture repurposing, dumpster diving, or any other non-sense. Travel hacking with credit cards, yes. Cutting out huge markups by buying directly from locals, yes.  Thoughtful purchases, yes.

And some people do appreciate real, current expense numbers so they can see how things actually work. It has nothing to do with bragging. You're welcome to ignore it and find another comment where someone spends $20,000/mo month.

In fact, maybe someone can start a 3rd alternative website; heaviestpockets.com.  People can discuss the pleasures of their first class flights on their 7-day vacations buying chef-selected cuts of fine meat and vintage wine from a select bodega in Argentina. It'll be really popular because these people are obviously enjoying themselves more than everyone else.

 Again, this is going to be a very personal subject. If someone thinks they need $250,000 per year to enjoy themself, who am I to argue. We're all different.

But I can certainly say in my case that I can (and actually do right now) have a fabulous time, traveling the world or doing whatever else I want for MUCH less. We live for $3,000/month in Cuenca, Ecuador sending our kids to private schools, eating great food, buying private health care, drinking local craft beer, and taking excursions around the country. $60,000 to $100,000 per year and you can live like a king/queen here and many other parts of US and the world.

And, something many people don't consider is how much less things costs when you have flexibility of time. You can take trips when there are deals, shop at local markets for food, negotiate long-term hotel/airbnb deals, and travel slower. Traveling slowly is so much cheaper than a 7-day, in-and-out vacation.

Just food for thought. The point of this wasn't to say low or high-income needs are right or wrong. But for those hoping they can enjoy themselves for less than $250,000 per year, I just want to let you know it's easily done.

 I teased a few results in the post above. But we'll compile this and make it available along with other information on early retirement with real estate sometime in mid to late 2018. Sorry for the wait!

I mean 75% are ok with a net worth of less than $3 million.  25% want $3 million or more. 

Assuming a 6% average income yield on that 3 million, that's $15,000/month or $180,000/year. Not too shabby in most places.

And so far, about 33% of the total have a net worth goal between $1 and $2 million. Using the same yield assumption, that's $60,000 to $120,000 per year. 

About 70% of people said they needed less than $100,000 per year to pay all their expenses. So, the fact that 75% need a net worth less than $ 3 million seems to make some sense. 

Sure, some people will want more income and thus more net worth, but the others can still live very comfortably in those middle ranges. 

 Thanks for doing the survey Jacob! And thanks for listening to my interview on ChooseFI.  A lot of what I'm trying to learn with the survey is right at the intersection of the Bigger Pockets and Choose FI/MMM universes. Real estate and FIRE are too fun topics!