All Forum Posts by: Dan Rowley

I've kicked the tires with Roofstock also.  And as @ ken maddis pointed out I do think some of the neighborhood ratings are shaky.  I think they are chasing areas with cash flow and so mostly what I've seen there are more like C class (not B).  Not a terrible thing, just know this going in and do your own due diligence of the neighborhoods also.

Yes I've considered SAC but for me personally I don't have a lot of time i want to dedicate to managing properties myself and so I prefer passive investing and relying on PMs. Even with the PM costs as they are in TX and a few others states I invest in I can net positive cash flow in growing markets.

And with my primary residence and other investments I own in CA already I also want to diversify my holdings.  TX is growing faster than CA and is business friendly and has no state income tax = they are gaining more fortune 500 HQs each year.  

Vinh, 

what you've done is invest in a 'growth' market Vs an 'income' (cash flow) market.  so, your value/gain would come with the higher appreciation potential of SoCal.  That said, appreciation is never a sure thing and sure prices have risen since 2010 and economy looks strong right now but, but let's face it California can be more volatile than many areas and so you may net our fine on appreciation in the near term or you may not...

In general, it's best to at least be break even cash flow, then even if appreciation doesn't happen you haven't been burning cash to own the property.

Dan

It's true given the high property taxes there in TX that you need a better rent to value ratio in Austin to clear the same cash flow.  Prices have risen in Austin to where cash flow neutral/positive scenarios are hard to come by unless it's a subpar neighborhood you likely don't want to own in.  

You can find cash flow neutral or positive in Houston (I invest there) and San Antonio, and possibly in Dallas metros in very decent neighborhoods as those are strong economies and growing metros, though those markets may lack the sexiness and tech profile of Austin.

A correction may come at some point (who knows when?), and it's probably inevitable but I'd argue it's effects will be nothing like the prior downturn, which was actually caused by real estate financing (i.e. junk loans).  The banks haven't been handing out junk loans since.

If it helps to give perspective, what you're seeing is not unique just to the KC metro.  Many areas of the country have seen home values rise quickly in past few years, thus resulting in lower (or 'compressed') cap rates.   

The good news is for your current portfolio = equity gains.  You might think of it like the stock market, where you dollar cost average and if you invest over time some low and some at higher prices   If the area and home are good quality it may make sense for you, just know that at the outset your cash flow will be much lower.  Or seek out wholesale type opportunities but those have their own challenges (i.e. a lot of rehab typically).

I've invested with FIG and the projections (perhaps suprisingly given some of the other outfits that tend to inflate things) I have found are pretty accurate.

Basically it's what many of the other contributors are saying = macro/market dynamics.  In Indy as even in most other  'good' investments markets there's no longer a lot of cash flow sitting out there, especially in A/B.  Prices have risen and cap rates have been compressed, plus financing is now more expensive.

Maybe you can find some wholesale / off MLS prices that are lower but those are generally not in A/B areas and typically require rehab or 'tlc'

And you could still probably get some cash flow from B- / C area properties off MLS, but likely you'll have more headaches for sure and the investment won't be as 'passive' as you hoped it would be.

I'd also agree it's best to not buy something than to overpay on something and then regret it.

An interesting tidbit... but how does this relate to how or whether or not to invest in Jacksonville ?   A much bigger risk factor when consideirng investing is the potential for hurricanes/floods.

I use these guys and am pretty happy

CJ Real Estate, Inc.

www.cjproperties.org