All Forum Posts by: Dan Rowley

regardless of stock market gyrations, folks will still need a place to live.  So, that is bullish for real estate right?  :)

@William Yeh   
Under non-recourse loans, the guarantor is not generally responsible for losses the lender incurs, unless they commit certain bad acts; such as fraud, waste, damage or destruction, misapplication, misrepresentation, bankruptcy, or environmental contamination.  So there is still someone that needs to sign their name and would be responsible in the even to of 'bad actor' behaviors.

@Connie Dai   There are some rules of thumb but that need to be tailored to the specific situation.  You can probably also google and find good online resources on the topic. 

The two main ways to compensate a loan guarantor is 1) an annual fee and/or 2) a percentage of equity.
>Annual Fee – If it is a nonrecourse loan, the typical fee is 0.25% paid out annually. If the loan balance at the end of year one is $10 million, for example, the fee would be
$25,000.
>Equity – In addition to an annual fee, you can offer an equity stake in the deal.Depending on how you negotiate, what the projected returns are for the deal, and
how many other options you have to guarantee the loan, for a nonrecourse loan, the percentage can be 5%, 10%, or more.

@Matthew Rubino Rule of thumb is you need a debt to income ratio of <50%. Do you have / you must have other types of debt that contributed to your 60% DTI = maybe student debt, auto loans, business loans, etc.?

@Patrick K.  whether there's merit in it is subjective and every one will arrive at their own conclusion based on their individual circumstances.  If you're in a hurry to buy something you might bite the bullet and do it BUT if you can wait and be patient market conditions are bound to change as things are very cyclical.

DO: just stick with your #s/projections and that will dictate the proper price.

DON'T: make it emotional or about FOMO, which is prevelant these days given how heated the market is and so many bids on decent properties.

To your negative cash flow comment.....  Warren Buffett once said, “The first rule of an investment is don’t lose money. And the second rule of an investment is don’t forget the first rule. And that’s all the rules there are.”

@Randy Beharry

Unfortunately you kind of get what you pay for and decent rental properties @ $100K are hardly out there anymore.  If that's what you're seeking there are option you can find but just know what you'd be getting into:  rougher areas with higher tenant turnover/delinquency and more deferred maintenance and other hassles.

@Matthew Stallone  - You referenced San Antonio.  And you may be aware of this already but you have to factor in the quite high property taxes in Texas.  Depending on which city/county you will pay between 2% and 3% of value in property tax each year, which cuts into cash flows so even if you're closer to the 1% rule you may not necessarily cash flow.

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Thanks for the reply Dan. I know getting both is difficult, ideally Id

like something close to 1% and a non stagnant market with appreciation.

That's why San Antonio is on my list. I feel like prices are somewhat

reasonable as well as a good chance for appreciation due to being so

close to Austin and the 35 corridor. What are your thoughts on San

Antonio?

@Matthew Stallone I don't want to be discouraging here... but cash flow is difficult to find (unless you put higher down payment $s down) in this environment in growth markets.  So, if you're investing for cash flow you will probably need to focus on secondary or probably even tertiary markets. Of those you listed Pittsburgh is probably your best bet for cash flow, but it won't have stellar growth statistics vs. many other cities.    Also, remember that markets are cyclical and so the environment is bound to change with some of the macro-economic and geo-political events that are at play.