All Forum Posts by: Dave G.

Most realtors suck at even being a realtor, much less being able to take on the financial and schedule risk of doing a flip or any kind of real estate investing. Not even the 80/20 rule with realtors, more like the 97/3 rule in my experience.

A good realtor, better yet a good realtor that is also a good RE investor, is worth their weight in gold. Find them, then be sure to take good care of them to keep them on your team.

If you're looking for any kind of detailed recommendations, you're going to have to provide a little more info. We know nothing about you other than you're new and looking at distressed property. 

What is your starting point for knowledge? Have you read a book or two?

How did you narrow down to 8 potential deals?

Where are the deals and what do the numbers look like?

What is your financial situation?

What are your goals?

On BP there are thousands of posts and hundreds of podcasts that will get you smart on investing. Maybe that is your next step.

@Aleejandro Dela Vega - a few questions:

Since the Great Recession.....

• How much new construction inventory has been added?
• What has been the population growth?
• What has been the job growth and in what industries (other than casinos, Zappos & AFB)?

The market cycle valuation extremes have always appeared to me to be very similar in Vegas and Phoenix. But the Phoenix market seems to me to be way more diverse in terms of job base. This is why I've never considered Vegas since it seems almost like a company town relying 90% on gambling and tourism. But maybe I'm way off on that.  

If they get well each month and aren't bad tenants in any other way, keep collecting the late fees making the extra income. 

My experience - I've had this scenario before and made a lot of extra income off of a tenant with $100 late fees. I did, however, eventually evict the tenant for non-payment....so much for all the "extra" income.

You could also explore switching to collecting 1/2 the rent every other week to accommodate the tenants poor money management habits. They may welcome this and you'd collect an extra month of rent every year as compensation. 

Or do what @Thomas S. has recommended.

Great job. Keep it up and look forward to hearing your next inspirational update.

My motivation is I pray at the alter of capitalism every day. I believe a market economy is the most efficient market structure know to man, and that it benefits all of society more than any other tried by mankind. I am a disciple of Adam Smith and his economic tenets. I believe that it is my duty to deploy capital to its highest and best use. That is my job as an investor & market participant. 

I also get a huge rush writing offers on properties...my crack cocaine!

Good post by @Josh Collins

Here's my mental download having experienced the highs and lows of the equities and real estate market for the last 35 years.

There are indicators you can see when the economy is doing well versus not well. I see these as symptoms of a potentially overheated or bubble-threatened market, and they are not hard to see if you pay attention. A few are below in no particular order.

• Grocery store checkout magazine barometer - if Time, People and those other yappy magazines start having cover page headlines about new stock market strategies, "new economy" stories, "how to invest in gold or real estate" stories and so on, proceed with caution. 
• Cold Call metric - I get voicemails and mail all the time now from "investors" wanting to buy my properties. I did not get any at all 2 years ago. 
• Junk mail - I get multiple credit card offers every day in the mail now. They're offering huge mileage bonuses. I also get offers for unsecured lines of credit. Go back a 2-3 years, I only received a few credit card solicitations a week maybe, with much lower incentives. 
• And of course there are all the real estate sales stats like DOM, closing/listing price ratio, frequency of multiple offers/bidding wars, etc. We should all be watching this data like a hawk.

So things have been heating up. We all know that. But it's not necessarily a bad thing, and there are a few things that are different now that are a calming force for me not to bail and run for the hills. I'm still a buyer at this point. 

So what's different now versus 2005/2006?

• Lending standards, an oxymoron back then, are much tighter
• Rising interest rates will have a dampening effect on demand. This may already be occurring, but the net demand is still increasing so you may not think of it. It may be a good thing. 
• One thing I am not getting now that I was getting in 2005/2006 - near daily offers of 125% loan-to-value refinancing for my primary residence. I knew things were getting out of hand when those offers started showing up...that kind of wreckless lending can't go on forever without consequences. And it didn't.
• Most builders got crushed in the Great Recession. The ones that survived have been cautious and selective for the last ~10 years. Not a lot of inventory has been added for a long time. In AZ, the predominant building segment has been in the higher price range of semi-customs where builders could make more profit. Very little affordable, entry-level housing has been constructed. This was not the case before the Great Recession. In AZ back then, they were building houses like crazy. Lots of new developments have now been announced in the Phoenix area in 2018, but it's reacting to demand, not speculating that it will come like in the 2000s.
• Trades people were hit hard in the recession. Many went to go do something else for a living.  Couple that with the fact that for several generations now young people are dissuaded from non-college paths such as the trades. Result - a labor shortage in the trades. Hard to oversupply the market when builders struggle to find people to build houses. 
• Millennials are starting to move out on their own. I've read a lot about how this generation will be different and want to remain in urban, compact and walkable environments. I never understood this. More recently I've read a few articles (that I find more probable) on how this generation is really no different than the previous, they just waited a bit longer to move out of their parents home, get married and start families. And when they do, they will want an SFH with a yard, which probably means a suburban area. The market is starting to reflect this. Regardless, wherever Millenials decide to go to live, if they're moving out on their own it means additional households being added to the market.

If and when we really do have a bubble and it bursts is up to the market ultimately and no one can really time it. But it's a fact that the market at the macro-level has a major correction about every 20 years or so. Michael Kitces walks thru it quickly as a subtopic in the 4% rule Mad Fientist podcast that's very informative.

https://www.madfientist.com/michael-kitces-intervi...

"Be greedy when others are fearful, and be fearful when others are greedy" - Warren Buffet

"The trend is your friend, except at both ends" -  not sure who to credit

Cheers,

Dave

Well, there's an upside to investing in negative cash flow rentals - you will have very little competition and ton's of deals to choose from. 

And if you do it in California, you'll get all the benefits of someone engaging in capitalism there!

Good luck in your decision.

@Amit Sharan great addition to this thread

Absolutely agree with @Michael S.