All Forum Posts by: Account Closed
Account Closed has started 1 posts and replied 214 times.
Post: How Are Investors Making Money In The Boise Market?
- Posts 217
- Votes 190
Originally posted by @Stephen Pendl:
Hi Jason,
What my partner and I have been doing is making high, competitive offers on properties where we can force value. For example, a SFH on a property that's zoned for two dwellings. We add the second unit, and then it cashflows. With this method, we've been able to be competitive with other offers on SFH's and avoid the overpriced, over competitive investor cash offers on traditional multifamily (2-4plexes). We closed on two deals recently and have been moving forward with city approvals on both, fingers crossed! If all goes well, they will cashflow just as much if not more than if we'd bought duplexes several years ago. Another method to consider is short term rentals to increase rental income. I'm open to chatting if you want to connect! Best of luck to you!
So you bought before you had a clear greenlight from the city? I hope not
but if so, then my other question might be valid as well. What if the costs on that construction end up not being what you planned. How much room for error do you have to keep that deal from ending up a low or no cashflow "appreciation play".
Post: This is Not the Real Estate Environment for Rookie Investors
- Posts 217
- Votes 190
Originally posted by @Tony Kim:
Originally posted by @Account Closed:
Originally posted by @Monique Pett:
I totally agree with you're saying but I also think I'm a "rookie investor". I won't ever know to do something like that unless I work with seasoned investors, as well as new properties to be able to learn.
The time is always now, it's all we've got :)
The time might always be "now", but "now" isn't always a good time to go out in the water.
His advice sill stands.
As a youngster, I thought investing was so simple. Buy when low, sell when high.... When my parents took a big hit on their stocks/investments a long time ago, I asked them why don't they just buy when low and sell when high? Their response? "It's not that simple son." OK, I didn't understand it back then and I still don't understand it today. Trying to buy right now is going against something that even grade-schoolers understand. So unless you have an active strategy that can somehow find value and you're also willing to ignore all the things going on right now that may ultimately lead to a major correction (like several hundred billion dollars in double digit coupon debt from developers in China), I would agree with the title of this thread.
Appreciate the honesty. Frequently on these forums people get so caught up with the notion of "taking action"- so often touted, rain or shine, by the people who run BP- that they fail to see that sometimes the best action to take, is simply not taking a bad one.
Post: Off-Market Multi-Family Properties
- Posts 217
- Votes 190
Post: Investors doing poor rehabs for a quick sale
- Posts 217
- Votes 190
As a rule of thumb, don't buy a flip or a rehab unless you've got the skillset or team to thoroughly vet the work, and if you do, don't be surprised when they tell you they don't care what you found, they've got other buyers lined up.
Post: This is Not the Real Estate Environment for Rookie Investors
- Posts 217
- Votes 190
Originally posted by @Monique Pett:
I totally agree with you're saying but I also think I'm a "rookie investor". I won't ever know to do something like that unless I work with seasoned investors, as well as new properties to be able to learn.
The time is always now, it's all we've got :)
The time might always be "now", but "now" isn't always a good time to go out in the water.
His advice sill stands.
Post: Looking for my first MF rental property.
- Posts 217
- Votes 190
Originally posted by @Roland Brown:
@Account Closed You make a great point, about the deal needs to be a good one. Unfortunately, we don’t make the market, we live in the market, so the hunt for a good deal gets a different definition than it had in 2010 - 2015.
So then does it make sense to wait it out? Everyone’s investing plan and path is different. And I’m guessing you are very concerned that a new investor will be taken advantage of, hence your commitments.
I'm guessing that there is some thoughts that anyone buying now are only buying bad deals at market prices or just below market prices is getting a bad deal. Deals are still available, and sometimes sitting in plain site on the MLS with some creativity. That's where working with the right team comes in. I know there some very smart realtors here on BP, looking out for first time buyers. I've seen several posts from folks like @Joe Funari and many others so the right team is here in the BP community.
As for a housing market correct? wish I knew the future to say when the next one hits, but I just don’t. I do know that the economics for housing is still very strong. Prices are up because demand is up while there’s lots of reasons demand is surging (I listed 3 reasons driving demand below if you card to read that).
Specifically where does the money come from on deal 2? It used to be much simpler when everything was a good deal but this is the market. But today is different, if a person wants to buy a perfect BRRR DFW is not the easiest one to work in, so creativity and patience is where that next deal comes from.
My opinion on economic drivers-
1) COVID fatigue, folks got stuck in their homes for long time. That made a lot of people think if this ever happens again I want a much better environment.
3) Demographic demand - currently the largest demographic group millennials are at the median age of 31 - 34, which happens to be the average age of 1st time home buyers. The second largest group baby boomers are at youngest 57 years old , empty nesters and down sizing homes. The two largest demographic groups are trading right now with half of them not bringing anything to the table. With Gen X think both groups are nuts.
3) Regional demand - I know my market DFW is a competitive market, and has not slowed down long enough in years for anyone to take a breather. The demand is real because DFW continues to have corporations moving head quarters relocate here and creates opportunities for new jobs. Jobs attract new people. New people need a place to live so they buy the available inventory, that creates scarcity and the law of economics are that low supply forces higher price.
So, ...we don't make the market, and we do live in it, but we don't have to bend over for a bad one either.
As far as waiting anything out or making predictions, I don't make predictions, and am very critical of those who do. I just know that I'm having a very hard time finding any point in the last 3 decades where you got less value for your money as right now. Not even 06 was this bad. At least in Los Angeles or SE Michigan.
About the deals in plain sight on the MLS, I'd be happy if you posted one if you didn't mind me picking it apart. Creativity is a broad term and can be used to seemingly justify some far flung stuff- I'm just going to conservatively underwrite the MLS deal you link based on comps and market rents and we'll take a look how that pencils out. I've seen plenty of "creativity" (unpermitted contruction, sketchy zoning "work arounds", optimistic rehab projections, AirBnB dreams) that I'm not interested in. Not interest in future speculation plays trying to justify no real meat on the bone today either.
and about the money for the second deal, let's face it, the real dividing line in REI is people who use other peoples money (professionals) and people who only use their own. If you're only using your own, most likely the OP, his first deal better be a good one, or it's going to be a long damn time if he ever does the second.
Post: Looking for my first MF rental property.
- Posts 217
- Votes 190
Can. It can make you look like one.
It can also make you look pretty stupid if you overpay and don't get what you were hoping for.
They don't call it the Greater Fool Theory for nothing.
Post: Looking for my first MF rental property.
- Posts 217
- Votes 190
Originally posted by @Roland Brown:
I think a base hit is a much better plan than hitting out out of the park for a first property. You’ll get so much experience going through the process it will very quickly help you step to the second.
To clarify are you looking for a 2 - 4 unit?
FHA comes with an insurance premium that never goes away. If you are occupying one unit the conventional loan has a reasonable down payment size as low as 5% at times. I thi conventional is always idea.
Where does he get the money for the second, especially if the first isn't anything to write home about. When he saves enough up from his W-2 job? Or when he flim flams someone else into being an "investor" on his next one?
I know REIer's are all about using other people money, but what if that isn't his plan and he just wants to make a good investment. In that case, his first one better be a good one to boot.
So since you've owned and ran medium sized companies before, you must be aware of what it took to build them to the point where you had the teams in place you are asking for in the way you want to conduct your flips. You also must be aware of the competence or experience level neccessary to be able to weed out the bad hires, avoid people who would just suck your business dry, and attract and retain the quality people who will make real contributions to your enterprise.
Same thing here.
As far as competition, it's going to be everywhere. In just about any market across the country there are going to be established development companies who's "24/7" business does this full time, and they are amazing at getting to the local inventory. They can also work on smaller margins than any 1-off flipper can ever hope to, if he wants to turn a profit.
You'll have to be prepared to wear a lot more of those hats than you want to delegate, especially in the beginning.
All a moot point anyway unless you can actually source a viable deal, meaning, you acquire your "raw" materials cheap enough that your finished product can turn a profit. That's going to exclude just about any property from a Realtor/wholesaler, especially if you are new, because most of them will just shamelessly try to sell you any crap, telling you what a "great" deal it is. If those avenues worked, the bigger development companies would scoop them all up, rather than having to source their own deals the hard way.
Doable? sure, with a "starting a new business" commitment level to have a chance.
Post: Acceptable Cap Rate?
- Posts 217
- Votes 190
Originally posted by @Russell Brazil:
There is no acceptable or unacceptable, no good or bad cap rates. The cap rate is merely a reflection of the risk in the asset and market, measured against other assets and markets.
Spoken like a Realtor.