All Forum Posts by: Dom Cassissa

I haven't done any seller financing so take my comment with a grain of salt. But what I'm suggesting is what if you can work a deal with seller, be willing to pay full price BUT ONLY if seller is willing to hold a very favorable interest rate. I'm not sure what you're being offered by lenders but we can all agree it's going to be probably 5%-5.5% at the very best right now. Would this deal make more sense to you if you can get him to agree to maybe a 2.8-3% rate that he holds?

Quote from @Anthony Hom:

@Dom Cassissa yeah after reading this years later I am glad I never invested in reading .

Imo I got into the area in 2021 after seeing all the upcoming things here. Amtrak is opening a line back up that connects the Reading train stop back into Philly & the major east coast line. Additionally the city is pouring tons of money into redeveloping a ton of property in the inner city, Alvernia University just had a big redevelopment and school is thriving & Reading just passed the biggest infrastructure bill they’ve ever had to redo a ton of highways, streets & bridges. There’s a lot of push to turn this area around as cities closer and closer to major cities price people out of them

Quote from @Scott E.:

As somebody who was a sub-prime mortgage loan officer in 2007-2008 and remained in the mortgage industry for following 14 years, I can say with confidence that this time it's different (from a quality of loan perspective)

The single biggest threat to the housing market in my opinion is if we enter a recession and these layoffs persist. We're already seeing layoffs in tech and fintech. If we continue to see layoffs across other industries and the unemployment rate starts to rise, then there are going to be a lot of people who are having a hard time affording their home (ESPECIALLY the people who got caught up in the frenzy and paid too much over the past 18 months).

I still don't foresee a crash in the market comparable to what we saw in 2008. But I do think there is risk of price decline in the short term. All that being said, I have no idea what I'm talking about. I'm not an economist, I don't have a crystal ball. I'm just a guy with an opinion.

 What do you make of Zillow, Redfin & Compass all laying off 10-15% of their workforce?

Quote from @Bill B.:

How many homeowners do you know that want to become renters? Probably for the rest of their lives if the crash doesn’t come? I don’t know any homeowners that would sell and not buy another home  at any price.

They not only have to ignore the recent increasing price trends. They have to think they are smarter than everyone else, and pretend to be experts in at least 2x fields they probably have almost zero knowledge in. They have to want to move, and become renters subject to a landlord raising their housing costs 20% next year instead of keeping the fixed costs of owning which are probably lower than renting, or telling them they have to move again.  

Here’s an easy question for you. How close are you to selling your home and becoming a renter for the rest of your life if prices don’t drop? Are you 1% of the way to doing that or 10%? That’s where I place the rest of America. MAX. 

I understand you think this would make rents skyrocket, so that parts good, for the landlord, not the ex-homeowner. Luckily then landlords could pay more for homes because of the higher rents, thus continuing to drive home prices up and more and more people are priced out of homeownership for the rest of their lives. 

I know a pair of guys (co-owners) who did this last year. (Accidentally because after selling their home they didn’t qualify for the new home and are now renters.) Their rent is $500 higher than their payment was, but buying their exact home back would cost them another $500 more than because of appreciation and interest rates. They paid $20,000 to sell their home, to lose out on $50,000 in appreciation, to pay $6,000/year more in living expenses (this year, maybe double that next year), and interest rates are double what they had locked in. I’m 90% sure they will never own another home. And that was probably 80-90% of their net worth. 

Maybe I’m coming around to your side. These people were friends with a guy that owns bunch of rentals. And they didn’t ask me for advice once. But the story is much more a warning than a sign of impending doom. 

 The thing is as investors, we are all confident rents will raise. For someone who's not an investor just a personal home owner; do they think the same way? or do they think this is like selling a stock before a good dip when they can get back their position at a very favorable price instead?

Quote from @Rodney Sums:

Affirmative:

"Home owners will panic sell increasing inventory causing a "crash" because they think the bubble is going to burst"

This isn't my personal prediction.  I'm not selling.  I can't help but wonder if the market were to decline would this be a reason among others.  Many have discussed concern about whether they should sell or not in an effort to time the market.

 I think we see an influx in selling due to many many "would-be" sellers now realizing the fact that they missed the top of this cycle and will shuffle to try to get out quick while prices are still relatively high for recent years. I'm not looking to sell either though, I'm riding it. I think as rates soar & prices still sit somewhat high renter pools will stay heavy & flourish for some time.

Quote from @Tuli Green:

 Yes, relatively quick. After a month missed rent, we filled with the court. 2 weeks for a hearing, tenants had 2 weeks to vacate. For one we had a tenant (unknown to us went for a prison visit) so we had to file for possession and have the sheriff remove them 11 days after they had the 2 weeks to vacate. The person wasn't there obviously but that's the worst case scenario - 39 days after a month of missed rent. If you don't have to chase them out after the hearing then 4 weeks.

I have 10 units in Reading - we bought this building in September 2021 & inherited all our tenants. As month by month goes, yes we're having some difficult tenants but weeding them out as we go. What caught my attention to the city is I do see change coming. They just approved a new Amtrak line to go from Reading all the way into Philly to tie into the major east coast Amtrak line. This will allow both Reading residents to travel a bit easier to more affluent areas to make more pay & for residents living somewhere more expensive like Philly to keep their better jobs and relocate. The city of Reading is also pushing massive revitalizing to clean up some larger buildings & have been granting state & city funds to do so. Then you have Alvernia University on Penn St. that opened a new massive project creating foreign exchange student programs, jobs & more. There's a new Starbucks in the building as well ( As Grant Cardone says, poor people don't buy $5 coffees where there's Starbucks there'll be money lol). The city & state also just passed a big budget for an infrastructure project redoing highways and roads which will increase traffic to the city & create more jobs. There's a lot of pros looking forward, but for the time being it will be a little bit of work. Also remember this whole city is OLD, buildings and properties need maintenance, a lot were ignored by bad landlords in the past so don't think a good price with a high cap rate is a no strings attached deal. We're seeing about $11k to rehab an apartment to achieve $150-200/month rent raises. In addition we're finding lots of "old property problems" leaky pipes, wood rot in some areas as most have original windows & framing on the exteriors.

To sum it up, I see long term potential but this isn't an easy "buy & hold with a fat cap rate" you will need to put some work in & make sure you have a solid manager in place to help you deal with your problems as they come.

I know this is late from your post, but I have been using 24/7 Handymen - Alex specifically. They've done a whole bunch of miscellaneous repairs and apartment rehabs for me. Reasonable pricing, not the "fastest" considering I'm from NYC construction background but no real complaints.

Quote from @Mike Dymski:

This is always a risk, which necessitates having multiple exit strategies and reserves.  Cost overruns, delays, unforeseen issues, market correction...they are all possible.  If we add value and are able to execute the flip successfully, the risk of a market correction is significantly mitigated by the added value...particularly when compared to the alternative of purchasing a stabilized property instead and only experiencing the market correction with no value added.

No of course I get that, for example homes in FL I'm doing are low $100k $30-40k rehabs & $195-220k ARV, I'm already seeing houses come back in listing price so I'm wondering if we'll start to see flips close to breaking even and we have to switch to holding them as rentals instead

I’m curious if any other home flippers are thinking what I’m thinking about these fast rising rates. While 5% on 30y is still historically low, I’m wondering & sort of nervous to be honest that some flippers (hopefully not myself) will get caught holding the bag. With rates rising quickly enough to price a buyer out of a home, I’m wondering if anyone sees a likelihood of buying a flip, doing the rehab & then near selling time seeing rate hikes push the price down against us to compete with the economic market. Basically pushing or keeping the price down making it hard for us to profit. I’m curious what you guys think about this topic??