All Forum Posts by: Axel Meierhoefer

@Jay Gil Thanks for pointing it out. Yes, right now I like Ohio and Alabama, but that's because for me the important first selection is the turnkey partner I want to work with. A passive investment is only passive and works well when the organization you work with is great.

Then comes the properties and how well they perform - basically how much I can get my money to work for me.

There are also aspects like economic development, crime rates, school system scores, etc. but I have learned that you can find good areas and bad areas along those criteria in every state and region. As much as it might feel that having people from California migrating to certain areas is a benefit, they are also driving up valuations because almost every place they go to appears cheap. I know that some of my friends in Boise love the appreciation but can't afford to live with their families there anymore because prices have gone crazy - by their measure - not by CA price measures.

I hope you can agree that you don't want to invest in an area that is dependent on that migration. If you can find locations with a growing economy, stable growth without a lot of high jumps up or down and all the other important criteria met - it all, in the end, comes back to: "Where can my money work best for me to accomplish my goals"?

For me, that is where quality and cash flow have a healthy relationship and I am not sure if Denver and/or Colorado is by now really that great a place for that approach.

In the end, you need to be comfortable with your decision. I assume you put the question in the forum to get multi-faceted feedback. You decide what you want - we can all just give you additional things to consider.

@Jay Gil Thanks for explaining. If you are in the Bay area you can fly direct to Cincinnati or Cleveland on Southwest, same from Los Angeles.

I fear you give up a lot of performance that your money could provide to you.

@Jay Gil As many people have said, the main point is to establish your goals. I haven't seen why you chose the Denver area? I have written a lot here on BP about my turnkey investing approach. One of the most important aspects in investing in residential properties is 'performance'. When does your money work the most for you with the least risk.

For a $600K property that performs well for you, by my rule, you would have to get $4800 - $6000/month in rent. That appears pretty unrealistic to me.

Maybe you have a special reason to invest in the Denver area. If not, I would rather suggest looking for areas that have good schools and meet all your other criteria and in addition, offer you much better performance for your money. Your aim to pay off the property in 10 year or even 15 years is unrealistic, at least if you expect to pay it off from cash flow.

If, on the other hand, you invest in properties that do perform, you can actually get them paid off with a 15-year financing, especially if you're not planning to consume any of the cash flow they might produce and feed it into the financing.

Just to be clear, I am not recommending paying off the houses you purchase, but if you really feel you need to, investing in well-performing proteins, instead of a location where you know you will not get good performance.

I'll be happy to help if you like

@Account Closed Thanks for responding. I have never heard that unless properties are overpriced and banks are limiting the amount of loan they are willing to provide. If that is the case I would be careful. Otherwise, I suggest getting a broad spectrum of lenders' input.

@Account Closed I like to focus your thinking on goals. If I read it right you like to purchase a residence and (in the future) invest in real estate.

If I were in that situation I would aim to find the most efficient solution that still allows me to do both things as soon as possible. 

If you say you could put 20% down on a property of up to $500k, that's $100K. For a HELOC approach that would be good as you will have a hard time finding any bank to give you more than 80% on a HELOC.

On the other hand for your own residence, you can get away with much less downpayment, especially if this is your first home purchase. There are first-time homebuyer programs that often allow down payments of 3% or 5%.

That would mean you could get your $500K property for $25K + closing costs and would have probably about $70K of your downpayment money left.

With that, you could buy 2x residencies for approx $150k each in well-performing locations in the country. (I teach what I call the OOS SFR TK Strategy).

In that scenario, you could see if you like to use HELOC as an option to purchase, or maybe keep HELOC as an option to grow your portfolio.

In a residency situation, the most efficient use of your available funds would be to use as little as possible for your residence and keep as much as possible for your investing goals.

There are a few other strategic options to increase the velocity of your money but that would have to be discussed. If you like, feel free to IM/PM me and we can set up a call.

@Jay Hinrichs Thanks Jay. I PM you directly

@Drew Sygit That would not work for the strategy we are applying because my partner is in Cleveland. 

@Matt Thompson OK, thank you

Me too. Starting to explore Cleveland and try to find a really high-quality turnkey team 

@Matt Thompson Thank you Matt. Have you worked with them or how did you learn about them and them meeting the criteria?

I agree with your point but I am looking for them with a certain strategy in mind where I could make it worth their while to find properties in B-class neighborhoods. I am looking for long-term partners to buy from, not just a one-off deal.