All Forum Posts by: Axel Meierhoefer

@Carlos Hernández I believe you have to look at your goals long term.

I mentor people who want to build a portfolio and an estate but also help with referrals to the providers I use for my own investments.

The folks I support and I look for cash flow so we can build a portfolio that allows us to stop working and live off the passive income. That's a long-term strategy that can take up to 10 years and requires the right, well-performing markets to invest in.

We are a small group of people all realizing that same goal.

If your goals fall into that bucket, I am happy to help and support you. If it is a different goal, you will find the right support here on BP, as soon as you state what you aim to accomplish in the long term.

Quote from @Amir Eghbali:

New investor to the game. Looking to expand my knowledge.

 Welcome to BP Amir.

If you share your goals the community can help you the best. I focus on residential real estate investing for cash flow but there is pretty much any other variant here as well. Just let the community know what you aim to accomplish

@Lesley Cabrera Can you provide a little more detail about your property?

If it is the right kind, you might be able to 1031 exchange it and not pay taxes. I have done the same many years ago for a $800K property and got a bunch of SFR in well-performing locations so now they pay me a good amount every month and I can had them over to my daughter if I ever not want them anymore.

If you like we could also discuss on Zoom, bt it all depends o the property you own first.

Quote from @Jerryian Francois:

Hey bigger pockets happy holidays to you all I really need some advice here !  So it’s been 3 years since I brought my first duplex @415k its now build up equity and is worth over 540k so I have equity in it a refinance doesn’t make sense because I’m locked in at a low rate but I do t want to wait until rates drop to get back in the market I’m wondering should I tap into that equity via private money heloc and use about 30-50k to get into a flip deal the lender is giving 2 years to pay back the heloc ! Would love to hear from you guys !? Thank you in advance 

It really depends what your goals are. I believe HELOC is a good option as you can work with the equity you have, invest it, and if there is a real nice return to lower rates, you can refi the duplex and have the next property as a bonus. Happy to help if you like

Quote from @Manuel F Cobas Valle:

Hi. I'm living in Florida looking to buy a rental property in Cleveland or Cincinnati . Any recommendation(neighborhoods,rental prices, leasing contract advice).

Thanks.

 I can help you with TK properties in the Cincinnati area. I am getting good performance (cash flow versus purchase price) and from providers who renovate and manage. Feel free to DM so we can have a chat and I can make a referral to the providers I work with.

Quote from @Gil Segev:

Quote from @Axel Meierhoefer:

@Gil Segev Remember that I said how important goals are?

If your goal is to make monthly payments for an anticipated appreciation of 10%, then investing in real estate in strongly appreciating markets is a good idea. I am not sure that Austin is that market but it could be one of them.

You are right that the cash flow markets I invest in appreciate closer to 3% or maybe 4%/year but I don't have to pay anything for it, get the tax benefits and the depreciation, spread my risk across 2 or 3 properties, and because TK providers manage them I have no work and don't need to furnish them.

A CD is a very poor example as it shows that you don't seem to look at all the other aspects residential real estate provides you, regardless of whether in the Austin deal or my deals. My friend Keith summarized it this way:

1. Appreciation. You are aware of that

1. Cash Flow. Your rent income minus all the monthly expenses (mortgage, property tax, insurance, property manager, repairs, vacancy, etc.) leaves you with $600 of residual income. 

1. Loan Paydown. Unlike your own home where you pay this, your tenant pays the monthly principal portion of your loan on this property! That means the balance goes down a little each month which adds equity to your proeprties.

1. Tax Benefit. We’re talking about both the mortgage interest deduction and something called “depreciation” that you can typically use as a tax write-off against your income. 

1. Inflation-Hedge. This fifth way is one that even some advanced investors fail to consider. Just like inflation erodes the value of your lump of savings, it erodes the weight of your mortgage debt balance just the same. Your loan today has its “drag” diluted over time as more & more dollars circulate in an economy. Basically you pay the same amount each month but teh value of that money goes down over time. 

You can add those parts together in % terms and probably end up in the area of 16-20%. 

Funny side note: On the 6% of interest you get from the CD you see as an alternative you have to pay income tax so depending on your income it might only be 5% or even 4%.

In case you really mainly looking for a gain in value, you could also invest in stocks. If you had bought Tesla stock in Jan 2023 and sold it today your $150K would have doubled, so the gain would have been triple your appreciation of the $500K property in Austin.

The appreciation goal is a much shorter-term goal than my cash flow goal, where tenants buy me houses, create long-term passive income, and develop a portfolio I can turn over to my daughter when the time comes.

It's all in the goals you have.

@Axel Meierhoefer of course I see the benefits of owning real estate or I wouldn't be here :) 
You are correct that following the example you provided of buying 2 TK properties, I was only making a point on the ROI of cash flow (3.5%) and equity built by loan repayment (2.2%) for the near term. I also wouldn't put all of my investment funds into a single CD for the long term..

A better comparison would probably be what the funds would yield in a 20+ year prediction of SP500 vs. 2 TK properties being slowly paid down and appreciating. I personally believe real estate wins since we claim the whole appreciation while leveraging the bank's money for the initial purchase. 

Would you mind sharing which market you are currently investing in that sees $300 per door for TK LTR? It's definitely something I'd like to consider.  

 I am investing in the Quad cities and in the Dayton/Cincinnati area. I am happy to share my providers if you re up for a call to talk about it. If you DM me I can send a link to my calendar. That's how I help my clients, either direct referral or referral plus mentoring.

Quote from @Carlos Ptriawan:

Quote from @Axel Meierhoefer:

Quote from @Carlos Ptriawan:

Quote from @Justin Vogelgesang:

Outmigration from Texas dropped around 50% for 2022, and 2023 is still TBD of course. It has remained at the top for inbound migration for longer than that though. So Texas seems to be one of the most promising markets for the years to come I think. With all of the appreciation in the recent years, it's difficult for rent rates to keep up so there is a natural lag there. 

Would you be managing the property yourself? If not, then some other areas in TX would be far more feasible for rentals and you wouldn't have to resort to out of state then. 

 Buying locally is always better regardless the state, it develops the business skillset

 Curious, why is the  business skillset better if I am running a company locally versus operating in a location away from where I live? I have been in business for 18 years and have always done business activities where the clients and the market is, not where I live.

 when I invest locally I know which contractor is good, which market and which strategy is beneficial for me. When I invest out of nowhere in NowhereVille I only make few hundred per month. Now when I rehab locally I made hundred k or more per deal. 

 I agree but there is a huge difference between flipping locally and having professional property management far away from home. I was only referring to the latter.

Quote from @Carlos Ptriawan:

Quote from @Justin Vogelgesang:

Outmigration from Texas dropped around 50% for 2022, and 2023 is still TBD of course. It has remained at the top for inbound migration for longer than that though. So Texas seems to be one of the most promising markets for the years to come I think. With all of the appreciation in the recent years, it's difficult for rent rates to keep up so there is a natural lag there. 

Would you be managing the property yourself? If not, then some other areas in TX would be far more feasible for rentals and you wouldn't have to resort to out of state then. 

 Buying locally is always better regardless the state, it develops the business skillset

 Curious, why is the  business skillset better if I am running a company locally versus operating in a location away from where I live? I have been in business for 18 years and have always done business activities where the clients and the market is, not where I live.

@Gil Segev Remember that I said how important goals are?

If your goal is to make monthly payments for an anticipated appreciation of 10%, then investing in real estate in strongly appreciating markets is a good idea. I am not sure that Austin is that market but it could be one of them.

You are right that the cash flow markets I invest in appreciate closer to 3% or maybe 4%/year but I don't have to pay anything for it, get the tax benefits and the depreciation, spread my risk across 2 or 3 properties, and because TK providers manage them I have no work and don't need to furnish them.

A CD is a very poor example as it shows that you don't seem to look at all the other aspects residential real estate provides you, regardless of whether in the Austin deal or my deals. My friend Keith summarized it this way:

1. Appreciation. You are aware of that

1. Cash Flow. Your rent income minus all the monthly expenses (mortgage, property tax, insurance, property manager, repairs, vacancy, etc.) leaves you with $600 of residual income. 

1. Loan Paydown. Unlike your own home where you pay this, your tenant pays the monthly principal portion of your loan on this property! That means the balance goes down a little each month which adds equity to your proeprties.

1. Tax Benefit. We’re talking about both the mortgage interest deduction and something called “depreciation” that you can typically use as a tax write-off against your income. 

1. Inflation-Hedge. This fifth way is one that even some advanced investors fail to consider. Just like inflation erodes the value of your lump of savings, it erodes the weight of your mortgage debt balance just the same. Your loan today has its “drag” diluted over time as more & more dollars circulate in an economy. Basically you pay the same amount each month but teh value of that money goes down over time. 

You can add those parts together in % terms and probably end up in the area of 16-20%. 

Funny side note: On the 6% of interest you get from the CD you see as an alternative you have to pay income tax so depending on your income it might only be 5% or even 4%.

In case you really mainly looking for a gain in value, you could also invest in stocks. If you had bought Tesla stock in Jan 2023 and sold it today your $150K would have doubled, so the gain would have been triple your appreciation of the $500K property in Austin.

The appreciation goal is a much shorter-term goal than my cash flow goal, where tenants buy me houses, create long-term passive income, and develop a portfolio I can turn over to my daughter when the time comes.

It's all in the goals you have.

@Jay Hinrichs Got it, thank you