All Forum Posts by: Enoch Li
Enoch Li has started 3 posts and replied 11 times.
Post: What do investors do during recessions?
- Posts 11
- Votes 1
Quote from @Chris John:
I believe that you're referring to a callable loan, but I could definitely be wrong. I definitely don't know much about it, but in theory, a bank can call your loan and say that they'd like to be paid back in full. If you have equity, you can sell or refinance to pay them back. If the property is "upside down" because of declines in the market, you would need to refinance or sell for what you can get and then make the difference up in cash.
Having said this, I don't know much about callable loans in terms of which loans are callable, under what circumstances loans can be called, why a lender would call a loan that's "upside down", why a lender would call a loan that is current on payments, etc.
Sorry if this isn't what you were getting at!
Post: What do investors do during recessions?
- Posts 11
- Votes 1
Quote from @Jon Kelly:
@Enoch Li you're asking two different questions:
1) What do investors do during recessions
2) What happens when your home price drops below the borrower amount
1 - savvy investors will be more conservative in their underwriting guidelines. Save as much cash as possible. Be ready to take advantage of discounted properties
2 - It depends on the condition of the property and your personal financial situation. Is the property rented and cashflowing? Then, keep it and wait for the market to go back up. Is the property vacant and in need of repairs? It may make sense to have the lender foreclose on the property. Be very careful with what this will do to your credit and put future deals at risk.
This recession is nothing like the 2007-2008 crisis. A lot of properties have built of equity (hopefully)
Post: What do investors do during recessions?
- Posts 11
- Votes 1
Home prices dropped in 2008 and I heard a story from a colleague of mine that they lost their house because their home was not enough collateral for the loan. So my question to all my BRRR and 2008-era investors - how did you exit or hang on to your properties? You have to leverage a lot of real estate so what happens when your home prices drop under the borrowed amount?
Quote from @Nicholas Coulter:
Quote from @Enoch Li:
Quote from @Nicholas Coulter:
@Enoch Li Have you looked into different strategies for a house hack? I have been able to make really expensive houses work!
Like renting a room?
Yep! I rent out my spare bedrooms and it allows to increase my rental income by about 25%
Quote from @Nicholas Coulter:
@Enoch Li Have you looked into different strategies for a house hack? I have been able to make really expensive houses work!
Like renting a room?
Quote from @Peter Mckernan:
Quote from @AJ Singh:
You can drive an hour to Inland Empire and find performing multi family. The rental yields equal OOS investments once you bring tenants to market rent .
Align yourself with a Multifamily focussed realtor and you will find a deal soon
Patience is the key.
Buying rentals out of state is not as easy and cash flow is tight in Class b neighborhoods
I agree with Aj, if you value-add properties too that is key as well! Need to keep the options open and the appreciation is huge compared to out of state. An example, I have a rental in the Inland Empire. We bought it 2013 for $250K, refinance beginning of 2020 for $440,000 and we never touched it. Renter was in there for the whole time (they do take really good care of the place). Now a place on the same street sold for above $600K. That is one example of many that is provide on the west and or east coast in regards to appreciation
Quote from @AJ Singh:
You can drive an hour to Inland Empire and find performing multi family. The rental yields equal OOS investments once you bring tenants to market rent .
Align yourself with a Multifamily focussed realtor and you will find a deal soon
Patience is the key.
Buying rentals out of state is not as easy and cash flow is tight in Class b neighborhoods
That's unfortunately not an option because I'm going to need to house my spouse who goes to school in LA so we would need to be nearby.
Quote from @Taylor L.:
Out of state rentals can be a good way to go. You might also consider a short term rental househack. Instead of long term tenants in a duplex (for example) you buy a single family and rent out some of the space as an Airbnb. Perhaps with an inlaw suite or ADU. But, is that the type of lifestyle you want to lead?
I want whatever's the most passive. what would allow me to scale the quickest?
I'm working to save up for some RE investment, but after reading a couple beginner threads, I realized I probably won't be able to do what they're doing because OC doesn't have multifamily properties that make sense. Now I'm considering just purchasing a rental out of state, would that make sense or should I just keep the cash?