All Forum Posts by: Gordon Starr

If real estate is due for a correction in your area, one solid move is sell some property to pay off your debts. That's guaranteed to save you at the very least the interest you no longer owe. Also, it boosts your credit rating so you a have a green light to expand when the market bottoms again.

Outside the box? I'd like to see you ply your pleasant inquisitive self and use your classy style personality. Partner up with someone already established in real estate working a system that made them financially independent.

Creative? Read through this link: to go in or not to go in, that is the sheriff's auction question. The link describes how a good brick and hardwood quad went for 26k on a beautiful C street in Dayton, OH. That was WAY HIGHER than I thought it would go for. Lol.

https://www.biggerpockets.com/forums/311/topics/540284-to-go-in-or-not-to-go-in-that-is-the-sheriffs-auction-question

Yes, John. Open bidding and minimum pricing has ended and the price is 62k with roof repaired and tenants on time with payments.

Lol. This thread reminds me of the time I got stranded at Euclid and I90 and had to walk all the way to college at university circle on a Saturday night right after the welfare checks came out. That was an eye opener. It struck me that what was then poor was once pretty solid area. At that time, the inner east around, like East 55th and Euclid - way creepier in 1986. Is it still the same today?

@Karlos Rueckert

Comps this spring have just been crushing it as you can see from attached two nearby that are circled, X marks Carter ave. They are going for 53 per square foot for needs nothing properties with fresh rehab and leases. I only want 50 per square foot and am going to repost this at a later date.

http://kmfylaw.com/businessfinance/reminder-leases-of-three-years-and-longer-must-be-signed-and-notarized-in-ohio/

@Darrin Carey

See the above link to what you need to know regarding the 3 year lease. It does not need to be recorded.

@Courtney Jones

I love the 3 year because I get great tenants and then lock them in for the long hall. I also give the tenants a buy it now price whenever they request it. Usually the high end of retail. They can then invest in making the place their own! Its not hard to find great tenants who want that.

What happens to your net worth if you are leveraged at 70% LTV and the value of real estate drops 30%?

Try again Joe, you can mathematically calculate LTV goes to 100% and your net worth, or the portion of it you have in real estate becomes negative. You owe more than you receive when you liquidate. You cannot sell the property unless you bring cash to the table. You have nothing in the way of net worth from your RE portfolio.

What happens to rental resale values if the interest rate goes up to the point your rent doesn't cover expenses?

Try again, if aggregate rents don't cover expenses, you won't be able to get a loan in the first place unless you have some other income to pay for your cash flow negative, money losing investment. The resale value of rental property in this scenario gets absolutely crushed because the vast majority of buyers exit the market.

These scenarios are particularly germane to California rental real estate that doesn't cash flow at its current value. Its an interest rate increasing environment and high price environment for RE investors and this is why I wouldn't advocate keeping a huge loan just to own more of it!

In regards the stock market, leverage leads to market froth and subsequent crash and I believe it is now illegal.

Good question Sean, I actively try to sell to my tenants and select tenants in large part based upon their interest in buying and credibility to do so. Basically all have expressed interest in buying. However, they only come through about 20% of the time. My sale price quote (high end of retail values) to them is on day one of their rental and I usually stick with that. You as a landlord have considerable leverage in the transaction. I sometimes also offer down payment assistance and/or a period of no rent payments while under purchase contract. It is also a good idea to find a lender to work with who has a reputation for qualifying first time buyer or non-prime mortgages.

Good luck

@ Here's a math question, what happens to your net worth if you are leveraged at 70% LTV and the value of real estate drops 30%. Here is another one, what happens to rental resale values if the interest rate goes up to the point your rent doesn't cover expenses? Whole other meaning for brrrr. Like brrrr its cold out here. or you are brrrroke. Am I right?

I would pay it off in a heartbeat and be done with all the risk and hassle of trying to find an investment that pays more. If you are in California, you probably won't find one. The market is too frothy in CA. It is no longer justified by fundamentals (i.e cash flow), only speculation that the value will go higher. That is why so many people are selling CA and buying the Midwest. I wouldn't do that either. Good luck!