All Forum Posts by: Chris Watkins

@Randy Scott - I like your point. Something noteworthy is that you had positive cash flow so no matter the turn of the economy or not, you wouldn't HAVE to sell for bleeding reasons. A good takeaway for me is that as long as you have a realistic cash flow to cover expenses, it's better to buy than wait it out.

@Ian Walsh - That is the general principle right now, I agree. Unless the market keeps going up...

@Manolo D. - I really appreciate this idea - to focus more on weaknesses in my skillset. I would imagine there is a steep learning curve with your first rental and all the maintenance, upkeep, and updates required. What an idea - to find your rehab niche, become the expert in it, and pursue those properties to get value out of them. 

@Joe Splitrock - Good to know on the basement permit thing - I don't have enough experience to know that no permits is typical. I appreciate you allowing me to borrow from your experience on that. And the 1% rule thing - I thoguht the general rule of thumb is that you probably wouldn't be able to cash flow under 1%? 

Good point on just jumping it. I need to jump in, I just don't want to jump in for jumping in's sake. Maybe after this convo I will be able to loosen up a little, enjoy the process a little more, and actually pull the trigger. 

I can't believe you've never had a property fall out of contract?! Maybe my approach is a little off then? In a tight market my understanding is that you find properties that basically meet your criteria, tie it up under contract, then verify during due diligence that your assumptions were correct and that there are no other lingering issues with teh property. Is that what you do? What do you attribute your success to in being able to close on the deals you offer on?

Thanks @Joe Au that was a good read. Maybe I am focusing too much on cash flow without taking into consideration the equity value. Following that article really makes me more interested in the BRRRR strategy mentioned here a lot on Bigger Pockets.

@Hersh M. - I love the graph, It puts into easy visual perspective the cyclical patterns of the economy (recessions every 10 years for the last 50 years) and how it hasn't affected interest rates in a negative way...

Emailed you with the @Steven Bond - email sent. Thanks. I look forward to meeting with you. 

@Mike Palmer - great point - I like that perspective. Knowing my personality I will probably look to refinance an investment property or sell it before the 30 yr term is up...

I also like the idea of being able to control your interest rate somewhat. 

I have definitely been actively looking at alternative financing methods and have offered on several with seller financing, lease option, and even private money. I've learned a lot but most sellers I've talked to say the market is too tight for creative financing. Just gotta find that one exception to the rule though! Thanks Mike!

@Steve Theobald - have you been talking to my broker? J/K ... he did say essentially the same thing to me last week - "don't just buy a property to have a property". But at some point I wonder if I am a little too picky (which is why I asked this to you and the forum). I like your numbers showing the difference. I agree. Thanks again!

@Steven Bond, would love to meet up. I have known about FIG and followed your work for the past few years. From my limited understanding, your ideal client is someone with over 140k to invest in a down payment on a triplex or fourplex. I don't have that kind of cash to invest at this point. Am I missing something? Either way, I would love to meet all of you and learn more. 

Thank you @Steve Theobald, I have followed your advice on several other threads and appreciate your knowledge in this market. The beauty of all of this for me as I get established in real estate investing is that I can chalk up the last 1.5 years to "education". If time is money then I have really invested a lot in education the past 1.5 years. Fortunately, I have more time than money put into this so far...

I agree about the adjustment coming and wonder how the election will affect this (if any). @Becca Summers mentioned the idea that interest rates may change soon as well. So here's a question:

Is it better to buy high with a good interest rate or buy lower with a higher interest rate?

It obviously depends on the numbers involved (what interest rate differential are we talking about, how much higher are you buying, etc...), but with the future unknown, it has me thinking...

@Becca Summers, as always, very insightful. One thing that I sometimes forget is the fact that I can get a 4% interest rate on an investment property and it will be fixed for 30 years. You are right about that, hard to ignore the interest rates. Thank you for reminding me of that. 

Great perspective on the pulling of permits, etc... The more I look back on it, the more I regret passing on that duplex. It's good to know that it's super common for them not to pull permits on finishing the basement. 

I have approached the non-warrantable condo owners about seller financing. Maybe I need to market to them with that angle with a little more emphasis. 

Thanks for taking the time to provide your valued input!

Thanks @Anthony Colonnetta for the response. I agree - the risk of it going down is great. But then again, the Utah economy is really strong right now with a ton of job growth expected so it may go up for a number of years. The question that I don't have an answer to is "in 10 years from now, will I regret waiting to buy properties, or will I be glad I was picky and waited..."

I understand that finding the "perfect" buy & hold property is rare. I understand the concept of analysis paralysis. I even have a quote sitting on my desk right now that says "Every successful man I have heard of has done the best he could with conditions as he found them and not waited til next year for better." But It also makes sense to me to pass on just "okay" properties if they run the risk of becoming a long term headache. So here's my question:

How can you tell when you are being too picky? VS just being strategically selective? 

Here's more backstory:

For the past 12 months I have been actively searching for buy & hold properties to purchase here in Utah. I've found many properties that I liked on paper. I've been under contract on quite a few (probably 12 or so). But in my due diligence I find too many imperfections such as:

• Zoning issues
• No building permits pulled with city/county
• Too much rehab needed for the price
• Conventional lenders won't lend on it (non-warrantable condo, two houses on one parcel, etc...)
• The improvements I want to make aren't allowed by the city

I struggle to find anything that comes close to the 1% rule here in Utah, Wasatch, and Salt Lake counties. When I do, it has the above listed issues. 

I also, feel like (at least in Utah) we are at the peak of the market. Things still could go higher but I feel like I am buying high. So I am hesitant to tie up all my available down payment funds on properties in the peak of the market when, should things stabilize in the near future, it would be better to buy low if it did stabilize. 

I'm well aware of better buying power in the Midwest and how ROI is better there. But I'm not there and don't like the idea of owning out of state.

I know there is money to be made in real estate with any market. 

So am I being too picky? Do I need to change my strategy? What should be my mentality here?