All Forum Posts by: James W.

I do not agree with the comments that say the first property is meant to be a learning experience and that it doesn't need to make money.

It may be a learning experience, but buying a poor deal hurts your ability to grow your business and might not give the new investor a good impression of real estate investing.  My thought is that the first deal needs to be a really good one unless the investor has a lot of capital to learn with.  

For you analysis, you need to figure out how the utilities are split, what you pay, if you are able to transfer costs to tenants, and how much of the mortgage pmt goes to principal.  If part of your payment goes to principal, that is still a return to you but it does affect your cash flow.  I look at my return on the investment only factoring the interest portion of the mortgage payment but use the cash flow side to get a better idea on how the property will work with financing and scalability.  

Originally posted by @Greg H.:

@Account Closed

While I appreciate y'alls passion about your communities, the numbers don't lie.  My post was more tongue in cheek but here you go

Merrit- Since 1970, the population of Milwaukee is down 20% while Austin is approaching a gain of 400%.  Most northern metropolitan cities would reflect similar numbers

The "crappy" houses in Austin could be bought for 100K or so when I got into the business in 1989.  Those same houses would be $1-2 million today 

The heat?  We average approx 16 days above 100 degrees.  I can eat outdoors at a restaurant probably 300 days a year listening to live music on the patio.  I will open my pool in a couple of weeks and be able to swim until late September.  I can play golf year around. The only days I "hide" in my house is when the temp gets in the 30s

Austin literally has a festival every weekend.  We are heading down to SXSW this afternoon and will enjoy temps in the low 80s. 

John-  The temp never approaches 120 degrees

My wife and I travel extensively and to a person have never had anyone say a negative word about Austin(Except traffic)

I wasn't trying to say where I live has anything to do with the list.  Where I live is not on either.  I was simply saying that you can completely different answers to the questions and the "happiest cities" had nothing to do with another list published as "best places to live."  

That is a lot of rent for that price point.  Why would you overpay for that house when you could buy a nicer rehabbed property for less.  That makes no sense.  

Just buy another property and find your own renter if it is the case.

Vinyl will be the cheapest option and you won't need to paint it but you will need to replace it when the next big hail storm comes through.

Might not be a bad thing that you are not seeing as many of these as a new investor.  I see offers all of the time from wholesalers in MN offering terrible deals that could possibly get an inexperienced investor in a bad situation.  

I would look at craigslist, facebook marketplace and your local REIA for possible leads, but make sure you spend the time to determine it will work for yourself and do not rely on what the other person gives you for rehab costs and comps.  

I don't put any weight to those studies/surveys.  I think they make them say what they want them to say.  You would think there would be similar results in all of the articles like this if it really meant anything.  Below is an article that has the best places to live.  You would think there might be some connection between the "happiest" and "best" but it isn't the case.  The #1 is not even on this list.  

https://livability.com/list/top-100-best-places-to...

As a new investor, I would recommend keeping your housing expense as low as it can get. It might mean staying in an apartment and finding a property to invest in depending on the market. In my area, if you purchase a smaller multi family at fair market value, it still might not throw off cash flow for you or even decrease your current housing expense from what it is now. You should be able to find a lender that will underwrite 1-4 conventional loans, but make sure you find the right place to invest in as it could potentially hurt your ability to grow if the numbers do not work well.

Are they on the same property ID?  That would probably determine whether it is an 8 plex or two 4 plexes they are selling together. Look at the county records, lisitn information or ask them. 

Congrats guys!  you have come a long way in 10 months.  Honestly, I am surprised a bank has been willing to do this much business with you as a start up partnership with no previous experience.  Most do not want to work with new businesses and would not even consider moving this fast in this type of situation.  

Who hosts the webpage you use to post your videos and which online payment provider do yo use?

My leverage level depends on the property but I am working to increase it in order to do more deals. I wouldn't want to be more than 75%-80% leveraged in order to have an exit strategy and a little protection but might consider going more if it would be to fund a deal that makes a lot of sense to do and that is the only way to make it work.

The problem I am running into now is that my SFRs have appreciated over the last several years and pulling equity out to leverage them at 75% gets them to the point where they don't necessarily provide a good cash flow return since they appreciated faster than rent levels. They definitely would be properties I would not be jumping to invest in at 75% LTV.

At 75% LTV, I would be able to completely cash out on my initial investment, but it doesn't seem like it would be worth having them as rentals at that point since my return on equity would be low and renting a home for ~$100/mo after all costs, maintenance and cap ex does not seem worth wasting time on as it is only $1,200/yr (and principal pay down) to manage the property. It isn't worth the return even with good renters.

If I do refinance, I could use those funds to purchase another property at 75% LTV but I would essentially just be dropping the cash flow of my initial property in order to get it back on another. The net cash flow impact is probably a wash, and the result is I have another property to manage at the same cash flow level. More work for the same amount of money...

My strategy will likely be changing more over the next year or so as I try to make better use of my equity. When the market was down, I initially preferred to invest in SFRs from the standpoint of having a better exit strategy and because I could buy a SFR for the same unit cost as a unit in a multi family property. Now I am thinking more about cashing out of some of these SFRs while prices are up in order to get something a bit bigger.