All Forum Posts by: Stone Jin

@Dave Foster Thanks for responding.  Here is a new twist that I'm now considering. 

I sell 1 of my properties on the market to a stranger then I 1031 exchange purchase my father's primary which he is moving out of and then I will convert that to a rental property.   Would this be allowed?

@Casey Kendzior Sounds like you are set on buying a large SFH with your brother, I would look for one with an casita or guest house that you can rent out. There are houses out there that offer this and the rent from the 1 bedroom ADU can bring in $500-$800 towards your mortgage.

House 2-10, but something that makes sense and gives you the returns you want. The Phoenix metro initial cashflow and CoC returns are pretty low so don't get discouraged in your search its just a nature of today's market in AZ

We have a few properties in Toledo and it's been up and down, however the business model is proving out and we are happy and will purchase more properties in the area.  I know there are a lot of comments regarding homes in Washington Local and a lot of local guys invest there, however our strategy to offer inventory in the 1200-1800 range which is largely missing.  The returns are nowhere as good as what the local guys are getting, so we are not delusional that we will get the same as the guys who can buy for 20K put in 10K and rent for $800, that type of investing requires a very hands on approach.  I don't know what the turn key guys are selling but I assume it's at the 1% rule or less, so $800 rent for 80K purchase.  

As someone who mostly grew up in Toledo, my impression is that the city is a lot better than what is was when I was in high school and college.  There seems to be more energy and we are optimistic about the area.  Good luck investing.

@Peter Khoury

I invested in PHX metro from 2009-2017.  I didn't buy any deals last year in Phoenix as the numbers just didn't make any sense for the returns that we wanted.  I think the play for SF is more compelling than condos or small multi families, the tenant class will likely be better and will stay longer.  

We currently are looking outside of the Phoenix area both in state and out of state.  We look for returns of $400 cashflow and 10% cash on cash.  A wise investor once told me that cashflow pays bills, so every deal we look at must have strong cashflow numbers.  

You can certainly debate that the tenant is paying down the principle and that you get to depreciate and get tax benefits, however you can still get all of those things by buying in a market that makes sense. I'm not advocating that you buy in a different market as I think for the first few deals you should buy local and self manage and learn the business. It is just hard to find deals on MLS and what the wholesalers send aren't much better.

However if you approach your first deal as a learning opportunity and think of any money spent as tuition, then I would say that mindset will set you up for success.  It all really depends on what is important for you.  Check out some of the local meetups to get some fresh ideas.  @Shiloh Lundahl hosts one every month that is great for new investors as it is usually a smaller group and gives you an opportunity to ask questions.  The larger AZReia is good for information but not great to ask questions( I was at the meeting last night in there was about 200 people there)

@Peter Khoury Take a look on the MLS and see what is available between 200-220K and you should get a good idea of the type of inventory that exists. If you are taking out more debt to buy a deal, you should determine if the market even yields a return higher than the rate for the debt. It wouldn't make sense to me to borrow money at 6% to earn back money at 5%.

You may be able to get better returns on buying a multi family in an up and coming opportunity zone or look at the short term rental path.  Each with its own risks and rewards.

Happy hunting!

@Anthony Maza I'm not sure you will be getting 12% Cash on Cash in metro Phoenix anywhere, espicially if you are looking strictly on the MLS. Sometimes you can find a value add small multi family where the seller hasn't raised rents for 10 years but they get snatched up in hours. I think you will see after you start doing analysis that most deals on MLS pencil in around 5-7% cash on cash return, a lot of investors are okay with that knowing that it is a hot rental market and has appreciation(so less vacancy and about 3-5% appreciation), though many local investors think that the prices will plateau.

I think the creative subject 2 and lease options guys are getting better returns but that takes work up front.  I'm not sure how active/passive you want to be with your investing.  

A few years ago short term rentals seem very viable however I would be careful of market saturation as now it is very trendy to buy a condo in tempe/scottsdale and do STR.

Good luck,

Stone

My mom started investing with me when she was in her 60's and now she has a couple thousand a month in cashflow and she can live off of for the rest of her life.  Not to mention all the equity.  Never to old to get started.

@Michael Jones thanks for the offer.  In the last few years I find myself trying to repair first and then replace just from an environmental perspective.  

@Nathan Gesner I agree that in general repairing is almost as costly as replacing.  For example when one of our OTS microwaves gave out, the repair guy with parts and service to fix is $300 and to buy brand new with tax delivery and install is $270.  I would say if you have really high end appliances ($5000 fridge) then fixing would likely be much cheaper.  

Our approach at the moment is to look at the age of the appliance, if it is old then we replace and if it is newer-ish then we try to repair first.

After reading all the posts it's clear to see the two sides.  The great thing about living in this country is that each side has the freedom to do what each side wishes with their property.  I can empathize with the government workers and I certainly can see the lease is a contract POV.  So everyone just do what you feel is right, and don't judge others for what they feel is right.  There is NO right answer, the only right answer is to each of us individually. 

Outside of high end or semi custom homes you won't get ROI for this feature in my opinion. I have a bunch of class B properties and I can tell you that my tenants don't seem to care that what type of door to the yard they have. They are much more considerate of the rent price.